AT&T and Avici Systems put their competitors on notice last week by announcing that Ma Bell has completed its coast-to-coast Internet Protocol network and will use Avicis routers, which carry traffic at 10 gigabits per second.
"Its very important for both companies," said Seth Spaulding, senior analyst at Epoch Partners.
AT&T becomes just the second carrier — Qwest Communications International is the other — with a coast-to-coast optical backbone carrying traffic at that speed. The move quadruples AT&Ts previous capacity. With the new 10-Gbps circuits, AT&T could transmit 24 Hollywood films from Los Angeles to New York in less than two minutes, said Kathleen Earley, president of AT&T Data and Internet Services.
AT&Ts selection of Avici over Juniper Networks and others is an important milestone for the young router maker.
"AT&T is a tier-one carrier that doesnt easily allow in vendors," Spaulding said. "That they chose Avici over Juniper is a major validation of Avicis technology."
AT&T will maintain its leadership in carrying core traffic despite the onslaught from competitive carriers such as Qwest and Broadwing, Spaulding said. The contract with Avici is not exclusive, but so far Avici is the only vendor running OC-192 (10 Gbps) on AT&Ts network.
The OC-192 links will be terminated in Boston, Chicago, Los Angeles, New York, St. Louis and San Francisco. The deal is worth at least $5.1 million to Avici, and should help the company easily meet or beat quarterly revenue estimates of $9.1 million, Spaulding said.
"Its an important step for us," said Peter Chadwick, vice president for marketing at Avici, which started product development in 1997. "The fact that its being deployed in a real network demonstrates its capabilities and the problems it solves." The Avici router allows a carrier to grow its network cost-effectively over time and upgrade without disrupting service, he said.
AT&T also last week announced plans to more than double its Web hosting capacity this year, with the construction of eight new centers. Last month, AT&T opened two Web hosting centers — one in the New York/New Jersey area and one in Orlando, Fla. Over the past 12 months, the company has expanded Web hosting floor space by 600 percent.