Industry Update

Oct. 1, 1999

Telefonos de Mexico (Mexico City) announced it will invest $4.6 billion over the next 18 months to increase its geographical coverage and penetration of services. Telmex plans to take its services to 100,000 more communities throughout the country, providing 98% of the population with telephone services.

Pacific Gateway Exchange Inc. (Burlingame, CA) signed multiple agreements to sell more than $35 million of capacity on its global fiber-optic network. Additional agreements will enable the company to acquire certain strategic assets for expanding its global-network reach. Details of the agreements were not disclosed. Pacific Gateway expects to use its network and points-of-presence in major cities to provide global high-speed Internet connectivity, co-location, and remote content solutions throughout the worldwide data-communications market.

RCN Corp. (Princeton, NJ) launched service in the Washington, DC suburb of Gaithersburg, MD, activating the fiber-optic network that will bring voice, cable television, and Internet access to the area. Gaithersburg is the second community in the area to be connected to RCN's True Local Network, a broadband fiber-optic platform capable of offering a full suite of communications services to residential customers. The services in Washington, DC are provided through a joint venture with Pepco Communications (Washington, DC) under the Starpower brand name. RCN also announced it will deploy CIENA Corp.'s (Linthicum, MD) MultiWave Sentry DWDM optical-transport system in its East Coast fiber backbone.

Iowa Communications Network (ICN--Johnston, IA) awarded ADC Telecommunications Inc. (Minneapolis) a contract to upgrade its statewide infrastructure to deliver compressed MPEG-2 (Motion Picture Experts Group) video over an Asynchronous Transfer Mode (ATM)-based network. ICN will use ADC's AccessPoint media-access system to upgrade about 270 interactive distance-learning video classrooms over a 12-month period. About 800 classrooms will be upgraded when the entire five-ring network upgrade is completed. ADC also received a contract estimated at $40 million from Seren Innovations Inc. (Minneapolis) for ADC's Homeworx cable-telephony system.

Nortel Networks (Brampton, ON) was selected by Level 3 Communications Inc. (Omaha, NE) to provide transport and optical equipment for Level 3's end-to-end international Internet protocol (IP) network. Level 3 currently provides service over a combination of leased and owned facilities in 21 U.S. cities and four European markets. Nortel will provide Level 3 with its 10-Gbit/sec platform, DWDM systems, and the OPTera suite of open optical products.

E-TEK Dynamics Inc. (San Jose, CA) will acquire privately held Kaifa Technology (Sunnyvale, CA), a developer of fiber-optic components, including DWDM components and modules, circulators, and isolators. Under the terms of the agreement, shares of E-TEK common stock and cash with an aggregate value of about $40 million will be exchanged for all outstanding shares of Kaifa. The transaction is subject to various closing conditions.

Scientific-Atlanta Inc. (Atlanta) announced it intends to purchase the broadband Megaflex and Photon business units of Thomas & Betts Corp. (Memphis, TN). Under the terms of the agreement, Scientific-Atlanta would acquire selected assets of the Thomas & Betts business unit, the company's Burnaby, BC, Canada, facility, and approximately 60 employees. The purchase is expected to enhance Scientific-Atlanta's ability to develop other functionality for the fiber-optic node and respond more quickly to the marketplace.

Sprint North Supply (New Century, KS) awarded Siecor (Hickory, NC) a project to provide the fiber-optic cable for the Sprint World Headquarters in Overland Park, KS. Sprint plans to provide its more than 15,000 employees at the headquarters with ATM to the desktop. Siecor's LANscape optical-fiber MIC cables will be used for the installation.

Qwest Communications International Inc. (Denver) received a $36 million, multiyear contract from PowerNet Global Communications (Cincinnati) to provide a suite of communications solutions, including frame relay, high-speed private line, and domestic and international long-distance services. Qwest was also awarded a three-year, $25-million contract from LMCI--an Internet and local-exchange service provider--to provide advanced network services, including co-location, dedicated Internet access, ATM, frame relay, and private line.

Telcordia Technologies Inc. (Morristown, NJ) received a $12-million contract from the New York City Transit to design, manage, and deliver software solutions for a high-bandwidth network that will improve communications in the New York City subway system. Once completed, the newly designed fiber-optic network will serve 468 subway stations throughout the New York City area.

GST Telecommunications Inc. (Vancouver, WA) will build a fiber-optic ring in Seattle's central business district. The ring, which will connect to GST's recently announced 75-mi metropolitan area conduit network, is scheduled for completion in November. Using existing GST assets--including its voice and data switches--the downtown fiber ring will allow GST to directly provide integrated communications services to multitenant buildings in Seattle's downtown area.

Hewlett-Packard Co. (HP-Palo Alto, CA) launched its new, diversified technology company, Agilent Technologies (Palo Alto, CA) to design, develop, manufacture, and provide communications components as well as electronic and optical test, measurement, and monitoring instruments, systems, and solutions. The new company employs approximately 43,000 people in more than 40 countries and will offer its products and services in more than 100 countries.

Intermedia Communications Inc. (Tampa) will expand its nationwide IP network to support OC-48 (2.5-Gbit/sec) optical capacity. The expansion will interconnect Intermedia's frame-relay and ATM networks and will include the completion of an ongoing deployment of multiprotocol label switching (MPLS). With MPLS technology over an OC-48 optical network, Intermedia hopes to provide customers with virtual private networks and dedicated bandwidth that will allow multiple service options for voice, video, and other business-critical applications.

Metromedia Fiber Network Inc. (MFN--New York City) announced the recent launch of intracity dark-fiber networks in the metropolitan areas of Washington, Chicago, and Dallas. With New York City and Philadelphia, MFN now provides dark-fiber infrastructure in five of the 15 largest U.S. cities. The company is currently constructing networks in six additional U.S. metropolitan areas as well as in Canada and Europe. Metromedia also announced it will use Nortel Networks' (Brampton, ON) OpTera technology to create a multiprotocol private optical-network offering. Metromedia plans to offer enterprise customers in major metropolitan markets the advantages of a dedicated dark-fiber network, combined with a fully integrated and outsourced optical-network infrastructure.

AMP Inc. (Harrisburg, PA) and Pirelli Cables and Systems North America (Columbia, SC) formed an alliance making AMP the single-source provider of Pirelli fiber-optic cable in the U.S. premises-cabling market. Under terms of the agreement, the fiber cable, being marketed under the name AMP/Pirelli, will be exclusively sold and marketed by AMP and exclusively manufactured by Pirelli.

Kestrel Solutions (Mountain View, CA), a manufacturer of optical-modulation products, announced the completion of a $55-million private placement in its third round of financing. Kestrel is developing products designed to reduce the cost of operations and services for metropolitan networks.

Call-Net Enterprises Inc. (Toronto) commissioned its recently completed network with three additional rings in Central and Western Canada. The company now operates its own 14,600-km broadband fiber-optic network. The full network consists of four rings. The central ring links Toronto to Winnipeg through a northern Canadian route via Sudbury and Thunder Bay. The southern U.S. route connects Winnipeg and Toronto via Minneapolis/St. Paul, Milwaukee, Chicago, Detroit, and Sarnia. The Prairie ring connects Winnipeg to Calgary through a northern route via Saskatoon and Edmonton and a southern route via Medicine Hat and Regina. The west ring links Vancouver, Edmonton, Calgary, and Kamloops.

Corning Inc. (Corning, NY) and W. L. Gore & Associates Inc. (Newark, DE) announced serial transmission at 10 Gbits/sec over 600 m with Corning's InfiniCor multimode fiber using Gore's high-speed 850-nm vertical-cavity surface-emitting laser (VCSEL) technology. The fiber used was an 850-nm optimized 50-micron InfiniCor multimode-fiber. It was the first demonstration of multimode fiber, serial 10-Gbit/sec transmission over this distance. The test is aimed at using 10-Gbit/sec transmission speeds over local-area-network distances. Corning also announced that InfiniCor multimode-fiber achieved over 3000-m transmission at Gigabit Ethernet speeds in the 850-nm window.

Lucent Technologies (Murray Hill, NJ) announced the acquisition of Excel Switching Corp. (Hyannis, MA), a developer of programmable switches. Under terms of the merger agreement, each share of Excel will be converted into 0.5580 shares of Lucent, making the transaction value about $1.7 billion. The transaction is expected to be completed by the end of 1999.

Optical Solutions Inc. (Minneapolis) was chosen by All West Communications (Kamas, UT) to deploy its FiberPath fiber-to-the-home solution in three residential developments located east of Salt Lake City. More than 200 homes will be eligible for the service. A fourth development still in the planning stages could bring the total number of eligible residences to 1000. FiberPath is a solution for bringing integrated voice, video, and high-speed data connections directly to the home.

Blaze Network Products Inc. (Dublin, CA) announced the successful completion of a concept review of its Afterburner fiber-optic transceiver by Corning Inc. (Corning, NY). The purpose of the Corning evaluation was to determine the viability of using DWDM to improve the distance and capacity of multimode fiber in customer-premises networks.

ADC Telecommunications Inc. (Minneapolis) and Televisa, Mexico's (Mexico City) largest television broadcast company, announced the availability of high-definition television (HDTV) transmission in Latin America. The digital-television transmitter, digital audio, video patching, and fiber-optic infrastructure were supplied through ADC's Mexican subsidiary, ADC de Mexico SA de CV, and distributor, Dicimex SA de CV. In addition, ADC provided the digital uncompressed fiber-optic transport between Televisa's transmission site in Cerro Tres Padres and its HDTV programming network in Mexico City.

Quantum Bridge Communications Inc. (North Andover, MA), a developer of optical-access networking equipment, announced a $16-million second-round investment from Atlas Venture, a venture-capital partnership. The new funds will be used to continue development of Quantum's optical-access solution. The company, founded in October 1998, is developing a solution specifically to address bandwidth bottlenecks that exist in the public network's local-access loop.

Marconi Communications (Coventry, UK) and Ericsson (Stockholm) replaced their existing cooperation agreement for Synchronous Digital Hierarchy (SDH) products to enable Ericsson to market the full range of Marconi's SDH transmission equipment to Ericsson customers worldwide. The new arrangement integrates Marconi's MSH and SMA families of SDH products into Ericsson's total fixed and mobile network solutions.

Level 3 Communications Inc. (Omaha, NE) announced an agreement with Eurotunnel Telecoms Ltd. (London) to acquire multiple cables across the channel between the United Kingdom and continental Europe. Under the agreement, Eurotunnel will install and supply Level 3 with multiple cables through the high-security service tunnel. The first cable will be completed by the first quarter of 2000, with subsequent cables installed to upgrade and expand the network as required or when new fiber technology becomes available. Financial details were not disclosed. Level 3 secured a similar agreement with Alcatel (Paris) for additional cross-channel undersea-cable connectivity between the United Kingdom and Belgium. The Alcatel cable system is currently under development and expected to be completed by the end of 1999.

Krone AG (Berlin), a supplier of telecommunications and data networks, completed a change in ownership announced by its parent company, Jenoptik AG (Jena, Germany). Krone is now a part of GenTek Inc. (Hampton, NH), where it will team with the GenTek subsidiary, Prestolite Wire (Southfield, MI), to constitute the telecommunications division of GenTek. Each company plans to benefit from the other's market presence and customer structure in fiber and copper-cable technologies.

Bookham Technology Ltd. (Oxford, UK) signed a multiyear, multimillion-dollar supply contract with Scientific-Atlanta Inc. (Atlanta) for Bookham to supply its ASOC portfolio of optical components to Scientific-Atlanta. In addition, Scientific-Atlanta will invest $13 million in Bookham common stock, subject to shareholder approval. The products covered by the contract will be integrated into Scientific-Atlanta's Prisma Optical Networks family of products.

Viatel Inc. (New York City) announced the second of five phases of its Circe Pan-European Network, a cross-border, fiber-optic broadband network, has entered into commercial service. The 2005-route-km network connects Dusseldorf, Frankfurt, and Mannheim, Germany, along with Strasbourg and Nancy in France to the first-phase cities of London, Amsterdam, Rotterdam, Brussels, Antwerp, Paris, and Amiens. Viatel also secured the license to build, own, and operate its telecommunications infra structure in Switzerland.

Tellabs (Lisle, IL) announced completion of its acquisition of Alcatel's (Paris) DSC Communications (Copenhagen) businesses in Europe. Tellabs hopes to extend its global presence and heighten its ability to meet the growing demand for fiber-transmission networks worldwide through the DSC acquisition. DSC is a provider of managed, high-speed transport solutions based on SDH and DWDM technologies. Tellabs paid approximately $110 million in cash for the European business. Tellabs also recently completed its acquisition of NetCore Systems (Wilmington, MA), whereby NetCore becomes Tellabs new Internetworking Systems Division.

VersaTel Telecom International N.V. (Amsterdam) completed the first direct-fiber connections of its customers in the Netherlands and Belgium to its broadband local-access network. VersaTel is transitioning from a switch-based long-distance reseller to a broadband local-access provider. Last July, the company lit the first 315 km of its fiber-optic ring network connecting Antwerp, Hilversum, Amsterdam, Haarlem, the Hague, and Rotterdam. VersaTel also announced the lighting of the Rotterdam city ring that will connect Rotterdam Centrum-a major business center-to its broadband network.

SIFAM Fibre Optics Ltd. (Torquay, UK), formerly the fiber-optics division of SIFAM Ltd., became a separate legal entity on July 1. The new company will emphasize research and development in the fiber-optic components arena, specializing in erbium-doped fiber amplifiers (EDFAs) used in long-haul telecommunications. SIFAM Fibre Optics plans to develop a range of technologies for gain flattening and amplified spontaneous emission suppression in EDFAs. The new technologies differ from existing dielectric filter and Bragg grating approaches to gain flattening in that the loss profile can be customized for small production runs.

Cable & Wireless Communications plc (London) appointed Nortel Networks (Brampton, Ontario) as the systems integrator and a prime contractor for the expansion and enhancement of its global network. Nortel will oversee the delivery and integration of the initial five-year, $1-billion network expansion plan announced last year by Cable & Wireless. The complete Cable & Wireless European network will provide a range of high-speed integrated communications services to more than 40 cities in 13 countries.

Global Crossing Ltd. (Hamilton, Bermuda) announced agreements with Alcatel (Paris) and IMPSAT Corp. (Buenos Aires) directed at the rapid completion of its South American Crossing. Under the agreement with Alcatel (valued at $700 million) Global Crossing's marine division, Global Marine Systems Ltd., will have an option to provide marine operations and a guarantee from Alcatel of $100 million in contracts over the next five years. IMPSAT will buy a minimum of $46 million in capacity on the Global Crossing Network. In addition, IMPSAT and Global Crossing will enter into a nonexclusive, co-marketing agreement that will combine the Pan American distribution network of IMPSAT with the Global Crossing Network, giving Global Crossing a terrestrial link between Las Toninas, Argentina, on the Atlantic Coast and Valparaiso, Chile, on the Pacific. Lucent Technologies (Murray Hill, NJ) was selected to supply its optical-networking equipment, including its 80-channel DWDM system, and fiber cable for the terrestrial portion of the network.

New World Network Holdings Inc. (Miami), the developer and majority owner of Americas Region Caribbean ring System, ARCOS-1, is planning a new submarine fiber-optic ring around South America. The new network will connect more than 20 Latin American countries when combined with the already-announced ARCOS-1. Together, the two projects form a system called Americas-8, named for the shape of the figure "8" the two rings form on the map. With 41 landing stations and operating capabilities of up to 1.28 Tbits/sec, Americas-8 will use the latest in DWDM technology to connect Latin American countries with the U.S. market.

The European Commission gave the okay for AT&T (New York City) and British Telecom PLC (BT--London) to take a combined 30% stake in Japan Telecom (Tokyo). Citing the relatively modest presence of Japan Telecom in the Japanese domestic telecommunications sector, the commission decided the transaction does not raise any particular competition concerns. Under the deal, AT&T and BT will each hold a 15% stake in Japan's third largest long-distance and international carrier. The three companies plan to integrate most of their Japanese operations with Japan Telecom's units.

South Korea's Onse Telecom (Seoul, Korea) awarded a $3.5-million contract to ECI Telecom Ltd. (Petah Tikva, Israel) for a telecommunications network based on Synchronous Digital Hierarchy. The contract calls for ECI to supply a backbone network that will cover the region between Pusan and Seoul. The network is expected to be fully operational about now.

MIMOS Berhad (Kuala Lumpur, Malaysia), which operates jaring, the leading Internet service provider in Malaysia, completed the deployment of Superjaring, an OC-48 Internet backbone infrastructure. The new multimillion-dollar fiber-optic backbone network was built with equipment from Cisco Systems Inc. (San Jose, CA). Cisco's 12000 Gigabit Switch Routers were deployed throughout the backbone network and eliminated the need for a transport layer of equipment such as SONET or SDH.

Global Crossing Ltd. (Hamilton, Bermuda) signed an agreement with China Telecom (Beijing) to acquire the 49% share of S.B. Submarine Systems Co. Ltd. (SBSS) that was previously owned by Great Eastern Telecommunications, a Cable & Wireless and Hong Kong Telecom venture. Under the agreement, Global Marine Systems Ltd., a wholly owned subsidiary of Global Crossing, will continue to provide training and technology transfer to SBSS. The actual transfer of shares is subject to regulatory approval. SBSS has annual revenues in excess of $50 million.

Marconi Communications SpA (Genova, Italy) will supply Siemens Australia with its SDH technology for Siemens' turnkey contract with Vodafone. Marconi will provide its Series 3 synchronous multiplexer family and equipment management operations system.

With just over a year to go to the Sydney 2000 Olympic and Paralympic Games, Telstra Corp. Ltd. (Melbourne, Australia) announced it is on track with its fiber-optic communications backbone that will enable audiences around the globe to take part in the excitement of the Olympic Games. The Telstra Millennium Network will provide video, audio, data, phone, fax, and mobile-communications services.

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