Industry Update

CIENA Corp. (Linthicum, MD) completed its acquisition of Omnia Communications Inc. (Marlborough, MA), acquiring all outstanding shares of Omnia in exchange for approximately 16 million shares of CIENA common stock. The transaction is valued at approximately $474 million and will be accounted for as a pooling of interests.

Lasertron Inc. (Bedford, MA), a division of Oak Industries Inc., announced an initial multimillion-dollar order for its QDMH 10-Gbit/sec detector with a submarine telecommunications equipment manufacturer. The Lasertron QDMH high-speed PIN detector offers bandwidth up to 18 GHz.

GN Nettest's (Toronto) fiber-optic division signed an agreement to acquire PK Technology (Beaverton, OR) and York Sensors Ltd. (Hampshire, UK), the optical test and measurement division of IFR Systems Inc. The move was made in hopes of bolstering the company's market share in the fiber-optics market. PK Technology manufactures test and measurement equipment for fiber-optic networks. York Sensors manufactures and distributes distributed temperature sensing products for power, hydrocarbon processing, oil and gas, and fire detection industries.

Cincinnati Bell (Cincinnati, OH) agreed to pay $2.2 billion in stock and assume about $1 billion of debt to acquire IXC Communications (Austin, TX), a long-distance company with a national long-haul fiber-optic network. The deal will make Cincinnati Bell a national carrier able to offer bundled services over 13,000 mi of network. Under the agreement, each share of IXC would be converted to 2.0976 shares of Cincinnati Bell common stock. The companies expect the merger to be completed in the fourth quarter of 1999 or early 2000, pending regulatory approval.

NP Photonic Technologies (Tuscon, AZ) received $750,000 from the U.S. Department of Defense Phase II Small Business Innovation Research (SBIR) fund to continue development of novel fiber-optic components that will meet the demand for faster data transmission in both commercial and military communications systems. Research Corporation Technologies provided additional funding and is a partner in the project. NP is developing its Er3+ -doped glass fiber for fiber amplifiers as a lower-cost alternative that exhibits extremely high gain per unit length.

MediaOne Labs (Denver, CO) and Philips Broadband Networks (Atlanta, GA) successfully completed a series of tests on a broadband dense wavelength-division multiplexing (DWDM) system with a capacity of 20 optical wavelengths, each transporting 200 MHz of 256 quadrature amplitude modulation (QAM) channels. Twenty optical wavelengths in the forward path of the test system, each with 200-MHz capacity, yielded a cumulative forward capacity of 4 GHz per fiber for narrowcast applications. The 115-km fiber links were equipped with chromatic dispersion compensation and automatic optical-protection switches for primary and secondary fiber routes.

NorthEast Optic Network Inc. (Westborough, MA) signed a $3-million master-services agreement with Vitts Networks (Manchester, NH) for OC-12 (622-Mbit/sec) level service in New Hampshire and Massachusetts. The five-year deal will place the service in Manchester, NH; Keene, NH; Framingham, MA; Springfield, MA; and Worcester, MA; forming a Synchronous Optical Network (SONET) ring in central New England for transmitting Vitts's protected-service-network customer traffic. The service includes public and private Internet protocol (IP) and Asynchronous Transfer Mode (ATM) data transmission.

Phonoscope Ltd. (Houston, TX) completed final installation of a 96-mi district-wide high-speed fiber-optic local area network (LAN) connecting the main administration building to 48 school campuses in the Cy-Fair Independent School District. The system provides students and personnel with access to distance learning, education resources, video conferencing, and faster use of administrative support systems. The backbone was designed to accommodate the addition of 13 new campuses currently planned by the district for future construction.

FORE Systems Inc. (Pittsburgh, PA) will provide ATM core-switching systems for the first phase of Worldwide Fiber Inc.'s (Vancouver, BC) fiber-optic network build out. FORE is supplying its ForeRunner ASX-4000 ATM core switches with OC-48c (2.5-Gbit/sec) interfaces and carrier-class redundancy, and its ForeView Foundation network-management system. Worldwide Fiber is constructing an 11,000-mi North American fiber-optic communications network.

ALLTELL (Little Rock, AK) selected two vendors for the build-out of its more than 12,000-mi fiber-optic network stretching across 12 eastern states. Fujitsu Network Communications Inc. (Richardson, TX) will supply SONET transmission equipment in a multimillion-dollar, multiyear contract that includes engineering and installation services. CIENA Corp. (Linthicum, MD) was selected to supply DWDM optical-transport equipment along a 2500-mi portion of the network. In addition, CIENA was awarded a three-year contract with ALLTEL for optical-network business in the network.

Lucent Technologies (Murray Hill, NJ) announced it is acquiring SpecTran Corp. (Sturbridge, MA), supplementing Lucent's portfolio with additional fiber-optic products and expertise. The acquisition will include the two SpecTran divisions: SpecTran Communication Fiber Technologies, which manufactures fiber for communications; and SpecTran Specialty Optics Company, which develops custom-engineered fiber solutions and cable components. Lucent made a cash tender offer totaling about $64 million plus $35 million in SpecTran debt. Lucent and SpecTran are building off a relationship established last year when the companies signed an agreement giving Spectran rights to certain fiber patents used in manufacturing operations. The companies plan to complete the transaction by September 30.

CapRock Communications Corp. (Dallas, TX) signed an $18-million indefeasible right-of-use (IRU) agreement with Williams Communications Group Inc. (Tulsa, OK). The deal provides Williams with collocation and access to 755 route-mi running through Corpus Christi, Harlingen, Houston, Kingsville, Laredo, McAllen, and San Antonio. Williams currently has 18,600 route-mi in service and plans to complete 32,000 route mi connecting 125 cites by the end of 2000.

Tyco Submarine Systems Inc. (Morristown, NJ) netted a $630 million contract from Worldwide Fiber Inc. (Vancouver, BC) for the Hibernia undersea transatlantic network project. According to the agreement, Tyco will install an undersea cable-system link with landing points in Halifax, Boston, Dublin, and Liverpool. The link will also connect to Worldwide Fiber's existing North American terrestrial backbone.

The submarine segment of WCI Cable Inc.'s (Hillsboro, OR) NorthStar Network transmitted its first light between Oregon and Alaska. The network connects Alaska to the continental United States via undersea and terrestrial cables. Alcatel Submarine Networks (Paris) conducted two tests immediately following NorthStar's final submarine cable splice and results conformed to specifications. Alcatel will now begin the commissioning phase of the submarine segment. WCI is targeting a network startup date later this month.

Actel Integrated Communications Inc. (Mobile, AL) awarded a three-year, $7 million network applications contract to Frontier Communications (Rochester, NY). Actel is a facilities-based competitive loca-exchange carrier (CLEC) serving Alabama, Mississippi, Louisiana, Texas, and Florida through its ICI Network. It also serves the southeastern United States as a long-distance reseller.

Siecor (Hickory, NC) was awarded a new project by Sprint North Supply (New Century, KS) to provide the fiber-optic cable for the Sprint World Headquarters in Overland Park, KS. Siecor's LANscape MIC optical-fiber cables will be used for the project installation. The MIC cables are riser-rated or plenum-rated flame- retardant cable with 2-144 fibers. The fiber cable will contain Corning's (Corning, NY) InfiniCor fiber designed for Gigabit-Ethernet applications.

Cisco Systems Inc. (San Jose, CA) acquired StratumOne Communications (Santa Clara, CA), a privately held developer of semiconductor technology. Cisco hopes the acquisition will advance its New World telecommunications strategy and provide the silicon technology for high-speed data networks. Under the agreement, between 6.31 and 7.72 million shares of Cisco common stock will be exchanged for all outstanding shares and options of StratumOne worth about $435 million. The deal is expected to close in the first quarter of fiscal 2000.

Methode Electronics Inc. (Chicago, IL) announced the acquisition of Polycore Technologies Inc. (Melbourne, FL), a developer of communications transceivers. The new business unit will be called Methode Communications Modules. MCM's product family includes a series of LC-format transceivers for multimode glass-optical-fiber-networking applications. The new company will be headquartered in Melbourne, FL.

C-COR.net Corp. (State College, PA) and Silicon Valley Communications Inc. (SVC--Santa Clara, CA) announced a definitive merger agreement under which SVC will become a wholly owned subsidiary of C-COR. Under the agreement, C-COR will issue approximately 1,605,000 shares of its common stock to SVC shareholders, and convert options and warrants to acquire SVC stock into options and warrants to acquire approximately 420,00 shares of C-COR common stock, each subject to certain potential adjustments. The merger is expected to be completed later this year.

Charter Communications (St. Louis, MO) will install SONET transport infra structure in Fort Worth, TX, using an optical-transport platform from Cerent Corp. (Petaluma, CA). Deploying the Cerent 454, Charter will manage digital home communications terminal (HCT) functions through 100-Mbit/sec Fast-Ethernet connections over its cable-transport layer. Charter is a broadband-communications company offering an array of services including cable television, high-speed Internet access, and advanced digital-video programming.

Dynarc (Sunnyvale, CA) a start-up provider of optical IP and multiservice network solutions announced the completion of a private placement transaction with a select group of institutional investors. The successful placement brings in $8.5 million to the company, excluding costs. The additional capital will be used to strengthen and grow the sales and marketing efforts for Dynarc's high-speed optical-switching products in North America and Sweden. The switches are based on the company-developed dynamic synchronous transfer mode (DTM) technology.

Siemens Information and Communications Networks Inc. (Boca Raton, FL) is supplying and installing fiber-optic transmission technology for the Arcos 1 submarine cable network along the Caribbean coast. The equipment will include Synchronous Digital Hierarchy (SDH) and DWDM systems and the appropriate network-management systems from Sieman's TransXpress product family. Arcos 1 will connect 15 countries in the Caribbean via a 9000-km ring system. The $285-million contract was awarded to a consortium comprised of Nordeutsche Seekabelwerke GmbH (Nordenham, Germany), Tyco Submarine Systems Ltd. (Morristown, NJ), and Siemens. The network should be completed by mid-2000.

ECI Telecom Ltd. (Petah Tikva, Israel), an Israeli telecommunications equipment provider, won a $13.7-million contract from Colombian telecommunications operator ETB (Bogota, Colombia) to deliver an SDH network solution for Bogota's Metropolitan Telecommunications Network. The deployment will support ETB's voice, data, Internet, and video services, as well as provide network management. ETB accounts for 33% of the total in-service telephone lines in Colombia.

Telefonica Peru has standardized its 870-MHz upgrade projects with ANTEC's (Duluth, GA) 870-MHz line extenders. Telefonica Peru is deploying ANTEC's RF Link amplifiers to bring advanced, two-way service to more than 250,000 subscribers in Peru. ANTEC will also provide around-the-clock support and training.

BT (London) signed a three-year agreement with Alcatel (Paris) to build a nationwide transmission network in Spain. Amounting to 24 million Euros, the investment is aimed at coping with the expected boom in Internet traffic in Spain. Covering a total length of 9,000 km, the network will be based on five fiber-optic rings and the deployment of DWDM to deliver IP services. SDH equipment operating at speeds ranging from STM-1 (155 Mbits/sec) to STS-192 (10 Gbits/sec) and a network-management platform that integrates all network elements are also part of the agreement.

Level 3 Communications Ltd. (London) announced completion of its London network and acquisition of a second gateway facility in the city. The metropolitan network covers 33 km of London business districts from the West End to Kings Cross, Docklands, and the City of London. The network was built using 16 conduits. The extra conduit allows installers to pull new fiber through an empty conduit to upgrade the network without new construction. Level 3's second gateway site is located in North London. The new facility--expected to be ready for service by the third quarter of 2000--will house switch equipment and provide space for expansion.

Eurotunnel Telecoms Ltd. (London), an international telecommunications provider building a 31-mi fiber-optic channel tunnel link between France and the United Kingdom, selected Corning Inc. (Corning, NY) to provide its LEAF optical fiber for the project. The tunnel represents the first fiber-optic link through the channel tunnel. Eurotunnel Telecoms Ltd. and its French equivalent, Eurotunnel Telecom S.A., are wholly owned subsidiaries of the Channel Tunnel Group.

Alcatel (Paris) has regrouped its terrestrial and submarine transmission networking, optoelectronic components, and related research and development into a new organization called Alcatel Optics. The new organization, reporting to Alcatel's Internet and optics segment, was created as a result of increased transmission requirements spurred by global Internet growth.

Global TeleSystems Group Inc. (GTS-McLean, VA) purchased NMBS/SNCB's interest in Hermes Europe Railtel (Brussels, Belgium), buying out the last of the original partners in the fiber-optic network venture. Under the agreement, NMBS/SNCB (the Belgian railway) converted its 6.8% Hermes shareholding into GTS shares. GTS's trans-European cross-border broadband fiber network consists of 13,200 route-km of fiber with points-of-presence in 23 cities and 10 countries. By 2000, GTS plans to extend the network to 25,000 route-km and 50 cities.

Marconi Communications Ltd. (London) and Ericsson (Stockholm, Sweden) replaced an existing cooperation agreement to enable Ericsson to market the full range of Marconi's SDH high-speed transmission equipment. Under terms of the new agreement, Ericsson will integrate Marconi's MSH and SMA families of SDH equipment into its total fixed and mobile network solutions, and provide Ericsson with access to Marconi's development capabilities. The new arrangement builds on the existing agreement signed in 1995.

KPNQwest, owned jointly by Qwest Communications International Inc. (Denver, CO) and KPN (Amsterdam), began construction on the German "EuroRing," the third of six OC-192 (10-Gbit/sec) self-healing rings the venture plans to build in Europe by 2001. The first two EuroRings, connecting a total of 14 European business centers, are currently operating. The new ring-consisting of 96 fiber strands capable of 80 wavelengths at 10 Gbits/sec each-will interconnect to the first two. KPNQwest plans to complete the third ring by 2001.

German telecommunications group Mobilcom AG (Frankfurt, Germany) signed a deal to build a fiber-optic network to reduce interconnection costs. The company currently uses the network owned by Deutsche Telekom AG (Bonn), paying an interconnection fee for each call. Mobilcom plans to build a 3400-km fiber network in cooperation with Gasline Telekommunikationsnetzgesellschaft, the telecommunications unit of a German gas firm.

Seokyo Telecommunications Co. Ltd. (South Korea) has awarded a contract to Optelecom Inc. (Gaithersburg, MD) for fiber-optic equipment to be deployed in its airport security and surveillance system at Inchon International Airport. Coupled with an earlier-announced contract in the United Kingdom, the two airport-related contracts total more than $1.5 million. Optelcom produces high-bandwidth communications products, financial market data information, and business video systems.

An agreement with Sun Technology Solutions (Charlotte, NC) will provide Southland Financial Inc. (New York City) with $5 million in capital to secure an initial round of Southland's "last-mile fiber-optic solution" in Hong Kong. Under the agreement, Sun will make a $45-million equity investment in Southland. Southland aims to be an independent communications network and platform-server provider in Southeast Asia offering last-mile solutions.

Japan's Hitachi Cable Ltd., Matsushita Electric Industrial Co. Ltd., Sony Corp., Toshiba Corp., and connector makers Molex, Inc., SMK Electronics Corp., and Taiko Denki Co. Ltd., have formed a new electronics consortium supporting a miniature POF interface. The consortium plans to introduce the new POF interface to industry standards organizations inside and outside of Japan to establish it as a future global standard. Targeted at future high-speed requirements such as IEEE 1394, the proposed interface includes optical connectors about half the size of the current PN-type POF connector. The common specifications will cover the connector, transceiver, and cabling.

FLAG Telecom (London) announced two landing stations were slated to enter commercial service as this issue went to press on its FLAG (Fiber-optic Link Around the Globe) cable system. The landing station at Jeddah, Saudi Arabia, entered service on July 1, managed by Saudi Telecom Company. The cable landing station at Aqaba, Jordan, will enter into service on July 15 and be managed by Jordan Telecommunications Company. The FLAG undersea fiber-optic cable system stretches 27,300 km from the United Kingdom to Japan via the Atlantic Ocean, Mediterranean Sea, Red Sea, Indian Ocean, South China Sea, and the Pacific Ocean. The $1.5-billion privately financed cable has 16 landings in 13 countries and entered commercial service in late 1997.

Aberdare Cables (Johannesburg, South Africa) and Corning Inc. (Corning, NY) plan to become major suppliers of fiber-optic cable to the South African telecommunications industry. The two companies forged an agreement to join forces to bring fiber-optic technology and services to both private and public network operators throughout South Africa, taking advantage of opportunities presented by the rapidly expanding African telecommunications market. As part of the agreement, Corning's fiber technology will be incorporated into Aberdare's fiber-cable product line in South Africa and related markets; the agreement also addresses the possibility of sharing new technologies.

Cable deployment began in the Tasman Sea, marking the beginning of construction on the Southern Cross Cable Network between Australia, New Zealand, and the U.S. West Coast. The submarine cable was landed at Sydney, Australia, to begin the segment connecting New Zealand, Hawaii, and the U.S. mainland. Built by a consortium comprising Telecom New Zealand, Cable & Wireless Optus (London), MCI WorldCom (Jackson, MS), and Alcatel (Paris), the cable system is expected to be finished by August 2000.

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