Industry Update

Marconi Communications (Pittsburgh) announced a major commitment to BellSouth for the deployment of voice, video, and Asynchronous Transfer Mode (ATM)-based high-speed data technology throughout the BellSouth network using Marconi's DISC*S MX access platform. Marconi expects more than $1 billion in sales revenue as a result of the planned deployment over the next three years. Marconi believes the contract clearly demonstrates the synergies of acquiring and integrating RELTEC Corp. (Cleveland) and FORE Systems Inc. (Pittsburgh).

ADC Telecommunications Inc. (Minneapolis) created a new division, Cable Transport Systems Div., incorporating new digital-hybrid fiber-coax (HFC) products into its portfolio. The division's products, developed by ADC Phasor in Austria and newly acquired Comtec Electronics S.R.L. (Buenos Aires), will be marketed under the name Optiworx HFC Transport Systems Platform. The Optiworx family offers a multiservice HFC transport system that includes 1,310-nm and 1,550-nm optical transmitters, optical receivers, optical-distribution notes, and dense wavelength-division multiplexing (DWDM) technologies tied together with a network-management system.

Williams Communications Inc. (Tulsa, OK) completed a $26.5-million agreement to sell services and fiber capacity to Worldwide Fiber Inc. (Vancouver, BC). The fibers are primarily located in the northeastern United States and will be used by Worldwide Fiber to expand its national network. The 20-year agreement also includes Williams's receipt of monthly recurring revenue from Worldwide Fiber for collocation and network-maintenance services. Earlier last year, Williams and Pacific Fiber Link (Blaine, WA), a subsidiary of Worldwide Fiber, jointly constructed a multiconduit fiber-optic backbone network between Sacramento, CA, and Portland, OR.

Level (3) Communications Inc. (Broomfield, CO) began carrying customer traffic between Dallas and Houston on the first completed and lit segment of its U.S. intercity long-distance fiber-optic network. Level (3) is building an international-communications network optimized for Internet protocol (IP). The approximately 250-mi segment connecting Dallas and Houston is part of a 16,000-mi intercity network currently under construction by Level (3) planned for completion by the end of 2000.

Cable & Wireless North America (Vienna, VA) is deploying Tellabs' (Lisle, IL) TITAN 5500 wideband and TITAN 532LS narrowband digital-crossconnect systems into its fiber-optic network. The deployment is an expansion under an existing multimillion-dollar contract. Cable & Wireless is building a high-capacity IP network backbone and plans to use the TITAN systems to increase network capacity and optimize its high-speed Synchronous Optical Network (SONET) facilities.

Corning Inc. (Corning, NY) acquired the Optical Polymer Group of Honeywell (Morristown, NJ), which merged with Allied Signal Inc. (Morristown, NJ) last December. The acquisition is expected to expand Corning's technology base in optical components and position the company in the development of optical-communications products for telecommunications applications. Terms of the transaction were not disclosed. Included in the acquisition is all of Honeywell's equipment for making polymeric optical-waveguide devices and the related intellectual property.

Textron Inc. (Providence, RI) acquired RIFOCS Corp. (Camarillo, CA), a privately owned manufacturer of fiber-optic test and measurement instruments and components. RIFOCS will become part of Greenlee Textron, a supplier of test, measurement, and installation equipment for the data-signal-voice market. Terms of the transaction were not disclosed.

Broadwing Communications (Cincinnati) will trial the CorWave suite of all-optical switching, transport, and network-management products from Corvis Corp. (Columbia, MD). The CorWave solution will enable Broadwing to transmit optical signals up to 3,200 km without electrical regeneration and boasts optical network-management software to provision ultra-long optical paths without field intervention.

Ortel Corp. (Alhambra, CA) inked an exclusive agreement with Lucent Technologies' Microelectronics Group (Allentown, PA) for next-generation uncooled 980-nm pump laser modules used in metropolitan optical-network applications. Under terms of the multimillion-dollar agreement, Ortel will provide fully qualified uncooled 980-nm pump laser chips to Lucent for use in erbium-doped fiber-amplifier (EDFA) modules designed for metropolitan area networks. Ortel also announced the successful demonstration of a prototype fiber-optic video overlay receiver for use in a wide range of fiber-to-the-home architectures. The prototype video overlay receiver transports cable-television and direct broadcast satellite (DBS) signals in single-fiber architectures, powered from an electrical panel or in-home AC outlet.

The board of directors of the Fiber Optic Association Inc. (Boston) finalized a new set of advanced certifications for fiber-optic technicians. The new certifications establish the criteria for a certified fiber-optic specialist in termination, splicing, and testing fiber-optic installations. Upon passing the basic Certified Fiber-Optic Technician (CFOT) exam, technicians receive a logbook to record actual experience for further certifications. The logbook becomes the basis of qualifications for the advanced certification programs.

Sonus Networks (Westford, MA) was selected by Williams Communications Inc. (Tulsa) to supply a carrier-class packet-telephony solution to augment Williams' voice-over-packet services. The contract is valued at $20 million for the first year and could expand to more than $100 million over a three-year period. Williams will deploy the Sonus GSX9000 switch in three cities, with plans to rapidly deploy the new technology throughout its network.

Qwest Communications International Inc. (Denver) announced the successful launching of the first coast-to-coast IP-based OC-192 (10-Gbit/sec) fiber-optic link carrying commercial traffic between Sunnyvale, CA, and New York City. The network uses Cisco Systems' (San Jose, CA) new multi-terabit routing platform-the 12016 Gigabit Switch Router. Qwest also announced new multimillion-dollar contracts. The U.S. Department of Energy's Energy Sciences Network will, under a $50-million contract, receive performance levels through Qwest up to a terabit network by the year 2005. A second multiyear, multimillion dollar agreement calls for Qwest to provide communications services to Musicland Stores Corp. Under a separate three-year, $36-million contract, Qwest will provide a suite of wholesale communications solutions for First Communications LLC to sell to its customers, including high-speed, private-line, and domestic and international long-distance services.

C-COR.net (State College, PA) will provide 1,550-nm optical-transmission equipment to 21st Century Telecom (Chicago) to enable video, high-speed data, and voice services over 21st Century's HFC network in Skokie, IL. The 21st Century network will use a 1,550-nm transportation layer with full redundancy through several hub sites. The hub sites will feed optical nodes located deep in the network without any active device on the distribution plant beyond the node. C-COR.net's equipment will also provide DWDM technology for narrowcast services.

Tellabs (Lisle, IL) announced the acquisition of SALIX Technologies Inc. (Gaithersburg, MD), a developer of class-independent switching solutions. The all-stock deal is valued at about $300 million. Tellabs plans to use the acquisition of privately held SALIX and its ETX5000 Enhanced Telephony Exchange to enable service providers to deliver such new services as next-generation voice, fax, and data solutions and lower-cost network expansions. SALIX will remain in Gaithersburg as part of Tellabs' Adaptive Network Solutions Division.

Allegiance Telecom Inc. (Dallas) signed an agreement with Metromedia Fiber Network Inc. (New York City) for dark-fiber capacity in 13 of the U.S. markets served by Allegiance. The 20-year lease agreement will also provide Allegiance with long-distance fiber capacity between New York and Washington, DC. The deal is valued at approximately $130 million over the life of the contract. Metromedia has previously leased fiber capacity to Allegiance in Dallas, Houston, and the New York metropolitan area.

Tellium Inc. (Oceanport, NJ) raised $50 million of equity in a mezzanine round of financing. The equity was in the form of preferred shares and includes $45 million of new cash and the conversion of $5 million of debt. New investors include Thomas Weisel Partners and Pequot Capital Inc. Tellium plans to use the additional funds to continue designing and manufacturing products for intelligent optical networking.

Optical Solutions Inc. (Minneapolis), a manufacturer of fiber-to-the-home solutions, announced the closing of $7 million in senior debt financing. The funding will be provided in equal parts from Comdisco Ventures and Western Technology Investment. This latest funding follows the $16-million Series C preferred funding earlier this year. Along with seed capital funding, Optical Solutions has raised about $31 million since founding the company.

AT&T Canada (Toronto) announced its wholly owned subsidiary AT&T Canada Corp., acquired 7,504,745 common shares of TigerTel Inc., representing all the issued and outstanding common shares of TigerTel. The total acquisition cost was approximately $69.4 million plus associated expenses. TigerTel is a Canadian business telecommunications provider created in June 1999 through a merger of TigerTel Services Ltd. and Contour Telecom Management Inc.

McLeodUSA Inc. (Cedar Rapids), a facilities-based integrated-communications provider in the Midwest and Rocky Mountain states, announced the acquisition of Splitrock Services Inc. (Houston), a facilities-based provider of advanced data services. The acquisition is worth approximately $2.1 billion and allows McLeodUSA to offer data services, including Internet access, to customers in its existing 21-state market.

FEC Telecom Inc. (Orlando), the subsidiary of Florida East Coast Industries Inc., activated the first major segment of its new, high-speed fiber-optic telecommunications network. FEC operates as a carriers' carrier, providing dark fiber and circuits to meet the needs of competitive local-exchange carriers (CLECs). FEC installed optical technologies on the portion of its network extending between Jacksonville and Miami and will make capacity, including SONET redundancy, available to other telecommunications carriers operating in Florida.

Northeast Optic Network Inc. (NEON-Westborough, MA) signed an open-ended master services agreement with RNK Telecom (Stoughton, MA) under which RNK will use NEON as its backbone provider throughout the Northeast and Mid-Atlantic states. The five-year, multimillion-dollar agreement includes optical long-haul circuits and collocation services at multiple sites.

Phobos Corp. (Salt Lake City) inked a contract to supply a range of active fiber-optic networking products, including the company's P100-VF fiber network interface cards, to 3M (Austin, TX). As a result of the networking product agreement, Phobos products will be incorporated into 3M's Volition System, a networking product line that boasts reduced costs associated with using optical-fiber interconnects to push fiber to the desktop.

NEXTLINK Communications Inc. (McLean, VA) and Concentric Network Corp. (San Jose, CA) entered into a definitive agreement to combine the two companies, creating a next-generation, broadband-communications company with a full range of voice, data, and Internet services. The transaction, valued at around $2.9 billion, is expected to close in the second quarter of this year. Concentric's earlier acquisition of Internet Technology Group plc (London) also gives the combined company an established base in the European data marketplace.

Global Crossing Ltd. (Hamilton, Bermuda) and BCE Nexxia, a subsidiary of Bell Canada, (Montreal), announced a three-year services agreement valued at $24 million. Under the agreement, both companies will provide each other with network services to meet the global needs of their respective customers. Global Crossing will provide BCE Nexxia with network, private-line, and IP services to enhance its points of presence in the U.S. and Canadian markets. BCE Nexxia will supply Global Crossing with Canadian termination services.

Newport Communications (Irvine, CA), a developer of high-speed communications chips for the optical-networking industry closed its Series B funding in the amount of $23 million. Integral Capital Partners led the second round of funding. Earlier, Newport introduced a 2.5-Gbit/sec transceiver in a "plain vanilla" complementary metal-oxide semiconductor (CMOS) process that the company says will enable manufacturers to double or quadruple their equipment's port density, while reducing the system cost, power, and space requirements.

GST Telecommunications Inc. (Vancouver, WA) announced an indefeasible- right-of-use (IRU) agreement with Worldwide Fiber Inc. (Vancouver, BC) under which GST will receive fiber between Seattle and Portland, OR, and approximately $30 million. In exchange, Worldwide Fiber will receive conduit on GST's Sacramento-to-Los Angeles long-haul route. The agreement is the third major partnership between the two companies since August 1998.

2nd Century Communications (Tampa) secured $50 million in debt financing from GATX Telecom Investors II LLC, an investment partnership formed and managed by GATX Capital. 2nd Century will use the money to continue building its nationwide data-based local-exchange network. The company has now raised a total of more than $80 million since the company's founding less than two years ago.

Network Plus (Quincy, MA) agreed to a $50-million addition to its existing contract with Lucent Technologies (Murray Hill, NJ) that will expand the broadband capacity of the company's Northeast and Southeast U.S. networks. Under terms of the agreement, Lucent will provide its WaveStar OLS400G optical-networking system to Network Plus to enable capacity expansion up to 400 Gbits/sec.

TELUS (Vancouver, BC) selected Nortel Network's (Brampton, ON) optical Internet and high-speed-optical-switch interface equipment for its national network build. The agreement's value is estimated at $47 million. The deployment of equipment began in 1999, including completion of the link to GTE's U.S. network via Seattle. The cross-Canada portion of the TELUS network is slated for completion by June.

PRIMUS Telecommunications Group Inc. (McLean, VA) awarded Qwest Communications International Inc. (Denver) a high-speed-capacity agreement on Qwest's nationwide broadband fiber-optic backbone and private Internet peering at select sites in the United States and overseas. In addition to the fiber agreement, the companies formalized an Internet peering relationship. PRIMUS agreed to a long-term capacity purchase with Qwest for a nationwide fiber-optic cable ring and connecting routes. Concurrently with the implementation of the fiber-backbone ring, Qwest and PRIMUS will privately peer at multiple interconnection points around the globe to exchange TCP/IP routing information and traffic.

Alcatel Optronics (Paris) and Tekelec (Calabasas, CA) signed a representation agreement enabling Tekelec to market Alcatel's optoelectronic components in Europe. Through the agreement, Tekelec hopes to reinforce its local technical and commercial presence in Europe. Conversely, it enables Alcatel to expand services and competencies for components as a step in the company's global-expansion initiatives.

HanseNet Telekommunikation GmbH (Hamburg, Germany) has deployed Ciena Corp.'s (Linthicum, MD) MultiWave Metro optical transport system in its local network. The solution provides HanseNet with connections across Hamburg to a regional carrier. The MultiWave Metro platform is designed for short-haul applications using DWDM technology. Ciena's German distributor, Pan Dacom GmbH (Dreieich, Germany), will supply, install, and service the systems deployed in the HanseNet network.

KPNQwest (Amsterdam) will invest up to $305 million to construct a seventh high-capacity fiber-optic network ring in Europe. KPNQwest is the European joint venture of Qwest Communications International Inc. (Denver) and KPN of the Netherlands. Work on the new Iberian Ring, linking seven additional cities in Southern France and Spain into KPNQwest's pan-European and Qwest's North American networks will begin in mid-2000. The 2,500-mi Iberian Ring brings the total size of its European network to approximately 11,800 mi. The new ring will link the cities of Lyons, Marseilles, Barcelona, Valencia, Madrid, Bilbao, Bordeaux, and Toulouse.

Teleglobe Inc. (Reston, VA) was awarded a contract to provide a transatlantic STM-1 Internet connection to the Netherlands' GigaPort project. The GigaPort project is funded by the Dutch government and provides research institutes, universities, colleges for higher professional education, and commercial-research activities in the Netherlands with high-speed Internet connectivity on a domestic and international basis. The project also offers the Dutch business community the opportunity to take the lead in developing and testing advanced and innovative Internet technologies. Teleglobe's connection will interconnect GigaPort with U.S.-based STAR TAP networks through the company's New York GlobeCity access site.

A Russian telephone company, Demos (Moscow), became the first domestic firm to join Cisco Systems' (San Jose, CA) Cisco Powered Network marketing program. Under the program, Demos is granted the right to use the Cisco brand to promote its services in Russia. The company announced plans for a $30- million share issue for placement through derivatives on an unnamed foreign stock exchange in 2000. Demos-Internet also recently joined the Cable & Wireless (London) global telecommunications network to become Russia's largest Internet-access provider in terms of traffic capacity.

Eletronet, the data-communications joint venture teaming Argentina's AES and Brazil's Lightpar, plans to begin operations by the end of 2000. The company will set up 14 optical-fiber rings, the first connecting Sao Paulo to Rio de Janeiro and Belo Horizonte to Campinas. Eletronet will manage 52,000 km of electric power transportation lines from electric companies that will be used as infrastructure for the fiber-optic network, investing $500 million over the next five years.

Tyco Submarine Systems Ltd. (TSSL-Murray Hill, NJ) completed the first link to Pacific Crossing-1 (PC-1), Global Crossing Ltd.'s (Hamilton, Bermuda) advanced fiber-optic transoceanic telecommunications network, three months ahead of the contract schedule. TSSL will complete the full PC-1 system this year by installing three additional segments to form a self-healing ring network. PC-1 represents the first 10-Gbit/sec DWDM system directly connecting the United States with Japan. Global Crossing and related affiliates under Asia Global Crossing Ltd. (Tokyo) plan to put the system into service before the end of 2000.

KDD Submarine Cable Systems (KDD-SCS-Tokyo) received the construction contract for phase 1 of the East Asia Crossing (EAC), an 11,600-km subsea fiber-optic cable system that will connect Japan, Taiwan, Korea, Hong Kong, and China. The contract was awarded by Asia Global Crossing Ltd., a joint venture of Global Crossing Ltd. (Hamilton, Bermuda), Softbank (Tokyo), and Microsoft (Redmond, WA). The planning and construction has begun for EAC and service for the link between Japan and Hong Kong is scheduled for year-end 2000.

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