Industry Update

Nov. 1, 1999

JDS Uniphase Corp. (San Jose, CA) signed a definitive agreement to acquire EPITAXX Inc. (Trenton, NJ). EPITAXX is a supplier of optical detectors and receivers for fiber-optic telecommunications and cable-television (CATV) networks. Its products include long wavelength detectors and receivers that address a number of applications, including DWDM and SONET/SDH transmission, optical-network monitoring for terrestrial and undersea networks, test and measurement, and fiber-optic analog CATV. Terms of the acquisition agreement provide for a purchase price of $400 million payable in JDS Uniphase common stock to the EPITAXX security holders.

Startup networking company NEO Networks Inc. (Minneapolis) successfully conducted a 190-million-packet-per-second forwarding benchmark test on its StreamProcessor 2400 multigigabit router. Tested by Mier Communications Labs, the StreamProcessor 2400 forwarded all packets at wirespeed over 128 Gigabit Ethernet ports using Ixia 1600 test equipment from Ixia Communications (Calabasas, CA). NEO hopes to position its products for high-end enterprise core and service provider LAN applications.

MediaOne (Englewood, CO) awarded Lucent Technologies (Murray Hill, NJ) a contract valued at approximately $250 million for communications systems and software to enhance its U.S. network. Under the five-year agreement, Lucent will provide switching and optical-networking systems and communications software for incorporation into MediaOne's broadband HFC network offering local telephone, high-speed Internet, and broadband television services over a single network. Lucent's SONET-based solutions are also included in the agreement.

The Telecommunications Industry Association (TIA--Arlington, VA) published a new standard, Fiber-Optic Test Procedure--193, Polarization Crosstalk Method for Polarization-Maintaining [PM] Optical Fiber and Components TIA/EIA-455-193. The standard specifies a method of measuring the polarization-crosstalk of singlemode, highly linearly birefringent optical fiber and components. The new standard applies to fibers and components having connectors attached to one or both ends, and to two or more such entities joined in a series. It may also apply to other devices constructed from PM fibers or components.

Optical Networks Inc. (San Jose, CA) received an additional $15 million in its third major round of venture investment, bringing its total financing to $50 million. The networking system provider will use the funds to support fourth quarter 1999 field trials of its all-optical metropolitan networking solution--Dynamic Transport Systems--in the United States and internationally. The company expects its first revenue shipments in the first quarter of 2000.

Agere Inc. (Austin, TX) and Inverness Systems Inc. (Marlborough, MA) entered into a technology development agreement to develop device-specific software solutions optimized for the Agere PayloadPlus network processor. Inverness's contoured system architecture delivers system-level design optimization allowing for tightly integrated source-code solutions for the Agere network processor. The capability is designed to allow networking OEMs to integrate and deliver OC-48 (2.4 Gbit/sec) technology for Internet traffic converging voice, video, and data.

Fotec Inc.'s Cable University (Medford, MA) announced the opening of its new training facility at the company's headquarters in Medford. The new facility is equipped to accommodate more than 20 students for both classroom and hands-on training. Cable University plans to expand its telecommunications cable installation programs and provide an additional facility for hosting other seminars.

PECO Hyperion Communications (Bala Cynwyd, PA) will increase its Philadelphia-area fiber-optic network by about 120 mi, expanding to a total of 900 mi. The facilities-based CLEC announced a $30-million expansion that will provide connectivity to southern New Jersey, enhance its Philadelphia collocation facility, and establish a new collocation facility in Allentown, PA. The expansion is expected to be completed by the spring of 2000. PECO Hyperion operates over a fiber-optic SONET network.

Metromedia Fiber Network Inc. (MFN--New York City), an international fiber-optic network provider, completed its merger with AboveNet Communications Inc. (San Jose, CA). Under the terms of the merger, AboveNet shareholders will receive 1.175 shares of MFN Class A common stock. AboveNet-operating as a wholly owned subsidiary of MFN-will have access to MFN's planned network of more than 1.1 million fiber-mi in North America and Europe. AboveNet will market its services under its own name.

Tyco International Ltd. (Hamilton, Bermuda) took an equity position in Worldwide Fiber Inc. (Vancouver, BC) to form part of the funding for construction of Worldwide Fiber's transatlantic undersea fiber-optic network, Hibernia. Worldwide Fiber completed equity private placements totaling $345 million in convertible preferred stock with Tyco and three independent investors. The proceeds of the placements, together with an underwritten project financing commitment, will fully fund the $850-million network. Tyco Submarine Systems Ltd. (Morristown, NJ) is the sole supplier for the 12,200-km Hibernia project that will link North America and Europe.

Telemonde Inc. (New York) signed a contract that could be worth more than $10 million for the supply of transatlantic fiber and international traffic routes to World Telecom Carrier (Miami). The contract is Telemonde's first that includes elements of voice and data-traffic transport and the sale of bandwidth. Telemonde is a carrier's carrier supplying fiber-optic bandwidth to the global telecommunications industry.

Nanovation Technologies Inc. (Miami) entered into an agreement to purchase Apollo Photonics Inc. (Waterloo, ON), a company that develops software tools for the design, modeling, and simulation of photonic and optoelectronic devices and systems. The acquisition is part of the company's strategic plan to further the development of its advanced photonic technology. Terms of the sale were not disclosed.

Atmosphere Networks Inc. (Cupertino, CA) announced closing of its third round of funding. The $26 million in equity was provided in part by leading crossover funds, venture capital firms, and investment banks. Founded in 1997, Atmosphere provides packet-aware optical access infrastructure solutions for sonet/sdh and DWDM technologies.

Lucent Technologies Microelectronics Group (Allentown, PA) announced it has taken an equity position in privately held Horizon Photonics Inc. (Walnut, CA), an emerging manufacturer of passive optical components. Financial terms were not disclosed. Lucent plans to leverage Horizon's automated manufacturing processes and will also gain a timely supply of passive components for use in high-bandwidth optical-network systems.

Corning Inc. (Corning, NY) announced its InfinCor multimode fiber achieved over 3000-m transmission at Gigabit Ethernet speeds in the 850-nm window. Measurements at Corning's Center for Fiber Testing were performed on the premises system testbed. The testbed is designed to replicate field installations and includes commercially available fiber-optic transceivers, connector patch panels, and jumpers. In the test, Corning says the output signal clearly illustrated an open-eye diagram, demonstrating error-free transmission.

IMC Networks (Foothill Ranch, CA) is creating two new service divisions to provide integrated, multivendor networking solutions through strategic business-to-business relationships. The objective of the Business-to-Business Development Group is to establish strategic business, sales, and marketing relationships with other networking companies and create multivendor solutions with significant added value. The Integrated Services Division is tasked with researching, developing, and testing various manufacturers' products and services.

Panduit Corp. (Tinley Park, IL) and Belden Wire and Cable Inc. (Richmond, IN) have formed a global marketing partnership designed to promote cabling solutions for multimedia and networking applications. The partnership is designed to allow end users a choice of different multimedia and structured cabling solutions, some of which will exceed current standards and proposals.

Fujitsu Network Services (Plano, TX) is installing fiber-optic transmission equipment for Adelphia Business Solutions' (Coudersport, PA) major network expansion across the eastern United States. The contract for the installation is estimated at nearly $12 million. The engineering and installation services provided by Fujitsu are in addition to the equipment supplier contract awarded to Fujitsu Network Communications Inc. (Richardson, TX) earlier this year.

Lucent Technologies (Murray Hill, NJ) was awarded optical-fiber contracts with Columbia Transcom (Fairfax, VA), FEC Telecom Inc. (Orlando), and Metromedia Fiber Network Inc. (New York). The contracts have a combined value up to $300 million and include the deployment of Lucent's AllWave and TrueWave fiber. Columbia Transcom will deploy Lucent's TrueWave RS Fiber for its network under construction between Washington and New York City. FEC Telecom will deploy TruWave RS through key Florida cities. Metromedia will use Lucent's AllWave Fiber for its intracity fiber network routes in the United States and Europe.

Telecast Fiber Systems Inc. (Worcester, MA) supplied its Digital Viper fiber-optic system to Time Warner (Indianapolis) for an uncompressed 1.5-Gbit/sec live HDTV broadcast of the RCA Tennis Championships held in August. The Digital Viper took the signal from the switcher in the stadium control room and sent it to a crossconnect in the nearby Indiana University tennis building. From there, it was connected to the Time Warner fiber network. The final connection was made at the central office for the final 23-mi leg out to the transmitter.

RSL Communications Ltd. (New York) announced its U.K. subsidiary, RSL COM UK (London), will complete a $25.9-million fiber-optic network across England by April 2000. The new network will have initial capacity to carry more than 30,000 simultaneous telephone calls and enable RSL COM to carry a wider range of services within the United Kingdom. New network switches in Birmingham and Manchester will be added to the existing international switch center in London. In addition, 14 regional interconnect points are planned for London, Leeds, Sheffield, Nottingham, Milton Keynes, Basingstoke, Bristol, and Stoke on Trent.

Nortel Networks (Brampton, ON) and Ericsson Microelectronics (Stockholm, Sweden) agreed to create a common footprint and package interface for fiber amplifiers capable of supporting terabit-per-second transmission on a single fiber. The new platform will support both full conventional band WDM EDFAs and extended or L-band fiber amplifiers. The new standard would enable very high bandwidth capacity systems to be deployed with the added benefit of multisourcing.

Deutsche Telekom (Bonn, Germany) agreed to pay more than $50 million for Iaxis (London). Iaxis is building a high-capacity voice and data network in Europe and will provide Deutsche Telekom with space on the network for a period of 10 years. The network currently serves cities in the United Kingdom, France, Germany, Belgium, and the Netherlands with plans for expansion into Switzerland.

Completel (Paris) awarded CIENA Corp. (Linthicum, MD) a contract for CIENA's MultiWave Metro DWDM optical-transport system as a critical part of Completel's network in Paris. The equipment will provide connections throughout the Paris metropolitan area. Deployment of the CIENA system is currently underway. MultiWave Metro is designed for short-haul applications and can be used in point-to-point, mesh, or ring topologies.

Global Crossing Ltd. (Hamilton, Bermuda) activated its $35-million international control center in the business area of London's Docklands. The London center includes the network operations center, designed and equipped to manage and maintain terrestrial and submarine connections across Global Crossing's $6.4-billion global fiber-optic network. Assignment and provisioning of international services is managed directly from the operations center.

Infineon Technologies (Munich) and Molex Fiber Optics Inc. (Downers Grove, IL) have signed a mutual licensing agreement for optical-backplane connector devices. The two companies will market three backplane offerings based on the SMC, LC, and MT connectors. Infineon also inked an agreement with Altitun AB (Stockholm) to cooperate in the marketing and development of tunable lasers. The agreement begins with distribution of Altitun's existing tunable laser products and aims toward the development of a family of tunable laser devices for DWDM applications.

Onda (Parana, Brazil), a new Internet service provider (ISP) in Brazil, began operations today with 18,000 clients. The new company will focus on the southern region of the country, possibly forming alliances with large telecommunications operators. Onda was formed by several other Brazilian ISPs, including Inepar, Copel, Sercomtel, and America Negocios. Inepar and Sercomtel will transfer customers to Onda. Onda will use Copel's fiber-optic network and will be controlled by Sercomtel and Copel with 49%, Inepar with 25.5%, and America Negocios with 25.5%.

Global Crossing (Hamilton, Bermuda) announced that IMPSAT Corp. (Buenos Aires) agreed to provide infrastructure for the trans-Andean terrestrial link of Global Crossing's South America Crossing (SAC). IMPSAT's contribution will form the southernmost perimeter between Las Toninas, Argentina, on the Atlantic coast and Valparaiso, Chile, on the Pacific. IMPSAT will also team with Global Crossing for the construction and provisioning of backhaul networks in all countries connected to the SAC system and in Venezuela.

Fujikura Ltd. (Tokyo) and Draka Holding N.V. (Amsterdam) agreed to establish a 50/50 joint venture in Japan called Fujikura Draka Fiber Optics for the production of certain optical-fiber products for Fujikura. The technology used by the venture, called the PCVD process, was developed by Draka subsidiary Plasma Optical Fiber bv (Eindhoven, Netherlands). Production will be in a Fujikura facility outside Tokyo and will start by the end of 1999.

An 1100-km fiber-optic cable designed to improve telecommunications in China's Tibet Autonomous Region has been placed into service. The cable links Lhasa, Tibet's capital, with Nyingchi and Qamdo counties, located in mountainous areas, and is the second long-distance optical-fiber cable on the Tibet Plateau. The first section runs from Lhasa to Lanzhou, the capital of Gansu Province. Tibet plans to connect all cities and prefectures by fiber-optic cable by 2003 and to connect all counties by 2005, according to the regional Post and Telecommunications Bureau (Xinhua, China).

International telecommunications services provider New Millennium Development Group (NMDG--Hong Kong) plans to create a $3-billion global fiber-optic cable network, targeting four geographical regions that include Europe and Asia Pacific. In addition to building the network, NMDG is forming partnerships with telecommunications providers worldwide. The Asia-Pacific section will begin development in late 2000. The company plans to establish four undersea cable systems in the region that will link 13 Asian countries to each other and to the United States and Russia. Two other regions eyed for development are the Middle East/Africa and the Caribbean. Both of these networks are expected to be operating by 2001.

Fujitsu Quantum Devices (Yamanashi, Japan) has entered into a dual-source agreement with Lucent Technologies Microelectronics Group (Allentown, PA) that covers a pair of optical receivers. The first device, the R192 receiver, operates at 10 Gbits/sec with the 1300- to 1600-nm window. The receiver will be available with avalanche photodiode or PIN photodetectors in a 16-pin surface-mount package that includes a singlemode pigtail. The second receiver, the P172 FastLight, operates at 2.5 Gbits/sec within the 1100- to 1600-nm window.

Telecom Egypt (Cairo) awarded a $55.5-million contract to Morrison Knudsen Corp. (Boise, ID) to design and install new telecommunications lines for the telephone exchange area outside plant facilities in Cairo, Port Said, and Alexandria. The project includes the deployment of about 35 mi of fiber-optic cable. The project is jointly funded by Telecom Egypt and the U.S. Agency for International Development (USAID). Telecom Egypt is an agency of the Ministry of Transportation and Communications, which serves the Arab Republic of Egypt. The project should be completed in December 2002.

A memorandum of understanding (MOU) was signed between Telstra Corp. Ltd. (Melbourne, Australia), Teleglobe Inc. (Montreal), and Japan Telecom (Tokyo) to proceed with development and commercialization of the proposed Australia-Japan undersea cable network. The MOU followed a successful assessment of a feasibility study. A data-gathering meeting in Sydney was attended by 80 representatives of nearly 40 telecommunications companies and outlined the technical specifications of the cable, explained the pricing packages available, and assessed the level of interest and demand in the marketplace. The cable is planned for service in 2001.

Saudi Telecom (Riyadh, Saudi Arabia) signed a multimillion-dollar agreement with FLAG Inc. (Hamilton, Bermuda) for capacity on FLAG's cable system. The 28,000-km FLAG network stretches from the United Kingdom to Japan. The deal enables Saudi Telecom to connect with the rest of the world through the cable system's Jeddah landing station. Saudi Telecom is also FLAG's partner in the management of the Jeddah landing point. Additionally, Jordan and Israel agreed on steps to link Israel to the FLAG network that runs through Jordan in order to get connected to the Far East. The Jordanian link to FLAG is in the southern port of Aqaba. The Aqaba link with about 18,000 mi of cable costs $40 million.

Frontier Communications (Rochester, NY) and Telstra Inc. (Melbourne, Australia) announced a 30-month, $20-million network-services agreement. Fronier will provide network services to the U.S. subsidiary of Telstra.

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