Monday, March 28, 2011

Calix Solidifies Lead in Broadband Stimulus Sweepstakes

Our Estimate: 50 Announced Vendor Contract Wins by Summer, 
Total Includes Occam’s Acquired Wins 03/28/2011 San Francisco - Calix, Inc. (NYSE: CALX) this morning announced that broadband stimulus awardee Red River Telephone of Abercrombie, North Dakota has selected the Calix C7 Multiservice Access Platform (MSAP) and 700GE family of optical network terminals (ONTs) as part of the provider’s expansion of its network funded by the federal broadband stimulus program.

Red River Telephone was awarded a $9.088 million loan/grant combination package by the Rural Utilities Service (RUS) of the U.S. Department of Agriculture which the provider helped secure with a "local match" of $1 million.

Why Calix Leads the Broadband Stimulus Sweepstakes
Today’s announcement further solidifies the clear lead that Calix holds nationally in the number of announced equipment contracts funded with broadband stimulus monies.

This leadership position in announced wins is partially the result of larger major network equipment makers and material suppliers avoiding the public spotlight relative to the federal program. The fact that their largest customers, AT&T, Inc. (NYSE: T) and Verizon (NYSE: VZ) have disparaged President Obama’s program cannot be discounted in this regard.

The Calix stimulus victories also indicate the firm thrives in the sub-sector of the U.S. telecom market populated most heavily by independent wireline service providers and telephone cooperatives.  This sector has been heavily favored with awards under the federal program, only exceeded by the total dollar volume of disbursements’ now flowing out to optical fiber-based middle mile networks.  

Mostly Calix’s stimulus win track record is testament to the proactive approach that the company has taken in working with the rural telecom sector to explain the Obama Administration’s initiative, and to provide guidance as applicants worked through the program.  

Our Estimate: On to 50 Announced Wins
The Petaluma, CA based manufacturer of multiservice access platforms confirmed for us that it has now won and announced a full 36 equipment supply contracts from broadband stimulus program awardees. At the company’s present rate of frequent multiple contract announcements per month; we estimate the firm will reach near 50 stimulus fueled project contracts by June or July.

To date in 2011, Calix has made 8 stimulus announcements for a total of 9 projects.

A company spokesperson also confirmed for us that today’s total of 36 project wins includes contracts initially won by Occam Networks. Calix completed the acquisition of Occam on February 23 of this year. At the time it stated that the combination of Calix and Occam stimulus financed wins equaled “83% of publicly announced vendor selections for Broadband Stimulus projects amounting to over $630 million (of which a portion is access equipment)”.

By the company’s calculation, the 36 projects have been awarded a total of “approximately $678 million in Stimulus-related grants, loans, and private investment for plant engineering, materials, labor, and other costs, including access equipment.”

We estimate that of the $678 million awarded projects with disbursements partially flowing now to Calix; some $210 million is in stimulus projects previously announced as funding vendor wins by Occam.  

The percentage share of each awarded project which can be estimated as flowing to Calix vendor contracts varies by project size and type. Calix wins come from both RUS awards and those made by its sister federal agency managing the program, the National Telecommunications and Information Administration (NTIA) at the Department of Commerce. 

RUS awards comprise the lion’s share of funds moving to Calix selections. 

Red River Telephone
Red River Telephone, a rural telephone cooperative formed in 1951, accepted its first federal loan from the Rural Electrification Administration (REA) in 1953, 4 years after Congress amended REA’s charter to allow for federal support of rural telephone systems. The cooperative was awarded the broadband stimulus loan/grant package on September 13, 2010 by RUS, REA’s successor agency at USDA.  

"A project of this scope would take us 10 years or more to complete using just our own general funds, and we knew that the deserving citizens of our region couldn't wait that long," said Jeff Olson, general manager of Red River. "With this initiative, we will be making a strategic investment in the future of our member communities, stimulating economic development and allowing the residents and businesses of our region to keep pace with the demands of a global economy."

Red River will be using the RUS loand/grant combination package to expand broadband services across its footprint that includes communities in Minnesota, North Dakota, and South Dakota. The cooperative will use gigabit passive optical network (GPON) technology to enable ultra high-speed Internet services as well as voice services to subscribers in six counties.

The project “will place approximately 690 route miles of fiber optic cable in the proposed communities, covering an area of 918 square miles. Red River will be leveraging GPON and gigabit Ethernet (GE) technologies delivered via the Calix C7 MSAP, North America's leading MSAP, and 700GE family of ONTs, part of the industry's broadest portfolio of ONTs”, according to a Calix press release of this morning.

Web Analytics