Industry Update

North America

C-COR.net (State College, PA) re ceived $33 million worth of equipment orders from Adelphia Communications (Coudersport, PA) in support of new and existing Adelphia projects in various locations. During 2000, C-COR.net expects to supply Adelphia with both its 750-MHz and 862-MHz product lines, including its latest optical Navicor GPS node, the 900 Series Bridger, and the Navicor Line Extender. C-COR.net also completed its asset purchase agreement with Advanced Communications Services Inc., a California-based provider of advanced broadband network-engineering services.

Molecular OptoElectronics Corp. (Watervliet, NY), a fiber-optic component manufacturer, received an investment from Intel Capital (Santa Clara, CA). No further financial details were disclosed. MOEC's optical power-management products, including amplifiers and attenuators, allow software control of signal levels in optical-communications networks.

Scientists at Bell Labs (Murray Hill, NJ), the research and development arm of Lucent Technologies, also in Murray Hill, demonstrated the first long-distance triple-terabit data transmission. A record 3.28-Tbit/sec transmission was made over 300 km of an experimental Lucent TrueWave optical fiber. Using three 100-km fiber spans, researchers transmitted 40 Gbits/sec over each of 40 wavelengths in the conventional C-band frequency range and 40 Gbits/sec over each of 42 channels in the long-wavelength L-band range.

Broadwing Communications (Cincinnati) will extend the reach of its growing fiber-optic network by providing a direct connection between Denver and Salt Lake City, bringing its total network mileage to 16,888 route-mi. Touch America (Butte, MO), a subsidiary of The Montana Power Co., also in Butte, has already purchased access on this new link. A network exchange with EPIK Communications, a division of the Florida East Coast Railroad (Orlando, FL), will also provide Broadwing with a key fiber segment along the eastern coast of Florida, connecting Daytona Beach, Tampa, and Miami, and completing an additional fiber ring. Broadwing, in return, will provide EPIK with fiber access from Atlanta to Orlando and Dallas to Houston, as well as access in the Jacksonville area. Broadwing also an nounced a partnership with Compaq Computer Corp. (Houston) to deliver e-business services to the small-to-medium business market.

ADC Telecommunications Inc. (Min neapolis) signed an agreement with RedBack Networks Inc. (Sunnyvale, CA) to team to provide integrated Internet/data, video, and voice solutions to the broadband multimedia market. Under the agreement, ADC will develop video interface modules for RedBack's multiservice platforms and gains the right to sell RedBack products to the cable-TV market. RedBack also has the right to sell ADC's video modules into non-cable markets.

Tyco International Ltd. (Pembroke, Bermuda) established Tyco Ventures (Menlo Park, CA), a venture-capital operation to identify and invest in emerging companies and technologies that will enhance Tyco's core business activities and stimulate growth opportunities. Initially, Tyco Ventures will focus on communications, healthcare, and emerging technologies.

Qwest Communications International Inc. (Denver) announced the sale of its long-distance and related business, including certain physical assets in the 14-state US West Communications Inc. (Englewood, CO) territory, to Touch America (Butte, MO) for approximately $200 million. The sale will be completed when Qwest closes its merger with US West later this year. Under the agreement, Qwest will sell services for about 250,000 customers that include in-region businesses and related wholesale and private-line services.

Lucent Technologies (Murray Hill, NJ) announced its WaveStar OLS 400G 80-channel optical-networking systems will be used on the New York-to-Washington leg of Winstar Communications Inc.'s (New York City) national broadband network. Winstar is the first North American company to announce a live network across Lucent's flagship system. Lucent also exercised its option to acquire the remaining 44% stake in Ignitus Communications LLC (Acton, MA), a startup company focused on high-speed optical communications at the network edge. Terms of the transaction were not disclosed.

360networks (formerly Worldwide Fiber Inc.-Vancouver, BC) and Shaw Communications Inc. (Calgary, AB) entered into a broad-ranging agreement whereby 360networks will provide more than $170 million worth of high-speed bandwidth network services and dark fiber to Shaw. In addition, Shaw will make an equity investment of $100 million in 360networks. The agreement covers a three-year period.

Nortel Networks (Brampton, Ontario) is acquiring CoreTek Inc. (Wilmington, MA), a developer of strategic optical components, for up to $1.43 billion in Nortel common shares on a fully diluted basis, a portion of which is contingent upon CoreTek achieving certain milestones. CoreTek's tunable optical components, including its tunable lasers, vertical-cavity surface-emitting lasers (VCSELs), and micro-electromechanical systems products will be used by Nortel to strengthen its position in the all-optical Internet space. In addition, Nortel's new end-to-end optical Ethernet solution, based on its interWan packet transport and Accelar switch routers, was selected by BCE Nexxia (Toronto) for use on its North American IP broadband network.

Vitesse Semiconductor Corp. (Camarillo, CA) acquired all of the equity interests of Orologic Inc. (Morrisville, NC) for $450 million in common stock. The transaction was accounted for as a purchase. Orologic is a fabless semiconductor company that develops system-on-a-chip solutions that enable data-packet processing at OC-48 (2.4-Gbit/sec) and OC-192 (10-Gbit/sec) data rates. In an other acquisition deal, Advanced Fibre Communications Inc. (Petaluma, CA) ac quired GVN Tech nologies Inc. (Largo, FL), an integrated access-device manufacturer. Under terms of the agreement, approximately 1.1 million shares and options to purchase AFC common stock were exchanged for all outstanding shares and options of GVN, accounted as a pooling of interests.

GT Group Telecom Inc. (Toronto) acquired the competitive access provider business of Moffat Communications Ltd. (Winnipeg, MB) in a cash and stock transaction valued at approximately $118 million. The transaction consisted of Group Telecom paying $68 million cash for Moffat's fiber assets and providing Moffat with 1.667 million shares in Group Telecom stock. Group Telecom gained approximately 600 route-km of fiber network in Edmonton and Winnipeg, increasing its overall national network to more than 8,430 route-km.

Corvia Networks Inc. (Sunnyvale, CA) changed its company name to BrightLink Networks Inc. The identity shift is the second for BrightLink, a company that began in 1997 as Uniant. The company also took the wraps off of its intelligent optical-network switching system for major core-switching centers. The company's switch is based on a hypertorus mesh design, rather than a standard crossbar architecture, providing improved scaling capabilities. A new semiconductor switching fabric design lies at the heart of the product.

Williams Communications Inc., (Tulsa, OK) will deploy additional dense fiber-count cables in spare conduits from Houston to Atlanta to Washington, DC, to accommodate a growing demand for capacity on those routes. Williams will more than double its network fiber count through deployment of new high-density fiber cables on its longest network segment, an 1,800-mi route that runs alongside one of its interstate natural-gas pipelines. The project, planned for completion within a year, includes additional buildings and power upgrades to support the new cables.

Tellabs (Lisle, IL) will supply its CABLESPAN 2300 universal telephony distribution system to AT&T Broadband (New York City) under a new contract for the build-out of AT&T's hybrid fiber/coaxial (HFC) broadband network. The Tellabs products also enable AT&T to use existing HFC networks to provide residential consumers and business customers integrated telephony, data, and video services.

Chromatis Networks Inc. (Herndon, VA) announced a five-year purchase agreement with Cogent Communications (Washington, DC) for nationwide deployment of its Metropolis next-generation metropolitan-transport products. Cogent will purchase $25 million worth of Metropolis systems, based on Chromatis's selective wavelength-division multiplexing technology, to integrate switching and optical networking. The deployment will involve hundreds of multitenant buildings in major metropolitan areas throughout the United States.

DQE Communications (Pittsburgh) leased fiber on its metropolitan fiber-optic backbone to Penn Telecom (Cranberry Township, PA) in a deal worth approximately $8 million. The lease, which began last January, is for 15 years. In addition to phone services, Penn will use the optical network to provide high-speed bandwidth services, particularly broadband and Internet services.

Corning Inc. (Corning, NY) and Alcoa Fujikura Ltd. (AFL-Brentwood, TN) were selected as primary optical-fiber and cable suppliers for NEESCom's (Westborough, MA) expansion of its New England network. Composed of all-dielectric, self-supporting (ADSS) fiber-optic cable supplied by AFL, the network will also contain Corning's SMF-28 and LEAF optical fibers. NEESCom recently completed a 325-mi fiber-optic network expansion in eastern Massachusetts. Corning also announced it would invest $50 million in a second optical-amplifier manufacturing facility to be located in Benton Township, PA. Production is slated to begin mid-July.

Tyco Electronics Corp. (Harrisburg, PA) began supplying initial customer samples of its AMP Gigabit Ethernet and Fibre Channel pluggable SFP MT-RJ transceiver systems. The SFP transceiver, sometimes referred to as a "minigigabit interface converter (GBIC)," offers the same functionality as a GBIC, but with a significantly reduced footprint and with a small-form-factor connector.

Extant Inc. (Aurora, CO) announced its claim on the first live implementation of optical switching in a carrier network environment. The company placed the first three of approximately 50 Aurora series optical switches, manufactured by Tellium Inc. (Oceanport, NJ), within its data-centric, long-haul network. Extant and Tellium are working together on a plan to build the world's first carrier network, scheduled for completion in mid-2001, that uses optical-layer switching as the key enabler to faster, more reliable services.

adesta Communications (formerly MFS Network Technologies-Omaha, NE) finalized an agreement with the Chicago Transit Authority (CTA) for installation of fiber-optic infrastructure from the Chicago suburbs into downtown Chicago via CTA's tunnels and tracks. Adesta recently completed construction of a 295-mi duct and dark-fiber network within the rights-of-way of the Illinois State Toll Highway Authority to complement the CTA route. The first segment, connecting O'Hare International Airport with downtown Chicago, is scheduled for operation later this summer.

BTI Telecommunications Services (Raleigh, NC) will expand its fiber-optic network with installations in eastern North Carolina and the coastal Carolinas and Georgia. The 175-mi eastern North Carolina segment will complete BTI's ring between Rocky Mount and Raleigh. The 500-mi coastal Carolina installation complements the existing route and increases BTI's fiber network span to more than 4,400 mi.

Two competitive local-exchange carriers (CLECs) will trial the Optical Service Network product line from Alidian Networks Inc. (Mountain View, CA). Alidian's OSN family of optical-networking platforms scale from 2.5 Gbits/sec at the edge of the metropolitan area network (MAN) to 80 Gbits/sec at the MAN's major hubbing and aggregation points. The products are based on Alidian's newly developed WavePack and WaveSwitch technologies for transporting heterogeneous services across the metropolitan environment.

Two private schools and one public school in the New York metropolitan area selected Fiber Optek Interconnect Corp. (Wappingers Falls, NY) to install advanced Internet-protocol (IP)-based communications networks. Millbrook School in Millbrook, NY; Rye County Day School in Rye, NY; and Mamaroneck Union Free School District in Mamaroneck, NY; will each get a high-speed fiber-optic cable network with dedicated Internet access, a private branch exchange (PBX) phone system, and other elements. Cost of the projects totals $350,000.

Research Corporation Technologies (Tucson, AZ) will provide additional capital funding to NP Photonic Technologies, also based in Tucson, for the construction of modern commercial-production operations. NP is embarking on a development program to manufacture advanced fiber-optic components for metropolitan optical networks and dense wavelength-division multi plex ing (DWDM) systems. NP anticipates launching its first product in 2001.

Europe

Utfors AB (Sweden) and Nortel Networks (Brampton, ON) are pioneering in Europe a new networking model that promises to provide low-cost voice and high-speed IP services to businesses and consumers. The high-performance network will leverage Nortel's 10-Gigabit Ethernet technology in building Utfors's end-to-end Scandinavian Ethernet network, a 6,500-km broadband fiber-optic data and telephony network, scheduled for completion this year.

iaxis (London) plans to expand its European broadband network to the Far East and throughout the United States. The company linked its existing pan-European multiterabit broadband capacity with networks across the Medi terranean Sea, Red Sea, Indian Ocean, South China Sea, and domestic North America through a series of capacity-sharing transactions. The new connectivity stretches across more than 56,000 miles, 205 cities, and 25 countries. iaxis also received an investment of $66 million from a consortium of investors led by Bain Capital Inc. (Boston).

KPNQwest (Amsterdam) completed a German fiber-optic ring connecting 16 German cities in a 1,678-mi route. Representing an investment of $219 million, the ring connects to KPNQwest's EuroRing network, linking 46 European business centers and the Qwest North American network. The ring, when fully lit, will have a total capacity of more than 30 Tbits/sec. KPNQwest is the European joint venture of Qwest Communications International Inc. (Denver) and KPN (Amsterdam).

Zaklady Elektroniczne ELWRO S.A. (Wroclaw, Poland) was purchased by Telect Inc. (Liberty Lake, WA) from Siemens AG (Munich). Terms of the transaction were not disclosed. ELWRO has been a main subcontractor for Telect for nearly two years, providing full assemblies of the company's digital-crossconnect products for the European market. Telect plans to use the ELWRO plant to further expand its European operations.

The Hessischer Rundfunk (Frankfurt) television station will standardize on Telecast Fiber Systems' (Worcester, MA) Cobra fiber-optic extension for triaxial cameras. Unlike ordinary copper cables, fiber-optic technology enables the station to control the studios from 4 km away. Telecast's Cobra is the only fiber-optic extension cable available for triaxial cameras.

Tele Danmark (Denmark) will build a 2,100-km fiber-optic network in Sweden and Norway. The new network will connect to the company's Denmark network, as well as to its new 2,700-km German network, to form Tele Danmark's international infrastructure, TeamNet. Tele Danmark also inked an agreement with Swedish data and telephony operator Utfors AB to buy dark fiber in Utfors's Swedish fiber ring between Oslo, Gothenburg, Malmö, and Stockholm.

Storm Telecommunications Ltd. (London) chose Sycamore Networks Inc. (Chelmsford, MA) to supply intelligent optical-networking equipment across Storm's network in the United Kingdom, Belgium, Holland, France, Germany, Italy, Austria, Switzerland, Sweden, Norway, Denmark, Finland, and the United States. Storm plans to use Sycamore's transport and switching technology as an enabler of StormWave, Storm's own product and services portfolio.

A startup optical-networking company, ilotron (Colchester, UK), received first-round financing of $10 million from European venture-capital company 3I (London). The new company plans to launch an all-optical core router scalable to petabit capacity. ilotron was formed last January as a startup from the University of Essex, Photonic Networks Research Centre, a renowned center of excellence in photonics and optical-communication networks.

Global TeleSystems (GTS--Washington, DC) will deploy Ciena's (Linthicum, MD) MultiWave CoreStream intelligent optical-transport systems in its trans-European optical-fiber network. The open-architecture system is for OC-192 transmission, scalable up to 96 channels per fiber pair. GTS anticipates placing orders for Ciena systems valued at approximately $100 million for the build-out of its network. PSINet Inc. (Herndon, VA) also signed a three-year supply agreement to deploy Ciena's intelligent optical transport systems to expand network capacity in Europe and North America on PSINet's global IP-optimized backbone network.

Algety Telecom (Lannion, France) closed a second round of venture-capital funding at $31 million. New investors were Goldman Sachs (New York City) and Dassault Developpement (Paris). The new infusion of capital will fund Algety's ongoing development of DWDM systems that use a new generation of solitons, as opposed to currently used photons, for ultra-high-speed data transmission over long-haul fiber-optic networks. Com patible with any type of existing fiber, soliton technology boasts an increase of data capacity and transmission distance. Ibsen, (Copenhagen) a manufacturer of holographic phase masks and fiber Bragg gratings for DWDM systems, also received new financing in the amount of 6.9 million Euros. The new financing will enable Ibsen to develop manufacturing capabilities and strengthen its DWDM product portfolio.

Luciol Instruments (Nyon, Switzerland), a startup in fiber-optic measurement and instrumentation, began manufacturing operations in Nyon. Founded by three scientists from the University of Geneva, Luciol's core technology is single-photon counting, which provides the highest possible detection sensitivity. Combined with the use of four short pulses, this technology allows high-precision temporal detection, in the picosecond range, with zero dead time. The first application, a chromatic-dispersion analyzer based on direct time-of-flight measurement, will be released soon, followed by a photon-counting optical time-domain reflectometer with high resolution and sensitivity.

Dynarc (Sunnyvale, CA) moved to strengthen its position as an optical-networking-equipment supplier in the deregulated Nordic market through a partnership with reseller and system integrator Dotcom (Stockholm). The partnership includes certified training of Dotcom's personnel in areas of network design and deployment, support, and sales. The two companies will also cooperate on business development projects, combining Dynarc's products with network services and applications from Dotcom's portfolio.

Nortel Networks (Brampton, Ontario) increased its ownership in Nortel Dasa Network Systems GmbH and Co. KG, its joint venture with DaimlerChrysler Aerospace in Germany, and in Matra Nortel Communications SAS (MNC), its joint venture with Aerospatiale Matra in France. Nortel's ownership in Nortel Dasa and MNC will increase from approximately 50% to 58% and 55%, respectively. The move is part of Nortel's strategy of extending its presence in building the high-performance Internet in Europe.

A newly formed German holding company, eKabel GmbH, purchased a majority 65% stake in Hessen Kabel KgG, the Hessen regional broadband network of Kabel Deutschland GmbH, a wholly owned subsidiary of Deutsche Telekom AG. In partnership with Deutsche Telekom, eKabel plans to aggressively invest in network upgrades to provide a complete range of broadband services, including digital television, telephone, and Internet access.

Researchers at the Optoelectronics Research Center at the University of Southampton in the United Kingdom are collaborating with scientists in Italy and Germany to find alternative materials for the manufacture of optical fibers. The work received a half-million British pounds in funding from the European Union Information Societies Technology Program and is known as Project LOBSTER (large optical bandwidth by amplifier systems based on tellurite fibers doped with rare earth's).

Carrier1 International S.A. (Zurich) will be the first European long-distance communications operator to deploy Corning's (Corning, NY) MetroCor optical fiber, specifically designed for metropolitan and regional applications. Carrier1 will deploy MetroCor fiber in Amsterdam in the third quarter of this year, with more deployments possible in cities such as Paris, Milan, Berlin, and Frankfurt.

South|Central America

The U.S. Trade Department says 1999 investment in Latin American telecommunications originating from the Untied States rose 9% to $5 billion. The same statement also identified Mexico, Brazil, and Argentina as the most important telecommunications markets in the region.

GlobeNet Communications Group Ltd. (St. Davids, Bermuda), a developer of Latin American undersea systems, was acquired by 360networks (Vancouver, BC) for approximately $600 million of 360networks common stock. The total transaction is valued at about $1 billion, since 360networks will assume GlobeNet's $400 million in debt. GlobeNet is developing Atlantica-1, a 22,500-km undersea fiber-optic network linking the United States, Bermuda, Brazil, and Venezuela. The primary ring is scheduled to enter service by the end of 2000.

Brazilian Resources Inc. formed a joint venture with Barramar Mercantil Ltda. (BML-Sao Paulo, Brazil) to expand and develop infrastructure for digital-information highways in Brazil. BML acquired rights-of-way agreements and built about 12,000 km of fiber-optic infrastructure, planning to complete a national fiber network reaching about 97% of the country's economy. The joint venture will establish Newco, a new special use company for the development, construction, and operation of the networks.

Ciena Corp. (Linthicum, MD) opened Ciena Brazil Limitada, the company's wholly owned subsidiary in Sao Paulo, Brazil. Staffed by local engineers and managers, the new entity plans to deliver optical-networking solutions in the fast-growing Brazilian telecommunications market.

Asia

Anritsu Corp. (Tokyo) signed a cooperation agreement with Alcatel (Paris) for the development of future high-speed telecommunications components and systems. The agreement enables both companies to build on their combined market knowledge and technological capabilities to provide new and improved telecommunications systems.

Lucent Technologies (Murray Hill, NJ) signed two contracts totaling $145 million to supply optical systems and fiber cable to customers in China. In an agreement worth more than $80 million with CITIC Pacific Ltd. (Hong Kong), Lucent will provide optical-networking equipment for CITIC's 32,000-km nationwide backbone-network project, scheduled for service in the third quarter 2000. Under a $65-million agreement with China's Guangdong Eastern FiberNet Co. (GEFC-Beijing), Lucent will provide optical-networking systems and fiber-cable products for use in GEFC's broadband network in the Guangdong province, planned for completion in mid-2000.

FLAG Telecom (London) announced that its wholly owned subsidiary, FLAG Telecom Japan (Tokyo), was awarded a Type 1 license to operate international telecommunications services in Japan. The license enables FLAG Telecom to offer a managed bandwidth service between Tokyo and major cities in Europe. FLAG Telecom also plans to offer Internet connectivity and IP-based services between Tokyo, Asia, the United States, and Europe. The services are expected to begin in July. FLAG Telecom also award a contract to Alcatel (Paris) for supply of a multiterabit dual cable system spanning the Pacific Ocean. FLAG Pacific-1 will be a resilient loop design linking Tokyo, Vancouver, Seattle, San Francisco, and Los Angeles at speeds up to 5.12 Tbits/sec.

Telstra Corp. (Melbourne, Australia) and Keppel Telecommunications and Transportation Ltd. (Singapore) plan to join forces in taking advantage of the deregulation of Singapore's telecommunications market. Their respective wholly owned subsidiaries, Telstra Holdings Pty Ltd. and DataOne Corp. Pty Ltd., have signed an agreement to enter into a joint venture that will offer a full range of telecommunications services to corporate and consumer customers in Singapore. Telstra and Keppel will each hold a 50% equity stake in the joint-venture company.

Beyond Broadband Networks Inc. (BBN-Taiwan) inked an original equipment manufacturer (OEM) reseller agreement with Vianet Technologies Inc. (New York City) to serve fiber access demand in Taiwan and China. As Taiwan continues a major national telecommunications network upgrade, BBN and Vianet hope to deliver new SDH and digital loop-carrier equipment into the emerging market.

Tyco Submarine Systems Ltd. (Morris town, NJ) signed a memorandum of understanding with the Bangladesh Telegraph and Telephone Board to design, manufacture, and install an undersea fiber-optic cable, the Ban gladesh-Singapore Sub marine Cable System. The cable, approximately 3,200 km in length, will connect Bangladesh and Singapore. The $150-million system is scheduled for completion in 2002.

FLAG Telecom (London) announced that Saudi Telecommunications Co. (Jed dah, Saudi Arabia) purchased capacity on the FLAG Europe-Asia cable system between Jeddah and New York, believed to be the largest single-capacity purchase on any cable emanating in the Middle East. Terms of the multimillion-dollar deal were not disclosed. The Jeddah landing station, one of 16 landing points in 13 countries on the undersea cable, was declared ready for service in July 1999.

Africa|Middle East|Australia

ECI Telecom Ltd. (Petah Tikva, Israel) will supply an optical backbone network to Hansol M.com, a fast-growing wireless-communications provider in Korea. ECI's DWDM and Synchronous Digital Hierarchy (SDH) solutions will be deployed to form a backbone network to facilitate the delivery of voice, data, Internet, and video services. ECI expects complete delivery of equipment by mid-2000.

Yellowave Corp. (Los Angeles) signed an agreement in principle to acquire FibroLAN Ltd. (Israel) for stock. FibroLAN makes fiber-optic broadband devices used in two fast-growing data-market segments: local area networks and broadband ac cess. Yellowave has positioned itself as an incubator of high-tech companies, with a focus on assisting the development of telecommunications companies emerging from Israel's science and technology community.

Telecom New Zealand (Melbourne, Australia) signed a deal with global venture Concert Communications to offer a broad range of data and voice services in New Zealand and Australia. Telecom said its deal with Concert, a $7-billion global joint venture of AT&T (New York City) and BT (London), will offer integrated global communications for its business customers. Concert's frame-relay network covers 55 countries, and its IP backbone is expected to reach more than 60 cities worldwide within 18 months.

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