AT&T said Monday that it has a new optical network that will restore Internet service faster in the event of an outage and will shorten connection times for business customers.
The service connects more than 40 U.S. cities and is already carrying traffic, the company said, adding that the network has enhanced security features. Companies have made disaster recovery and security a priority since the Sept. 11 terrorist attacks.
AT&T said its "intelligent" optical network can bring back service quicker after a failure because its switches can automatically reroute traffic. The "intelligence" of the system comes from software that gives each switch a complete map of available routes and algorithms to help the system decide which path to take. AT&T is using Ciena's CoreDirector switches for the new network, along with Cisco Systems' ONS 15454 Sonet Multiservice Platform, a combination of hardware and software.
Though the companies refused to put a specific dollar value on the deal, analysts estimated it was in the multibillion-dollar range. UBS Warburg analyst Nikos Theo said the deal was likely worth $50 million to $100 million this year for each company. Credit Suisse First Boston analyst James Parmelee said in a research note that the deal could be worth as much as $8 to $10 million in monthly revenues for Ciena.
The news helped spur shares of Cisco, up 69 cents, or 4 percent, to $17.45, and shares of Ciena, up 82 cents, or 9 percent, to $10.28, despite that fact that the deals have been anticipated for some time.
"We were expecting Cisco and Ciena to announce these contracts for awhile," Theo said. "But the act of recognition by AT&T is obviously good news for both of them."
AT&T also said that the optical network, along with new support and maintenance systems, will enable the company to resolve customer problems faster and connect business customers to the network at a quicker rate.
The company plans to expand the network on its fiber-optic network, which already extends 63,500 miles.