In 2002, AFC bought AccessLAN for a product that was called Baracuda at the time. AFC renamed it to Teliant. This acquisition was made in line with the 2001 Business Plan and ultimately failed to achieve its aims. It became clear that AFC was not likely to defeat Alacatel in the DLC market in the Tier 1 carriers. The RBOCs had built many systems that optimized deployment of DLCs based on Litespan. Some of these elments were noted earlier in my blog. Our idea was to open up another front against Alcatel in the market share battles in Telco Access. Even though the UMC could be deployed as a CO DSLAM, it was neither cost nor density effective in this application. Some smaller customers used the UMC this way since they had some free slots, but the product was not optimized for this application.
We had chosen CO DSLAMs to be the market target because they were the other major market in Telco Access. On top of that, the Alcatel product that was originally chosen 5+ years ago had significant limitations as things moved forward. What we expected was an evolutionary change at this spot in the network from ATM to IP. This was expected to be an opportunity to introduce a new product to the Tier 1 carriers. We went off to search for companies that might have the solution and ended up looking at 3 companies: Copper Mountain, Paradyne, and AccessLAN. We did not move forward with Copper Mountain because it was clear that their architecture and plans were best utilized by the CLECs. We did not choose Paradyne because its products tended to be deployed outside the US or in small carriers. AccessLAN had a new product that was targeted at the Tier 1 North American Carrier Business. This product was in development and came to market after we started the process of acquisition.
Our major flaw in this acquisition is that we had not recognized the change in buying behavior at the Tier 1 Carriers. For many years, Carriers re-issued RFPs for existing spots in the network. From a supplier standpoint, this meant that about every 3 - 5 years there would be a chance to introduce a new product to an existing market. This stopped in the late 90s, but it was not evident yet to us. One of the reasons we chose AccessLAN is that it could support the existing ATM model and evolve to an IP model. We expected carriers would want to migrate to IP DSLAMs but would like to do so slowly. This evolutionary change is what had happened in the past. The new behavior is a one and done model. Once a product or products are selected for a technology, there is no follow on. The next RFP will be for the next technology.
To manage the transition from ATM to IP, it meant that the Teliant had to have an ATM core overlaid by an IP capability. In the case of Teliant, this was modular and was added to existing modules. So the ATM product could be made at a relative cost point to other ATM DSLAMs. The IP add-on could not compete against the newer models of IP DSLAMs that did not support ATM capability. Additionally, the new IP DSLAMs were really Ethernet DSLAMs. Teliant was a layer 3 IP device. Again, this was a more costly model than it needed to be.
Because of this, we were never able to crack the Tier 1 CO DSLAM business. This is not to say we found no value in the portfolio for Teliant. The primary application that we found for it was in the IP Video over DSL space (also called IPTV). Tim Flood developed an end to end product line based on partnerships for the non-access parts of the portfolio. We used the routing capability of Teliant to become our IP Video Router for these networks. From a strategy standpoint, our plan with this was to mitigate any traction by Next Level Communications who were pitching an ATM video product. IP Video was never easy for us. Given the time and technology available the solution had many limitations. But this solution did work and we ended up with over 50 small carriers that did Video over DSL.
We also sold Teliant as a standard CO DSLAM and small carriers also used it as either a core or edge ATM switch. But the product never did what we wanted it to and this was a fault in not understanding the customer. Next up we will explore the Skunks works that led to FiOS. Then we will enter the last 18 months of AFC, which was a VERY busy time.
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