Centillium’s Optical Business Unit will deliver infrastructure solutions that offer higher integration, broader functionality, smaller footprints and lower power consumption for both central office (CO) and customer premises equipment (CPE). These products include optical transceivers to control the bi-directional traffic on a fiber cable; FTTP chipsets to manage the high-speed protocols between the CO and the CPE terminals; and broadband service processors to facilitate in-premises networking and delivery of voice, video and data to the end-users.

“The launch of our new Optical Business Unit is a significant step in Centillium’s overall diversification strategy and complements our leadership position in DSL and VoIP to include next-generation optical access solutions,” said Faraj Aalaei, CEO and Co-founder of Centillium. “Armando and his team are well positioned to participate in the emerging optical network buildouts.”

Pereira added, “The Optical Business Unit has been successful in attracting an outstanding team of optical experts and has been working to develop differentiated products that are unique in the market. Our products will not only support equipment designers to meet the desired feature and performance specifications but also enable these optical access companies to finally push the market to critical mass with the necessary pricing per line of service. We plan to roll out a family of both CO and CPE solutions throughout 2004 to address FTTP opportunities worldwide.”

FTTP Market Opportunity
Widely anticipated to be the early adopter of FTTP solutions, the Japanese market has seen a rapid increase in NTT’s capital expenditures (CAPEX) budget for optical access. As recently as this month in a public filing, Japan’s national incumbent operator NTT Group announced plans to spend ¥280 billion (U.S. $2.56 billion) on expanding its fiber access networks during its 2004 fiscal year. According to the company’s published plans, this is expected to account for more than one-third of the carrier’s total planned CAPEX outlay for the year. The investment indicates a dramatic step up in FTTP activity, expanding NTT’s fiber footprint to upwards of 80 percent of its total number of subscribers and adding an estimated one million new broadband subscribers.

In North America, the FTTP opportunity is also gaining momentum – empowered by the Federal Communications Commission’s (FCC) Triennial Review of the Network Unbundling Rules. The decisions within the Triennial Review included significant relief from the unbundling rules for investment in first-mile broadband access facilities. As a direct consequence of these developments, several U.S.-based Regional Bell operating companies (RBOCs) cooperated in a joint procurement contract in 2003. At a press conference in December 2003, Verizon’s CTO Mark Wegleitner said the carrier would spend between $600 million and $800 million (at least 10 percent of its roughly $6 billion wireline capital expenditures budget) on FTTP during 2004.

Organizations such as the Telecommunications Industry Association (TIA) and the Fiber-to-the-Home Council (FTTH Council) have been laying the regulatory groundwork for the deployment of these new high-speed optical access networks. TIA President Matthew J. Flanigan adds, “In the United States, we believe the FCC’s August 2003 ruling concerning the unbundling obligations of incumbent local exchange carriers has lifted the clouds of uncertainty, clearing the way for new investments and creating incentives for carriers to invest in FTTP broadband access. When you combine this ruling with FCC Chairman Michael Powell’s recent statements on the importance of broadband and the momentum created by the joint procurement contract issued by carriers for passive optical networks (PONs), the future of FTTP in the U.S. looks bright.”

Note to Editors
For additional information on NTT Group’s publicly announced 2004 financial year CAPEX plans, see NTT’s press release dated March 1, 2004 titled, “Submission for Approval of Business Operation Plan for Fiscal Year Ending March 31, 2005.”