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Alcatel-Lucent to Construct & Sustain SBB's Datacom NG

Alcatel-LucentALU recently announced that it has been chosen by Swiss Federal Railways SBB (also known as Schweizerische Bundesbahnen) to deploy IP and optical networking technologies for providing world-class service for SBB's passengers. Expected to be fully operational from 2020, the new network will be developed by leveraging Alcatel-Lucent's Synchronous Digital Hierarchy ("SDH") network with IP and WDM technologies.

In particular, Alcatel-Lucent will offer its services to SBB's highly ambitious project 'Datacom NG', which involves building a next-generation network to cater to the continuous increase in passenger and freight traffic. Once completed, the project will improve punctuality and reliability of service and customer satisfaction, introduce new services, streamline network operations and manage traffic demands more efficiently.

Inside the Headlines

Starting from 2016, Alcatel-Lucent will offer its technologies over a four-year period. Post the full-fledged launch of the network, the company will provide maintenance services for a minimum of eight years and beyond, if required.

Switzerland's biggest transportation operator SBB has lately been experiencing unprecedented growth. This compels it to shift its mission-critical applications and passenger & business operations to a networking infrastructure run on advanced communication technologies like Optical Dense wavelength division multiplexing and Internet protocol/ Multiprotocol Label Switching ("IP/MPLS"). Based on these requirements, SBB is working to develop a network that can support its entire information and communication systems including train control, customer information, sales, Internet services for passengers and IT systems for employees.

Alcatel-Lucent is supporting SBB's transformation from its existing "Syncronous Digital Hierarchy" infrastructure to an integrated IP/MPLS and optical network and IP/Optical infrastructure at over 1,300 sites. The company plans to use its proprietary offerings, including 7750 Service Routers, 7705 Service Aggregation Routers, 5620 Service Aware Manager and 1830 Photonic Service Switch, to accomplish SBB's scheme.

Bottom Line

Alcatel-Lucent's IP/MPLS is gaining steady market traction as multiple organizations are increasingly adopting it for better flexibility and operational excellence. For instance, in early December, the technology was deployed by Poland's maritime authorities to enhance operational efficacy as well as safety at ports. Overall, the company enjoys a relatively strong position in the growing optics and IP Routing domain.

Encouragingly, according to business consulting firm Grand View Research, Inc., global MPLS IP virtual private networks ("VPN") services market will likely reach $26.62 billion by 2020, thereby generating lucrative opportunities for Alcatel-Lucent. The report also states that despite maturing considerably over the last 5 years, the market is still going strong. We believe that with increasing number of banks, government offices and other public organizations adopting IP/MPLS technology, Alcatel-Lucent's future looks promising.

Alcatel Lucent - which is nearing completion of the merger deal with Nokia Corporation NOK - currently carries a Zacks Rank #3 (Hold). Better-ranked stocks in the same industry include AudioCodes Ltd. AUDC and Communications Systems Inc. JCS , both sporting a Zacks Rank #1 (Strong Buy).

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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