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Response Letter

 September 16, 2005

 CONFIDENTIAL TREATMENT

 REQUESTED BY AVICI SYSTEMS INC.

 AVCI-001

BY ELECTRONIC SUBMISSION

 United States Securities & Exchange Commission

 Division of Corporate
Finance

 Judiciary Plaza

 450 Fifth Street, N.W.

 Washington, D. C. 20549

 Attention: Kathleen Collins

Re:
Avici Systems, Inc.

 Form 10-K for the
Fiscal Year Ended December 31, 2004

 Forms 10-Q for Fiscal Quarters Ended March 31, 2005 and

 June 30, 2005

 File No. 000-30865

 Ladies and Gentlemen:

 This letter is being filed on behalf of Avici Systems, Inc. (“Avici” or the
“Company”) in response to comments contained in the letter dated August 18, 2005 (the “Letter”) from Kathleen Collins of the Staff (the “Staff”) of the Securities and Exchange Commission (the “SEC”) to Mr.
Paul Brauneis, Chief Financial Officer of the Company. The comments and responses are set forth below and are keyed to the sequential numbering of the comments and the headings used in the Letter.

 Form 10-K for the Fiscal Year Ended December 31, 2004

 Liquidity and Capital Resources, page 24

 Comment:

1.
We note a significant increase in inventories and deferred revenues for the current year. Explain the reasons underlying these material changes. In addition, clarify for us that
your liquidity and capital resources discussion includes all known trends, events or uncertainties, which are reasonably likely to impact future liquidity.

 United States Securities & Exchange Commission

 Division of Corporate Finance

 September 16, 2005

  Page

 2

 CONFIDENTIAL TREATMENT

 REQUESTED BY

 AVICI SYSTEMS INC.

 AVCI - 002

 Response:

 The Company reported deferred revenue of $7.3 million at December 31, 2004 compared to $2.7 million at December 31, 2003.
This increase is primarily due to deferral of revenue on certain shipments to customers for which all revenue recognition criteria had not been met. Accordingly, [*] revenue was deferred at December 31, 2004 and [*] inventory related to such
deferral remained in inventory pending the recognition of the related revenue, at which time such amount will be charged to cost of sales.

 The Company reported a $7.0 million inventory balance at December 31, 2004 compared to $1.2 million at December 31, 2003. In addition to the increase in
inventory associated with the deferral of revenue discussed in the preceding paragraph, inventory at December 31, 2004 also increased due to a decision by the Company to manufacture certain products in anticipation of customer orders.

 The Company believes that such fluctuations in deferred revenue or inventory
are not unusual or necessarily infrequent transactions in the application of revenue recognition criteria under SOP 97-2, or in its planning for inventory levels in anticipation of customer requirements, and that such changes or trends are currently
contemplated in the Company’s liquidity discussion included in its Managements’ Discussion and Analysis of Financial Condition and Results of Operations appearing in its annual and quarterly reports on Forms 10-K and 10-Q, respectively.

 The Company acknowledges the requirements under Item 303 of
Regulation S-K, which requires that all known trends, events or uncertainties, that are reasonably likely to impact future liquidity, be disclosed. The Company believes that the following are its known trends, events or uncertainties that are
reasonably likely to impact future liquidity and has disclosed them accordingly within paragraphs 1, 2 and 3 of the Liquidity and Capital Resources section of the 2004 Form 10-K, page 24, as follows:

 “We expect working capital requirements will increase
further in the future if product sales increase, creating larger customer receivable balances and the need to build inventory in advance of shipment. In addition, we expect to selectively invest in infrastructure costs needed to support the scale of
operations.”

 “We expect that
capital expenditure requirements may increase if product sales increase, creating a need for increased levels of test and management information systems equipment.”

 “We believe that our existing cash, cash equivalents and marketable securities will meet the normal
operating and capital expenditure needs for at least

 United States Securities & Exchange Commission

 Division of Corporate Finance

 September 16, 2005

  Page

 3

 CONFIDENTIAL TREATMENT

 REQUESTED BY

 AVICI SYSTEMS INC.

 AVCI - 003

the next 12 months. However, we could be required, or could elect, to raise additional funds during that period and we may need to raise additional capital
in the future. We may not be able to obtain additional capital on terms favorable to us or at all. The issuance of additional equity or equity-related securities would be dilutive to our stockholders. If we cannot raise funds on acceptable terms, or
at all, we may not be able to develop or enhance our products or respond appropriately to competitive pressures, which would seriously limit our ability to increase our revenue and grow our business.”

 Additionally, in the Overview section of the Company’s
“Management’s Discussion and Analysis of Financial Condition and Results of Operations” appearing on page 16 of its 2004 Form 10-K, the Company states:

 “We expect that sales and marketing, research and development, and general and administrative expenses
will increase as our business expands. As a result, we will need to generate significant revenues to achieve and maintain profitability.”

 In future filings, the Company will consider providing such disclosure in the “Liquidity and Capital Resources” section when applicable as
appropriate.

 Note 1. Operations and Significant Accounting Policies, page
43

 Note (a). Revenue Recognition, page 43

 Comment:

2.
Please tell us whether you are using SOP 97-2 or SAB 104 in recognizing revenue on your product sales and explain your revenue recognition policy for each major type of
arrangement. Also, tell us how you considered paragraph 2 of SOP 97-2 in determining that software included in your products sales is incidental to the product as a whole, as applicable.

 Response:

 The Company designs, develops and sells high-speed data networking equipment for the carrier market. The Company derives its
revenues primarily from product sales including hardware and software and on-going support and maintenance of hardware and software. Since software embedded in the product is considered to be significant and not incidental to the product as a whole,
the Company recognizes revenue for these elements using the provisions of SOP 97-2 paragraph 8 and related guidance, including EITF 03-05. In future filings, the Company will state that it follows the guidance provided under SOP 97-2 for revenue
recognition.

 United States Securities & Exchange Commission

 Division of Corporate Finance

 September 16, 2005

  Page

 4

 CONFIDENTIAL TREATMENT

 REQUESTED BY

 AVICI SYSTEMS INC.

 AVCI - 004

 The Company considered paragraph 2 of SOP 97-2 and as stated in the preceding paragraph, concluded
that software is significant and not incidental to the product as a whole.

 Comment:

3.
We note your disclosure that revenue from arrangements involving multiple elements (networking equipment, installation, PCS, and/or other services) is allocated to each element
based on the relative fair value (unless VSOE does not exist for one of the delivered elements in which case the residual method is used). Tell us how you establish VSOE for each of the elements included in a multiple element arrangements.

 Response:

 The Company derives the significant majority of its revenues from product
sales including hardware and software and on-going support and maintenance of such hardware and software. The Company establishes VSOE for support and maintenance, which are typically the undelivered elements, and records revenue on the product
shipments using the residual method. Consistent with paragraph 10 of SOP 97-2, the Company establishes VSOE based on the price consistently charged when the undelivered element is sold separately, or as determined by reference to the list price
appearing in the Company’s established price list, if that price is not likely to change.

 Comment:

4.
We note your disclosure that “other services” are recognized “as the work is performed.” Clarify for us the nature of these “other services” and if
material, the accounting literature that supports your revenue recognition policy for these sales.

 Response:

 Other services relate primarily to training. Training is provided in a classroom setting to customers if it is purchased separately or if it is part of a
sale arrangement as an element. The Company accounts for training under the provision of SOP 97-2 paragraph 65. Consistent with paragraph 10 of SOP 97-2, the Company establishes VSOE based on the price consistently charged when training is sold
separately, or as determined by reference to the list price for such services appearing in the Company’s established price list, if that price is not likely to change. Revenue derived from training services was not material in 2004 [*].

 United States Securities & Exchange Commission

 Division of Corporate Finance

 September 16, 2005

  Page

 5

 CONFIDENTIAL TREATMENT

 REQUESTED BY

 AVICI SYSTEMS INC.

 AVCI - 005

 Comment:

5.
We note from disclosures within the filing that your customers include government agencies. Considering this, tell us how you considered paragraphs 32 – 33 of SOP 97-2 in
accounting for fiscal funding clauses, if any, included in your software arrangements. Also tell us how fiscal funding clauses or other government contract contingencies impact your revenue recognition for other services and products you
provide.

 Response:

 In addition to telecommunications carriers and Internet service providers,
the Company’s products are marketed to certain agencies of the US government. Although the Company has sold its products to US government agencies it has not had sales to US government agencies during the three years ended December 31, 2004.
Arrangements with US government agencies in the past did not contain fiscal funding clauses and hence were not affected by paragraphs 32 and 33 of SOP 97-2.

 Comment:

6.
Tell us how you recognize revenue on sales to distributors. Tell us if you offer these distributors any rights-of-return or other incentives (i.e. discounts as referenced on page
31, price concessions, etc), and if so, tell us how you account for them. For each of the distributor incentives, tell us how you determined that your fee is fixed and determinable upon the product’s shipment to the distributor. Tell us how you
considered paragraph 6 of SFAS 48 EITF 01-9 in accounting for return rights and other considerations. In addition, describe your ability to reasonable estimate the effects of the various programs offered to resellers. See SAB Topic 13A(4)(b) and
paragraph 8 of SFAS 48.

 Response:

 [Per our discussion and concurrence with Ms.
Megan Akst of the Commission Staff, we believe that the Commission’s question above relates to disclosures found on page 8 versus page 31 of the Company’s Form 10-K. The following response is provided with regard to sales to distributors
and distributor rights-of-return or other incentives.]

 The Company generally recognizes revenue on sales to distributors upon shipment if all other revenue recognition criteria are met. Sales to distributors may be for the distributor’s internal use or for resale to a known end customer.

 United States Securities & Exchange Commission

 Division of Corporate Finance

 September 16, 2005

  Page

 6

 CONFIDENTIAL TREATMENT

 REQUESTED BY

 AVICI SYSTEMS INC.

 AVCI - 006

 The Company, through its distributors, is aware of the purpose of each sale. In certain
circumstances, depending on end customer requirements, certain product acceptance criteria may be applicable. In such instances, the Company recognizes revenue upon satisfaction of such criteria and notification of acceptance by the distributor.

 The Company has not offered rights-of-return, price
concessions or rebates to distributors. Discounts to distributors may vary by the respective distributor contract terms. Such discounts are negotiated and agreed to with the distributor depending on end customer requirements and in consideration of
the competitive environment. However, the sales price is fixed prior to shipment and is not subject to refund or other adjustment. Moreover, the Company has not offered extended payment terms to its distributors or direct customers.

 The Company recognizes revenue on shipments to distributors consistent with
its accounting for sales to direct customers. Under the revenue recognition section of its Critical Accounting Policies the Company has disclosed that its revenue recognition policy encompasses sales to resellers. In the future filings the Company
will include a similar disclosure in its footnotes within the revenue recognition section.

 As disclosed in footnote 3 of its 2004 financial statements and in its MD&A, the Company issued warrants to a distributor in connection with its distribution agreement. The Company accounts for such consideration
under the provisions of EITF 01-9 as a reduction of revenue. The Company considered paragraphs 6 and 8 of SFAS 48 and SAB Topic 13A(4)(b). As described in the first and second paragraph of this response the Company has not offered rights-of-return,
price concessions or rebates to distributors, and thus an estimate for returns under the provisions of paragraphs 6 and 8 of SFAS 48 and SAB Topic 13A(4)(b) are not applicable. However, the Company does offer warranty on its products to customers.
The warranties require the Company to repair or replace defective products returned to the Company during the warranty period at no cost to the customer. The Company records an estimate for warranty related costs, in accordance with FASB Statement
No. 5, Accounting for Contingencies, at the time of sale based on the actual historical return rates and repair costs as described in Footnote 6 of its Form 10K. Such warranty costs have historically been within the Company’s expectations and
the provisions established.

 United States Securities & Exchange Commission

 Division of Corporate Finance

 September 16, 2005

  Page

 7

 CONFIDENTIAL TREATMENT

 REQUESTED BY

 AVICI SYSTEMS INC.

 AVCI - 007

 Form 8-K dated July 21, 2005

 Comment:

7.
We note your use of a non-GAAP measure in your Form 8-K dated July 21, 2005. Tell us how you considered the guidance in Question 8; Frequently Asked Questions Regarding the Use
of Non-GAAP Measures. In this regard, it does not appear that you have provided a transparent discussion regarding the material limitations associated with the use of the non-GAAP financial measures and the manner in which management compensates for
these limitations. Also, tell us how you addressed the substantive reasons why management believes the non-GAAP financial measures provide useful information to investors.

 Response:

 The Company acknowledges its use of non-GAAP measures in its press release dated July 21, 2005 as furnished to the
Commission as Exhibit 99.1 to its Form 8-K also dated July 21, 2005.

 The Company has considered the guidance in Question 8, Frequently Asked Questions Regarding the Use of Non-GAAP Measures, namely that non-GAAP measures should never be used with an intent to smooth earnings, that the Company has considered
the usefulness of such non-GAAP measures to investors and substantive reasons in support thereof based on all facts and circumstances including the manner in which the non-GAAP measure is used and the economic substance supporting the decision to
use the non-GAAP measures.

 The non-GAAP measures referred to
in the press release dated July 21, 2005 as furnished to the Commission in its Form 8-K, the accompanying fin