The shift of content to the cloud and the proliferation of broadband-ready devices continues to reinforce the strategic importance of the Access Network. We believe that Communication Service Providers (CSPs) globally are well-positioned to capitalize on this opportunity, as is Calix - the largest telecommunications vendor in the world focused solely on this space. Today, we are the leading broadband access vendor in North America, with a track record of improving gross margins* that reflects an important ongoing transformation in the access market and the recognition by our customers of the increasing strategic importance that Calix system solutions provide in enabling CSPs to meet the needs of their evolving business models.
President Barack Obama visited Calix gigabit customer Cedar Falls Utilities
On January 14, 2015 President Obama visited one of Calix's 1,200-plus customers, Cedar Falls Utilities (CFU), and announced a variety of new broadband initiatives that his administration is championing. As a part of his visit, the President received a full gigabit demo featuring one of the more than 65 announced Calix-enabled gigabit deployments that are serving well over a hundred communities today. A list of Calix gigabit deployments is available at http://www.calix.com/gigabit/.
Commenting about the CFU network powered by Calix, the President tweeted "Your network is as fast as some of the best networks in the world.". A summary and a video of the President's visit as well as an agenda appeared in The Des Moines Register. The White House also issued a press release outlining his plans to promote competition and local choice in next-generation connectivity.
President Obama speaking in Cedar Falls Iowa said "…we've still got a lot of work to do. Right now, 98 percent of Americans have access to the most basic levels of broadband. That's a good thing. But that number doesn't look quite as good when you look at the speeds we're going to need for all the apps and the videos, and all the data and new software that is constantly coming onto market. We've got to keep pace. We've got to be up to speed.
Right now, about 45 million Americans cannot purchase next-generation broadband. And that next generation of broadband creates connections that are six or seven times faster than today's basic speeds. And by the way, only about half of rural Americans can log on at that super-fast rate…"
Through continued disciplined execution, we are excited about the opportunities ahead of us as we move beyond the 15% of the global communications market that we have historically addressed, which with the exception of our customer CenturyLink, a Tier 1 service provider, has largely been focused on Tier 2 and 3 telcos in the U.S., Canada and the Caribbean. Specifically, these growth opportunities over the next few years include (1) customer expansion opportunities, which include new international markets through an expanding network of VARS, including, Ericsson, expanding our sales to cable MSOs beyond our existing business service sales to include fiber solutions for residential services, further gains at the former Qwest territory acquired by CenturyLink in 2011, and additional Tier 1 service providers opportunities globally. Additional growth opportunities are being driven by (2) new products which expose Calix to new adjacent markets, including the fast growing business Ethernet services and mobile backhaul markets. In addition to expanding our total addressable market (or TAM), the industry is starting to see increasing adoption of fiber access solutions by telcos, disruptive non-traditional providers and cable MSOs. Articles in the trade press include:
As cable MSOs become aggressive offering 100 megabits per second to the home, we believe that will start to force other CSPs in competitive markets to upgrade their networks and move more towards faster and more robust fiber-based solutions, including the gigabit deployments noted above. In fact, Calix already has a growing list of customers with announced gigabit per second broadband deployments powered by Calix. Furthermore, some cable MSOs which have used fiber for business applications have recently indicated interest in using fiber for their residential customers too. A recent study commissioned by the by the Fiber to the Home Council Americas also found that small and medium-sized telephone companies that have upgraded their networks to all-fiber are reporting operational cost savings averaging 20 percent annually.
On July 8, 2014, Calix announced an exciting new solution called “Open Link Cable” which provides cable companies a fast and efficient path to bring gigabit speeds to their subscribers while leveraging their existing DOCSIS provisioning system. Historically Calix has only sold into the business side of cable to companies such as Cox so with this new solution Calix is now positioned to pursue opportunities that can double Calix’s North American TAM over time as Calix can now support the residential portion of cable companies. The Open Link Cable solution is based on concepts introduced by the CableLabs DOCSIS Provisioning of EPON (DPoE) specification and is designed to align with future DOCSIS Provisioning of GPON (DPoG) standards that are currently in development. In fact, the use of access network solutions from Calix has allowed Grande Communications to become Austin, Texas’ first gigabit services provider ahead of much larger competitors. And now, with Open Link Cable, Grande Communications has the ability to provision these advanced fiber services with its “back office systems untouched”, according to Matt Murphy, Grande Communications president. Moreover, while Open Link Cable integrates with most cable back office systems, Calix professional services can also perform custom integration for those cable operators with unique back office requirements. Phil Fine, Director of Cable Market Development at Calix provided a more detailed overview of how the Open Link Cable solution works and the benefits it offers cable operations in a new Calix video. To view that video, please click here.
How fast is 1 Gbps?
- Download 25 songs in one second
- Download your favorite TV show in less than 3 seconds
- Download an HD online movie in less than 36 seconds
If you ever wondered what else one might do with 1 Gbps or faster speeds, videos from Corning and CenturyLink are worth viewing
Gigabit Availability = $1.4 Billion in GDP according to a new study that quantifies contribution of Fiber-fed Broadband to GDP in U.S. Communities. A new, first-of-its-kind study released on September 18, 2014 by the Fiber to the Home (FTTH) Council Americas finds that communities with widely available gigabit access have per capita GDP that is 1.1 percent higher than communities with little to no availability of gigabit services. The study examined 55 communities in 9 states, finding a positive impact on economic activity in the 14 communities where gigabit services are widely available. For more information, please see the Fiber to the Home Council Americas' press release.
For additional thoughts on this topic, you might want to read a recent Pew Research survey which discusses gigabit connectivity today and includes some projected trends from 1,464 expert respondents who weighed in on the following question: Will there be new, distinctive, and uniquely compelling technology applications that capitalize upon significant increases in bandwidth in the US between now and 2025?
Looking ahead, Calix's success will be driven by further adoption the types of system solutions and software that Calix offers to meet the evolving needs of our expanding base of domestic and international customers for more robust capabilities and faster networks that are more operational- and capital-efficient than typically provided by today's access networks. Calix achieved record sales in 2014 (a CAGR of 11.5 percent since 2009) at $401.2 million, and we generated positive cash flow from operations for the sixth year in a row, $38.1 million in 2014. We believe that we are well positioned to continue to make further progress. For more information about our results, please see our Quarter Results page.
This page includes forward-looking statements regarding our growth drivers and opportunities as well as our development of new products that will continue to help our customers transform their networks, the future business and financial performance of the Company. Click here for important additional information about the risks and uncertainties associated with these statements . Please refer to our SEC filings, especially in the "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" sections of Calix's Annual Report on Form 10-K for fiscal year 2014 and Form 10Q for fiscal year 2015's first quarter on file with the SEC.