Industry Update

Dec. 1, 1999

Bell Atlantic Corp. (New York City) announced it would take a stake in Metromedia Fiber Network Inc. (New York City) as part of a $2.2-billion deal that will enable Bell Atlantic access to a national fiber-optic network. Under the deal, Bell Atlantic will pay Metromedia $550 million for use of its network in 50 major U.S. metropolitan markets for a period of 20 years. Bell Atlantic will also take a 9.9% stake in Metromedia for $700 million in newly issued shares at $28 per share. It will also buy about $975 million in debt securities that, if converted into stock, will increase Bell Atlantic's investment to about 19%.

CapRock Communications Corp. (Dallas) and Adelphia Business Solutions (Coudersport, PA), formerly Hyperion Communications, announced a 30-year indefeasible right-of-use agreement granting Adelphia access to several Texas markets via 1208 additional fiber route-mi of CapRock's Synchronous Optical Network (SONET)-based network. This second agreement between the two companies is valued at $7.2 million. The agreement extends Adelphia's network southward from Dallas to Waco, along to Bryan and east to Austin. From there, the connection continues southward to San Antonio, Laredo and McAllen, before routing through Corpus Christi, Victoria, and on to Houston.

Lasertron Inc. (Bedford, MA), a division of Oak Industries, announced a major order for its QDMH 10-Gbit/sec detector with an unnamed submarine telecommunications equipment manufacturer. The Lasertron QDMH high-speed PIN detector boasts bandwidth up to 18 GHz with high responsivity and flat frequency response for use in long-haul receivers operating at 10 Gbits/sec and beyond.

MP Telecom (Duluth, MN), a wholly owned subsidiary of Minnesota Power Inc., will expand its fiber-optic network 208 mi into southern Minnesota. The new fiber will link Winona, Rochester, Austin, Albert Lea, Owatonna, Faribault, and Minneapolis. The project is part of MP Telecom's plan to tie its network to Minneapolis and Wadena and Eau Claire, WI. When the project is completed, MP Telecom will have more than 1000 route-mi of fiber in its Minnesota network.

Florida East Coast Telecom Inc. (FECT--Orlando) is doubling the reach of its fiber-optic network to serve major centers in the south. FECT announced an agreement with Enron Corp. (Houston) that gives both companies access to portions of each other's fiber networks. The deal, which includes co-location space for each company, will provide FECT with a minimum of 9500 fiber-mi of dark fiber in the Louisiana/Texas markets. Network Plus Corp. (Quincy, MA) also signed an agreement with FECT to acquire an additional 9106 mi of fiber-optic cable in the southeastern United States. The 20-year, $19-million deal provides Network Plus with access to two diverse fiber routes from Atlanta to Miami. FECT controls 12,600 fiber-mi of dark fiber and fiber-conduit assets that comprise a 780-mi telecommunications loop.

Newport Corp. (Irvine, CA) acquired the commercial bulk-precision-optics business portion of Corning OCA West (Garden Grove, CA), a subsidiary of Corning Inc. (Corning, NY). The operation manufactures specialized precision-optical products and systems. Newport plans to relocate all its existing optics operations to the Garden Grove location. The cash transaction is expected to bring important new capabilities to Newport with applications across a variety of industries through the design and manufacturing of optical elements and systems.

GST Telecommunications Inc. (Vancouver, WA) announced a 20-year agreement with the city of Pasadena, CA, under which GST will lease and operate fiber on the city's 25-mile metropolitan fiber-optic backbone. Under the agreement, GST will lease fiber on the city's recently installed backbone, connecting Pasadena Water and Power Dept. facilities throughout the city, as well as other city government, school district, and corporate office buildings.

IXC Communications Inc. (Austin) and PSINet Inc. (Herndon, VA) announced an agreement for IXC to provide PSINet with approximately 14,000 mi of fiber backbone on its coast-to-coast fiber-optic network. Financial terms were not disclosed. The exchange will occur in two phases. During 1999 and 2000, PSINet will acquire fiber on about 14,000 mi of IXC's network. A second phase later in 2000 involves the sale of additional fibers to PSINet, who also contracted with IXC to provide operational maintenance and co-location. PSINet also recently selected Nortel Networks (Brampton, ON) to supply its OPTera LH optical-networking equipment and integrated management system for PSINet's global-backbone network expansion. The deal, a first-phase deployment for PSINet, was for a three-year period.

JDS Uniphase Corp. (San Jose) continued its acquisition spree by acquiring Ramar Corp. (Northborough, MA), a developer of lithium niobate-based integrated optical components. Terms of the acquisition were not disclosed, but JDS Uniphase plans to integrate Ramar into its modulator business to add technical capabilities to its 10- and 40-Gbit lithium-niobate modulator-product development activities. JDS Uniphase recently acquired EPITAXX Inc. (Trenton, NJ), a supplier of optical detectors and receivers for fiber-optic telecommunications and cable-television networks, and AFC Technologies (Hull, QC), a developer of optical amplifiers and broadband instruments.

Blaze Network Products Inc. (Dublin, CA), an optical-networking company, received $10 million in its first round of venture capital funding. Lead investors were Wasserstein Adelson Ventures L.P. (New York City) and Dynafund Ventures (Los Angeles). The round of investment is expected to help the company expand its manufacturing facility and augment its application-specific integrated-circuit design capabilities. Blaze is developing technologies that enable higher bandwidth for short-haul premises networks.

International FiberCom Inc. (Phoenix) announced its Infrastructure Development Division was awarded new contracts totaling more than $35 million. Services include the engineering and installation of fiber-optic network segments and turnkey development of city-wide telecommunications networks for companies, including AT&T (New York City), NEXTLINK Communications Inc. (Bellevue, WA), Comcast Communications (King of Prussia, PA) and Cox Communications (Atlanta).

ADC Telecommunications Inc. (Minneapolis) announced that Advanced Systems Technology Inc. (Lawton, OK) purchased the Cellworx Service Transport Node for deployment in a U.S. Army base's fiber-optic network. The initial $2-million order, for an eight-node ring and systems-integration services, enables the Army to develop a connectivity approach that maximizes the current fiber network to broadcast real-time digital video as well as local-area-network services.

Global Crossing Ltd. (Hamilton, Bermuda) announced successful equipment deployments through agreements with Hitachi Telecom (USA) Inc. (Norcross, GA) and Pirelli Cables and Systems North America (Columbia, SC) on its North America Crossing network (formerly the Frontier Optronics Network). Hitachi's AMN 5192 10-Gbit/sec SONET equipment went into commercial service on the network, a coast-to-coast Internet protocol-based fiber-optic backbone. Pirelli's DWDM system also went operational, providing gigabit data speeds with eventual scaling to terabit speeds.

Tyco Submarine Systems Ltd. (TSSL--Morristown, NJ) signed a contract with Worldwide Telecom Inc. (Barbados), a subsidiary of Worldwide Fiber Inc. (WFI-Vancouver, BC), for TSSL's seahorse Atlantic Maintenance Program for WFI's transatlantic Hibernia Cable System. The five-year maintenance plan is valued at approximately $100 million and has provided for extensions of the contract at the end of the initial five-year term. seahorse Atlantic is a dedicated, full-service maintenance solution for undersea cable-system owners, using three vessels from TSSL's fleet.

Total Telcom Inc. (Edmonton, AB, formerly D.C. Corrosion Corp.) was awarded a major turnkey fiber-optic broadband project in Alberta. The value of the contract will exceed $8 million and work completion is expected by the end of 1999. Total Telcom provides a wide range of telecommunications activities: design, detail engineering, project management, installation, and maintenance of systems for voice, data, video, and telemetry. The customer's identity was withheld on request.

Millennium Digital Media (St. Louis) selected ANTEC Corp. (Duluth, GA) to provide optical, RF, actives, and network-power solutions for the upgrade of its Eastern U.S. properties. Through the partnership, ANTEC has provided Millennium with optical needs that include Laser Link 1310-nm transmitters and optical nodes. ANTEC is also supplying network powering supplies, including mini-bridgers and line extenders for Millennium's upgrade projects.

Alcoa Fujikura Ltd. (Brentwood, TN) acquired a majority share in Tele-Tech Company Inc. (Lexington, KY) and DigiSys Corp. (Lexington, KY). The two companies provide engineering, furnishing, and installation services, along with intrabuilding wiring services in the telecommunications industry. Alcoa Fujikura hopes the additions will increase its service and product offerings to telephony and business premise customers.

Alcatel (Paris) signed a contract with Pangea Ltd. (Hamilton, Bermuda) to provide two submarine cables across the North Sea. Each cable will have an initial capacity of 160 Gbits/sec and will form part of a self-healing ring linking London, Amsterdam, Dusseldorf, Hamburg, and Copenhagen. Alcatel will engineer, supply, install, and commission the links. The cable between Redcar in the United Kingdom and Maade in Denmark will incorporate Alcatel's six-fiber repeater, designed to increase capacity of the cable by 50%. The southern cable, between Lowestoft in the U.K. and Amsterdam in the Netherlands, will use Alcatel's RAMAN pumps and optical amplifiers to enable the 259-km span to operate without the need for underwater amplification. The cables will be incorporated into the ring during November 2000. Alcatel also partnered with Global Crossing Ltd. (Hamilton, Bermuda) in managing the operation and maintenance of its Pan European Crossing, an 11,000-km fiber-optic network that will connect at least nine European countries. Terms of the deal were not announced, but the network will enable connectivity between 24 major European cities and the Global Crossing Network.

Telia AB (Stockholm) will deploy optical-transport systems throughout its backbone network supplied by CIENA Corp. (Linthicum, MD). Under the first contract period through December 2000, CIENA expects to provide its MultiWave Sentry equipment and support for Telia's network spans in Sweden, France, Germany, and the United Kingdom Initial orders, worth about $10 million, have already been received. Telia began initial deployments of optical-transport systems from CIENA in 1998.

France Telecom (Paris) announced the entry into commercial service of the sea-me-we 3 undersea fiber-optic cable network. The network project began in 1997 by a consortium of 92 international-telecommunications operators. Links entering service include Singapore to southern China, Australia, and Europe via India and the Middle East. Extensions to Japan and Shanghai will enter service before the end of 1999. sea-me-we 3 is 25,000 mi of cable linking 33 countries on four continents: Europe, Africa, Asia, and Australia. The cable has a transmission rate of up to 40 Gbits/sec offering voice, data, and video services.

WORLDxCHANGE Communications (San Diego), a global-telecommunications company in 12 countries, announced plans to develop and deploy a broadband fiber-optic network in Europe. The company will construct a 3000-km network using DWDM equipment and low dispersion fiber. worldxchange operates 40 switches in 12 countries with an extensive network of owned and leased undersea and terrestrial fiber cables.

Level 3 International, a European subsidiary of Level 3 Communications Inc. (Omaha, NE), will deploy upwards of 600,000 km of Corning Inc.'s (Corning, NY) LEAF optical fiber in the first installment of its European data network. Corning Cables, Corning's European cabling division, will cable the total volume of fiber for the network. The contract follows a 1998 announcement that Level 3 would deploy more than 2 million km of the LEAF fiber in the U.S. nationwide network.

LD COM (Paris) signed a contract with Alcatel (Paris) for the supply of more than 500,000 km of fiber-optic cable for its French and European network. The contract was worth 200 million francs. Alcatel previously provided 60,000 km of fiber for LD COM's build-out along the Seine, in and around Paris. The new purchase will enable LD COM to further extend its network to link Lille, Calais, Lyon, Strasbourg, Arles, Montpellier, and Geneva during the next 12 months. LD COM, created in 1998, is a long-distance telecommunications infrastructure manufacturing and management company. Alcatel also penned an agreement to provide DWDM and Synchronous Digital Hierarchy equipment to France Telecom (Paris) for its pan-European and national networks. The equipment will be installed in 40 cities in 16 countries with completion planned for 2001.

Telecommunications carrier MobilCom AG (Schleswig, Germany) will use CIENA Corp.'s (Linthicum, MD) MultiWave Sentry 4000 optical-transport system to expand the capacity of its nationwide network 40-fold. The three-year contract is valued at an initial $8.6 million. MobilCom, a private telephone company, will use CIENA equipment to bypass the expensive SDH layer and enable network upgrade to 96 channels at 2.5 Gbits/sec or 48 channels at 10 Gbits/sec.

FLAG Telecom (London) and Global TeleSystems Group Inc. (GTS--McLean, VA) plan to nearly double the capacity of FLAG Atlantic-1 (FA-1), the undersea fiber-optic cable connecting London, Paris, and New York City. The speed of the network will be upgraded to 2.4 Tbits/sec on each of FA-1's two transatlantic cables. The project's initial cost of $1.2 billion has been completely funded through financing arrangements, and more than half of the system's capacity is already committed, including a dedicated fiber pair to GTS. Alcatel Submarine Networks (Paris) will provide fiber cable and optical-transmission technology and systems.

Carrier's carrier iaxis (London) announced plans to build a 10,000-km submarine network in the Mediterranean that will link Europe, Africa, and Asia. The first phase of the $900-million network is scheduled for completion by the end of first quarter 2001. Nordeutsche Seekabelwerke GmbH (Nordenham, Germany), a company fully owned by Siemens AG (Munich), will manufacture and deploy the 48-fiber cable for the initial phase of the network, stretching 390 km from Barcelona and Marseille. The network boasts the first multiple terabit capacity in the Mediterranean. During 1999, iaxis built a 3000-km terrestrial network linking cities in northern and western Europe. The company plans to extend that network another 9000 km into central and southern Europe by the end of first quarter 2000 at a total cost of $500 million.

Nortel Networks (Brampton, ON) landed two new contracts in Europe for the construction of fiber-optic networks. LambdaNet Communications (Hanover, Germany) will use Nortel solutions for an intercity Internet network planned for operation in January 2000 linking 21 German cities and expected to expand to a pan-European network later in the year. The contract is valued at $100 million over three years. Nortel inked an additional $100-million deal with Pangea Ltd. (Hamilton, Bermuda) to provide an optical-fiber cable system linking London, Amsterdam, Dusseldorf, Hamburg, Copenhagen, Malmo, Gohtenburg, Stockholm, Oslo, and Helsinki in Nothern Europe. The initial project, called Pangea-1, will provide an integrated broadband solution for carriers and Internet service providers offering voice, video, data, Internet transmission, and leased wavelength services.

Teleglobe Communications Corp. (Reston, VA) and Aliatel a.s. (Praha, Czech Republic) inked an agreement for the deployment of a 45-Mbit/sec ATM link connecting Aliatel's local network to Teleglobe's global-telecommunications network. The deal enables Internet users in the Czech Republic to have improved worldwide online access. The Aliatel data-transmission network will access Teleglobe's GlobeSystem fiber-optic backbone network in Frankfurt, Germany.

Brazilian long-distance telephone company Embratel (Rio de Janeiro) will join forces with Lucent Technologies (Murray Hill, NJ) to build a nationwide high-speed data network in Brazil. Financial details were not disclosed, but the network will offer ATM and frame-relay backbone connections, dedicated and dial-up Internet, and virtual private networks. Lucent's NetCare Professional Services division will provide network planning, design, and implementation. Embratel is part of MCI WorldCom Inc. as a result of the privatization of state phone company Telebras in 1998.

Pegasus Telecom (Brazil) signed a $120-million contract with Alcatel (Paris) for the supply of equipment to provide digital voice and data-transmission services in Brazil. Pegasus plans to set up a 6000-km fiber-optic cable network in four phases. The first will link Rio de Janeiro and Sao Paulo and later, Minas Gerais. The network will spread throughout southern Brazil during the year 2000. Empresa Nacional de Telecomunicaciones (Chile) also awarded Alcatel a contract to update the first 1400-km section of its domestic network. Under the terms of the $2.4-million agreement, Alcatel will supply DWDM technology to expand the network to 32 wavelengths at 2.5 Gbits/sec, scalable up to 16 times at 10 Gbits/sec.

NEC Corp. (Tokyo) announced one of its fiber-optic telecommunications systems was approved by AT&T Corp. (New York) and is currently being deployed by the U.S. carrier. NEC's SpectraWave DWDM enables carriers to increase the amount of data transmitted on a fiber-optic cable. AT&T is deploying the current generation of SpectraWave that offers 32 channels with an upgrade to 64 channels. NEC is currently developing a 160-channel version for availability in late 2000.

Lucent Technologies (Murray Hill, NJ) announced the initial investment of $10 million to open its first Asian research and development center in Shenzhen, China. The broadband optical-network research center will focus on software development for network planning and management. Lucent plans to further expand the center over the next 18 months. Lucent established a manufacturing center in Shanghai several years ago to produce SDH transmission and other optical-network products.

Telekom Malaysia (Melaka, Malaysia) won a contract to assist the state government of Melaka with an IT infrastructure for its electronic-government project. The network, called MelakaNet, will be based around Telekom Malaysia's Corporate Information Superhighway (COINS) backbone and will provide the infrastructure phase one of the state's Projek Kerajaan Electronic Negeri Melaka. MelakaNet will support electronic-government applications on its fiber backbone and a later connection to the country's high-tech trade zone, the Multimedia Super Corridor.

China's Shandong PTA enlisted Alcatel (Paris) to build a DWDM link for the cities of Jinan and Qingdao. Exact terms of the contract were not released. The link will provide a transmission capacity of 16 channels at 2.5 Gbits/sec on each fiber pair. The new link is scheduled for completion by April 2000.

Elbit Medical Imaging Ltd. (Haifa, Israel) and Bezeq International (Petach Tikva, Israel) signed agreements with Project OXYGEN Ltd. (Hamilton, Bermuda) granting them the right to buy a controlling stake in its global fiber-optic network. The $15-billion network will connect 75 countries. In the first stage, to be completed within two years, a cable will be deployed between Israel and New York through Europe at a cost of $1.5 billion. Of this sum, $500 million will be in equity and the rest in debt. Groups led by Elbit and Bezeq will each invest $250 million for a 40% equity stake and control of voting rights. The remaining $250 million will be raised among international investors. The option granted the two companies is expected to close within a few months.

PowerTel Ltd. (Adelaide, Australia) announced it will complete a fiber-optic network along the east coast of Australia by January 2000. A link between the capital cities of Sydney and Brisbane, connecting regional towns along the route with central business district fiber laying in Sydney, Brisbane and Melbourne has been completed. Work on the Sydney to Canberra to Melbourne link is underway. PowerTel has invested more than $131 million in the new infrastructure. The network runs through existing ducts provided by a consortium of utility companies. PowerTel will offer data, voice and fax over leased lines, ATM, and frame-relay services by January 2000.

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