Adtran migrates from a hardware-focussed business to one that is software-centric

By:
Natalie Bannerman
Published on:

Tom Stanton, chairman and CEO of Adtran, talks to Natalie Bannerman in Huntsville, Alabama, about the company’s new strategic direction and plans for virtualisation

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“We’re literally transforming the way in which telecoms operators do business.” That was the bold claim made by Adtran CEO Tom Stanton when asked about the future roadmap of the US vendor.

As the CEO and chairman of one of the most talked about telecoms vendors in the US, I knew that speaking to Stanton was a priority when I attended the Adtran Connect event in Huntsville, Alabama. The who’s who of the US telecommunications industry were in attendance, from CenturyLink to Comcast and Verizon, all at the behest of Adtran’s CEO. While analysts, press and customers all discussed what was next for the industry, like the approaching advent of IoT, 5G and of course SDN and SD-Access, it seemed that Adtran were not only in tune with these changes but fully prepared and waiting for them.  

Following the announcement of several new product offerings, Adtran is laying the foundation for its future roadmap and transformational development. The three offerings include its NG Firewall powered by Untangle, a US-based cybersecurity firm. The new product in securities technology acts as an addition to Adtran’s ProCloud Subscription Services Suite. Through it, Adtran customers are offered solutions for content filtering, ransomware, malware and threat protection to name but a few. 

Next is its NG-PON2 solution which mobilises SD-Access by enabling wavelength agility, which does not impact service and offers ultra-low latency. And lastly, there’s the Gigabit Accelerator Program, which aims to provide service providers with the resources needed to accelerate the delivery of gigabit services, especially in rural areas. The programme includes things like a gigabit fibre-to-the-home starter kit, installation services, training, marketing support and access to gigabit community partners.

Overall its security, virtualisation and services that are next for the company. All three serve as key indicators of Adtran’s strategy and the direction in which it is moving, or as Stanton puts it “those press releases are an example of how we think the world is going to be transforming, at least in the telecoms space”.

In the short-term however, Stanton says that “increasing speeds and lowering price points” are the immediate goals at hand, an objective which he believes can be achieved through the use of the service edge. 

“Service edge is all about reducing the cost.” In the future, says Stanton, “instead of spending lots of money sending people out to do this work, it can be done remotely. You’re no longer sending trucks up to try and get customers up and running. That’s where we think a software-centric world will go, so instead of just trying to increase the bitrate, what we’re doing is literally transforming the way they do business”.

But it’s not all about the transformation of services, undoubtedly one of the biggest changes is in service equipment, as you now have the ability to “collapse equipment”, explains Stanton. “In effect you can take what would have traditionally been very expensive hardware to do BNG (Broadband Network Gateway) functionality, which is the subscriber management effectively, you can now use an application like Mosaic (Adtran’s SD-Access product) to tackle both operational cost savings as well as collapsing the network into more of a singular element,” he adds.

As with many European operators and telcos, customer-centric thinking remains at the very heart of all of Adtran’s business activities “that has always been part of our DNA”, says Stanton, adding: “Our customers tell us all the time, the thing about Adtran is they can always call them on the phone, they know what they’re talking about and they will solve the problem even if it’s not their problem. We don’t hide our staff from the customer. They can call our engineers directly and talk about issues they have or things they would like to see.”

Staying secure

As evidenced by its firewall offering with Untangled, security is high up on Adtran’s priority list. As a company that sells to key players like Germany’s Deutsche Telekom and Israel’s Bezeq, “security within the infrastructure piece of our business is built right in”, comments Stanton. “You can’t sell to carriers without meeting an incredibly rigorous set of demands.” But he is quick to move away from this one-size-fits-all type solution and instead aligns their thinking around security as more of a custom build adding: “The bigger the carrier, and that’s typically were we sell infrastructure to, the more it’s defined. You’re being driven by multitude of inputs that all require something slightly different.”

Despite the US telecoms industry spending a staggering $224 billion on M&A in 2016, Stanton makes it clear that the company has no future plans for consolidation. 

The company only recently completed the acquisition of two of CommScope’s fibre access products for an undisclosed amount during the third quarter of 2016, although he hastens to add: “We’re not opposed to looking at opportunities”.

Adtran has had a very successful year so far, with sales revenues at $184.7 million compared to $162.7 million in the second quarter of 2016, representing a 14% increase in sales for the first quarter of 2017 alone. Net income was up to $12.4 million in comparison to $10.2 million in the second quarter of 2016. Earnings per share were up $0.26 compared to $0.21 for the second quarter of 2016 and non-GAAP (generally accepted accounting principles) earnings per share were $0.30 compared to $0.25 for the second quarter of 2016. 

This is a result that Stanton says “was driven by increasing momentum with our ultra-broadband solutions, where we saw significant year-over-year growth both in the US and Europe”.

Projects

The company has also been busy with many strategic collaborations announced over the last few months. When discussing the progress of its partnership with NBN, he explained: “It’s fantastic. Further to the announcement in spring talking about fibre-to-the-cloud, that has now morphed into them buying Mosaic and their fibre-to-the-curb equipment from us,” said Stanton. 

He also mentioned that the project for Gfast trials with Tunisian incumbent operator, Tunisie Telecom, which saw speeds of 800Mbps using copper lines over a distance of around 100 metres, is still “early days” but progressing well. Most interestingly was the latest developments surrounding the SDN-optimised NG-PON2 trials with Verizon and Adtran’s rival vendor Ericsson. He commented: “They (Verizon) have two vendors, us and Ericsson. Ericsson is sourcing Calix equipment, Calix recently announced in a conference call that they signed a letter of agreement to start their FOA. People may be questioning whether that puts them ahead, but to be honest we got the same agreement the same week: we just wouldn’t announce that. So that basically gets us to the trial stage, and we expect rollouts to kind of start early next year, with accelerated rollouts in the second half.”

Most recently Adtran has released several products following on from the three initial announcements, reaffirming its commitment to being a software first company. One is the establishing of the Mosaic Open Network Alliance, also known as MONA. MONA aims to facilitate the development and industry adoption of SDN and NFV solutions based on open standards. Alliance members will work together through shared knowledge and expertise, enabling new SD-access projects. Also Adtran unveiled its Mosaic Subscriber Solutions & Experience Portfolio, which offers a range of tools that works to transition its access infrastructure, Mosaic, into a more open, programmable and scalable network. This is a product which, according to Jeremy Harris, Adtran’s director of subscriber solutions and experience, “demonstrates our passion for staying hyper-focussed on our customers to solve real world challenges. We believe that software offers the possibility to orchestrate every task, data-driven machines can securely manage the network, and end users deserve a blissful experience. This is the network that consumers want and that service providers desperately need, and we plan to make this a reality.”

Jay Wilson, senior VP of technology and strategy at Adtran, who was also in attendance at the Adtran Connect event, echoed these sentiments in his presentation on the future strategy of the company by reaffirming the company’s portfolio focus which is to “establish Adtran as the leading provider of cloud edge to subscriber edge connectivity using a modern SDN/NFV-based access architecture.” 

In addition the company wants to expand and develop three main service segments within the SD-access portfolio residential, SME and 5G network connectivity, and to develop access technologies such as Gfast and10G PON, which present new entry opportunities. 

As Adtran prepares to steer its 2,000-strong employee base through its next phase of development and makes that transition from a hardware-centric world to a software-centric world, Stanton says that moving with innovation or keeping up with customer demand is by no means his biggest obstacle. His biggest challenge still is managing expectations.