Verizon: Lights, Camera, Actiontec!

SOURCE: LIGHT READING
June 28, 2006

Actiontec Electronics Inc. says it’s already shipped “in the hundreds of thousands” of broadband home routers to Verizon Communications Inc. (NYSE: VZ - message board) for that carrier's FiOS fiber-to-the-home customers.

The electronics supplier announced today it was selected as the primary supplier of broadband home routers for Verizon, a huge win because those devices will be the central distribution point for Verizon to monitor, maintain, and add services to its customers' home networks. (See RBOCs Want Inside Your House.)

Actiontec's win could be viewed as a big loss for Verizon supplier Westell Technologies Inc. , which was thought to be in the running for the home router business with its UltraLine II video gateway products. And, as Westell shares sank 4 percent in trading on Wednesday, the company named a new director of engineering for its IPTV and video gateway products. (See Verizon Moves Toward Home Gateway.)

The new Actiontec routers are part of an installation package for new FiOS subscribers -- and new subscribers only. But FiOS data-only customers who upgrade to Verizon's TV service can also get the device free of charge, the company says.

Verizon released an RFP for a broadband home gateway (BHR) last summer. “We got responses from 13 companies and found four that met our requirements,” says Verizon director of customer premises equipment Michael Bolduc. “We then took the four into testing and exited testing by the end of last year with two vendors, and Actiontec was identified as the primary source."

Bolduc says Verizon is now testing the vendor that came in second place and has informed Actiontec it will be one of two vendors providing the BHRs. Bolduc won’t say who the second-source vendor is, but he says its residential gateways are already widely deployed.

The Actiontec router uses a chip set from Entropic Communications Inc. and comes with a 533MHz Intel Corp. (Nasdaq: INTC - message board) processor built in. While FiOS delivers only up to 30 Mbit/s downstream and up to 5 Mbit/s upstream today, the Actiontec router supports speeds of up to 100 Mbit/s both ways. (See Entropic Ships 1M.)

“FiOS has created a need to transfer data at a higher speed,” says Actiontec marketing VP Gunjan Bhow. “When we built this we were really laying the groundwork for future services like IP-based, offline video and storage devices connected to the router.”

The device supports the TR-69 home network remote management standard, which Verizon will use to troubleshoot the BHR and other devices on the home network.

The BHR also supports the Multimedia over Coax Alliance (MoCA), which provides specifications for the transport of entertainment services over in-home coaxial cable. (See MoCA Interoperates.) The standard, in effect, provides a common language by which the devices in the network can communicate.

“They’re integrating MoCA, and they’re pushing their access vendors to integrate MoCA into the ONT, so it’s within the same model as what folks like Netopia and 2Wire are doing,” says Heavy Reading senior analyst Rick Thompson. (See 2Wire Unveils Home Gateway.) “The Verizon BHR is a bit more custom-developed specifically for Verizon, based on their RFP requirements.”

Verizon is currently using hybrid QAM and IP set-top boxes made by Motorola Inc. (NYSE: MOT - message board), all of which support the MoCA standard. The Actiontec device does not support VOIP as many newer residential gateways do. (See Verizon Launches VOIP Gateway.)

Until now, there has been no central gateway device in the home networks of FiOS subscribers. Video is delivered from the ONT outside directly onto a Motorola set-top box on the TV. For Internet access, the ONT connects via Ethernet over coax cable directly to a single PC in the household. Now all these services will run through the BHR.

By the end of last year, Verizon had passed some 3 million homes with the FiOS network and expects to pass 3 million more this year. Verizon began selling its fiber-based FiOS TV service last fall and now sells the service in about 50 markets in seven states. Verizon is adding more cities to that list as it extends its network, and as it obtains local video franchises.

— Mark Sullivan, Reporter, Light Reading