Industry Update

Feb. 1, 2000

CoreTek Inc. (Wilmington, MA) announced the closing of a $20.5 million round of venture-capital financing for use in product development. Oak Investment Partners (Palo Alto, CA) led the consortium of investors with an investment of $12 million. The company intends to ramp up production of its tunable components. CoreTek has developed and is commercializing a component technology that combines micro-electro-mechanical system (MEMS) technology with active optical sources.

Standards Committee T1, a key U.S. standards development organization for the telecommunications sector that is sponsored by the Alliance for Telecommunications Industry Solutions (ATIS --Washington, DC), won approval by the International Telecommunications Union (ITU) to provide draft and final standards for use as reference documents to ITU Telecommunications Sector (ITU-T) study groups. Additionally, ITU-T study group leaders will be able to consider Committee T1's documents for use when preparing their own draft recommendations.

AMP Inc. (Harrisburg, PA) and Mitel Semiconductor (Kanata, ON) will collaborate to incorporate AMP LightRay MPX products into Mitel's Smart OSA parallel-fiber modules. The design combines Mitel's vertical-cavity surface-emitting laser (VCSEL) array and patented packaging architecture with AMP's optical interconnection systems. The collaboration is aimed at a growing market for very short reach parallel fiber applications.

Touch America (Butte, MO), the telecommunications subsidiary of The Montana Power Co., completed ductwork, fiber installation, and regeneration sites on its 1020-mi, $50 million fiber-optic network link between Denver and Dallas. In addition to providing broadband services to Denver and Dallas, the link passes through Colorado Springs and Pueblo in Colorado, and Amarillo, Lubbock, and Wichita Falls in Texas.

Chromatis Networks Inc. (Bethesda, MD) received $38 million in its second round of financing, bringing its total to $50 million. Chromatis intends to use the proceeds to fund its development, marketing, manufacturing, and selling of its next-generation transport platform for the metropolitan market. The company plans to launch products this year based on its own Selective Wave Division Multiplexing (SWDM) technology.

Telereunion S.A. de C.V., the Mexican subsidiary of Telscape International Inc. (Houston), signed an agreement with Presto Telecommunications Inc. (San Diego) to sell fiber-optic capacity on its Mexican network for approximately $5 million. Additional terms of the agreement were not disclosed. Telereunion is building a fiber-optic network in Mexico to reach the vast majority of the population.

Sycamore Networks Inc. (Tewksbury, MA) inked a four-year deal with Williams Communications Inc. (Tulsa, OK) whereby Williams will buy $100 million of Sycamore products each year. The agreement covers the full range of Sycamore's optical networking products, including the SN 6000 transport node, SN 8000 network node, and SILVX optical network management system. The Williams Multi-Service Broadband Network is an integrated fiber-optic network that couples Asynchronous Transfer Mode (ATM) core switching with advanced optical networking technologies.

Redback Networks Inc. (Sunnyvale, CA) signed a definitive agreement to merge with Siara Systems (Mountain View, CA) in a transaction valued at approximately $4.3 billion. With the addition of Siara's product portfolio and network operations software, Redback plans to extend its service creation and management capabilities in the access market. The merged company will retain the name of Redback Networks.

Fujitsu Network Communications Inc. (Richardson, TX) inked an agreement with GTE Hawaiian Tel (Hawaii) to provide Fujitsu's FLX2500A add/drop multiplexer system for the first true Synchronous Digital Hierarchy (SDH) transport ring in Hawaii. Under the terms of the agreement, Fujitsu is supplying up to 24 FLX2500As for multiple, fully redundant rings.

A team of researchers will strive to help realize the next generation Internet through a newly formed consortium dubbed "Pegasus" under a contract awarded by the Defense Advanced Research Projects Agency (DARPA). During the two-year period of the initial $7.5 million DARPA contract, researchers from the consortium will work in teams focused on three parallel and tightly-coordinated sets of activities: architecture, optical networking, and applications. The optical networking team, consisting of Lucent Technologies (Murray Hill, NJ), Drexel University, and Princeton University, will build and demonstrate a packet switch that can process 5 Tbits/sec of information and scale to higher capacities. The team will also create and demonstrate new types of all-optical devices that will be required to efficiently implement very high-speed networks. Other consortium members include Bell Atlantic (New York City), The City College of New York, and the University of Pennsylvania.

Hitachi Telecom (USA) Inc. (Norcross, GA) announced that US Optics Inc. (Los Angeles) is deploying Hitachi's Advanced Multi-services Network (AMN) ultra high-speed optical transmission equipment on its West Coast network. The deployments include dense wavelength-division multiplexing (DWDM) and OC-192 (10- Gbit/sec) Synchronous Optical Network (SONET) equipment. Initial deployments will be 4-fiber, bidirectional, line-switched rings (BLSR) in the bay area of San Francisco and Los Angeles. US Optics plans to expand to a nationwide backbone within the next two years. The equipment agreement is worth $100 million over three years.

Nanovation Technologies Inc. (Miami) closed its offering for $30 million of Series A preferred stock, bringing its total to more than $56 million during the past 12 months. The company plans to use the new capital to construct and staff a second product development facility for the design of light-based semiconductors for telecommunications and data networking equipment manufacturers.

Chorum Technologies Inc. (Richardson, TX) completed a $42 million round of financing. The company will use the funds to expand its production capacity and to expand product development and marketing programs. Chorum's PolarWave product portfolio, based on light polarization processing technologies, became available last September.

Digital Optics Corp. (Charlotte, NC) is partnering with Agilent Technologies Inc. (Palo Alto, CA) to develop a demonstrator module for use in transmitter/receiver communications applications. Under a grant from the Advanced Technology Program (ATP) of the Department of Commerce, Digital Optics will design and manufacture an integrated micro-optical system demonstrator to serve as the optical engine for a fiber-optic module. Agilent will work closely with Digital Optics in creating the demonstrator and provide system-level integration and testing.

RCN Corp. (Princeton, NJ) signed an agreement with NorthEast Optic Network Inc. (NEON--Waltham, MA) to lease dark fiber capacity from NEON's network in southern New England and White Plains, NY. The new fiber link will provide RCN with additional diversity and redundancy for its Boston to New York and Springfield, MA, routes, as well as backbone connectivity through Connecticut. The agreement provides for RCN's lease of dark fiber over 20 years, with NEON providing all maintenance of the fibers and space.

Pathnet (Washington, DC) announced a co-development agreement with CapRock Communications Corp. (Dallas, TX) to construct a multiconduit fiber network between Albuquerque and El Paso. The total projected cost for the 350-mi network segment is approximately $40 million. The scheduled completion is set for year-end 2000.

The network unit of Williams Communications Group Inc. (Tulsa, OK) signed a $130-million agreement with Prism Communications Services Inc. (New York City) to provide long-term capacity and fiber on Williams' fiber-optic network. The majority of the value in the transaction is in long-term network capacity; Williams will also provide collocation and fiber maintenance services over the 20-year agreement. Funding of the transaction consists of $120 million in cash paid over the life of the contract, as well as Prism's issuance of $10 million of common stock to Williams for the services.

Nortel Networks (Brampton, ON) will incorporate Corning Inc.'s (Corning, NY) PureGain EDFA (erbium doped fiber amplifier) modules into its OPTera 1600G long-haul optical amplification system. Corning previously supplied the optical amplifier modules for Nortel's first commercially available line of amplifiers designed for the 10-Gbit/sec transmission market.

Cronos Integrated Microsystems Inc. (Research Triangle Park, NC) raised $8 million in its first round of venture financing. Cronos designs and fabricates MEMS components. The company plans to use the funding to further its growth and expansion in markets in which MEMS devices are gaining rapid acceptance, particularly in telecommunications.

Corning Inc. (Corning, NY) signed a definitive agreement to acquire Siemens AG's (Munich) worldwide optical cable and hardware business and the remaining 50% of its two co-investments with Siemens--Siecor Corp. (Hickory, NC) and Siecor GmbH--for $1.4 billion, including assumed debt. Corning will fund the transaction with proceeds from both a common-stock offering and debt issuance. As part of the integration of the acquired operations, Corning will create a new operating unit, Corning Communications Europe, headquartered in London. Siecor GmbH will become part of Corning's worldwide optical fiber manufacturing operations.

Allied Telesyn International (Bothell, WA) was awarded one of two contracts with the trustees of the California State University to provide networking equipment and services for the California State University, University of California, and California Community Colleges statewide. The contracts, one of which was also awarded to Cisco Systems Inc. (San Jose, Ca), are for networking equipment to be used in campus networks throughout the state. Allied Telesyn will supply a full range of Ethernet, Fast Ethernet, and Gigabit Ethernet managed switches, including stackable and fiber switches.

Extreme Packet Devices Inc. (Kanata, ON) a semiconductor manufacturing startup, selected NEC Electronics Inc. (Santa Clara, CA) as its chip manufacturer. NEC will be responsible for the back-end design and engineering, fabrication, and packaging of Extreme's X-1 Traffic Management Chipset, capable of 10-Gbit/sec line rates. Extreme will deliver the X1 chipset to customers in third quarter 2000.

SIFAM Fibre Optics Ltd. (Torquay, UK) entered into an agreement to be acquired by JDS Uniphase Corp. (San Jose, CA). SIFAM, a manufacturer of advanced components for use in fiber-optic telecommunications systems, will become a wholly owned subsidiary of JDS Uniphase but will retain its original name. Terms of the acquisition provide for a purchase price of £60 million Sterling payable in cash.

Nortel Networks (Brampton, ON) acquired a 5% stake of Radiotronica S.A. (Madrid), a Spanish company whose principal activities include engineering, system integration, installation, and logistical services in Spain, Portugal, Morocco, and Latin America. Nortel has an ongoing working relationship with Radiotronica in Spain. The two companies plan to identify joint opportunities and increase market presence in Latin America. The value of the transaction was not disclosed.

Telemonde Inc. (London) announced that its wholly owned subsidiary, (Geneva), signed a major Internet services contract with Europe Online Networks S.A. (Luxembourg). As part of the commercial agreement between the companies, will supply Europe Online with a terrestrial network platform and connectivity based on the supply of fiber-optic bandwidth between New York, London, and Luxembourg. The agreement will include high-speed Internet connectivity to Websites around the world and direct access to a Europe Online point of presence (POP) in Luxembourg for European Internet service providers (ISPs).

KPNQwest (Amsterdam), a joint venture of Qwest Communications International Inc. (Denver) and KPN (Amsterdam), implemented a master- services agreement with COLT Telecom Group plc (London) to complete the loop for bandwidth to KPNQwest customers in key markets across Europe. Under terms of the agreement, COLT is a preferred supplier of local-access circuits across the KPNQwest network. In a related agreement, KPNQwest signed a $11.2-million contract with Europe Online Networks S.A. (Luxembourg). The contract enables Europe Online to connect its broadband, broadcast "Internet via the Sky" services to KPNQwest's pan-European terrestrial Internet network.

Global Crossing Ltd. (Hamilton, Bermuda) completed its $1.65-billion acquisition of Racal Telecom (Reading, UK), the telecommunications arm of Britain's Racal Electronics plc. The deal provides Global Crossing with key positions in Europe for completing its global fiber-optic cable network. Global Crossing also announced completion of construction on the first phase of its Pan European Crossing network. The first phase includes three rings connecting 13 cities in the UK, Netherlands, Belgium, Denmark, France, and Germany. A fourth ring, which will connect six cities in Germany, is slated for service in the second quarter of this year. The fifth ring, reaching five additional cities in France, Italy, and Switzerland, is scheduled for service by third quarter 2000.

Tele1 Europe (Stockholm), a European telecommunications service provider, will conduct field trials of Dynamic Synchronous Transfer Mode (DTM) equipment developed by Dynarc (Sunnyvale, CA). Tele1 Europe will be the first network operator to test Dynarc's DTM-based router switches on a field trial basis. Dynarc also recently delivered its DTM multiservice router switches to Airpower Communications (Los Angeles) for its trials of the first nationwide broadband wireless/fiber network.

VersaTel Telecom International N.V. (Amsterdam) agreed to acquire 100% of the outstanding stock of VEW TELNET (Dortmund, Germany), a wholly owned subsidiary of VEW ENERGIE AG, and a long-term right to use the fiber-optic network of vew telnet for approximately EUR 120 million. The acquisition enables an expansion for VersaTel into the Nord Rhein Westphalen region of Germany. Upon completion of the acquisition, VersaTel will gain access to approximately 1400 km of fiber-optic network, primarily consisting of 18 fibers, including an STM 16 (2.5-Gbit/sec) ring with seven points of interconnection with Deutsche Telekom (Bonn).

iaxis(London) announced further plans for working with CIENA Corp. (Linthicum, MD) to build next-generation optical networks with CIENA's LightWorks suite of optical-networking solutions. The carrier issued purchase orders for CIENA's MultiWave Metro optical transport systems for deployment in its iaxisenroute pan-European network and announced plans to trial CIENA's MultiWave CoreDirector intelligent optical core switch.

BT Tel (Madrid), the Spanish subsidiary of BT (London) and Nortel Networks (Brampton, ON, Canada) completed the first live calls on BT Tel's now completed Internet protocol (IP) telephony network. The network was completed in six months using IP technology from Nortel. Major trials for Nortel's Internet telephony solution are underway or planned with several other companies, including SBC Communications Inc. (San Antonio), France Telecom (Paris), AT&T (New York City), Williams Communications Inc. (Tulsa, OK), and Telstra Corp. Ltd. (Melbourne, Australia).

Alcatel (Paris) delivered the first DWDM system to Telefonica de Espana's (Madrid) high-speed national fiber-optic network that links several Spanish cities. The link supplied by Alcatel will connect Murcia to Valencia on the eastern coast of Spain. Based on the Alcatel Optinex system, it will provide an initial transmission capacity of 16 wavelengths at 2.5 Gbits/sec.

New Milleniun Development Group (NMDG--West Palm Beach, FL) acquired the Magellan System, an undersea fiber-optic cable planned to circle the South American continent. The deal is worth about $2.5 million in stock. NMDG will continue to develop the 19,900-km Magellan cable network that includes landing points in Argentina, Brazil, Chile, Colombia, Peru, Panama, and Venezuela. The expected in-service date for the network is September 2001.

Pointe Communications Corp. (Houston, TX) and Telscape International Inc. (Houston, TX) signed a letter of intent to merge the two companies in a move to position the combined entity as a major provider of bundled communications services in the U.S., Hispanic, and Latin American markets. The closing of the transaction is subject to completion of due diligence, execution of a definitive agreement, and shareholder approval.

ADC Telecommunications Inc. (Minneapolis) announced the acquisition of Comtec Electronica S.R.L. (Buenos Aires), a manufacturer of video transmission products for the cable television industry. Terms of the acquisition were not disclosed. Comtec manufactures modulators, amplifiers, and receivers that improve transmissions within cable networks. ADC believes the acquisition will position the company as the only U.S.-based amplifier producer with manufacturing operations in Latin America, giving ADC a solid foothold in the region.

Global Crossing Ltd. (Hamilton, Bermuda), Softbank (Tokyo), and Microsoft (Redmond, WA) completed the formation of their joint-venture company, Asia Global Crossing, to provide advanced network-based telecommunications services throughout Asia. Initially, the venture will construct East Asia Crossing, an undersea fiber-optic cable system that will link Japan, China, Singapore, Hong Kong, Taiwan, South Korea, Malaysia, and the Philippines. Asia Global Crossing plans to expand both subsea and terrestrial fiber-optic buildouts throughout the area, as well as linking East Asia Crossing to Global Crossing's ongoing worldwide fiber network. Global Crossing also announced that initial cable connections have been completed on the northern section of Pacific Crossing-1 and its Japanese terrestrial system, Global Access Limited. The subsea and terrestrial systems will combine to provide broadband capacity from the United States to Tokyo.

Hanaro Telecom Inc. (Seoul, South Korea) purchased equipment from Lucent Technologies (Murray Hill, NJ) to provide high-speed Internet access and basic telephone services in several South Korean cities. Hanaro is using Lucent's AnyMedia Access System that supports international standard interfaces and can interoperate with any digital switch. Hanaro deployed the platform as part of its fiber-to-the-curb project.

One of the biggest takeover deals in the Indian information technology industry saw Satyam Infoway Ltd. (New Delhi) acquire IndiaWorld Communications (New Delhi) at a cost of $115 million. The payment was entirely in cash and the deal boosts Satyam's presence as India's largest private ISP.

Marconi Malaysia (Kulim, Malaysia), a joint venture managed by Marconi Communications, won a three-year contract with Telekom Malaysia to install a high-speed SDH-based network. The contract, worth $60 million, is a key part of Telekom Malaysia's support for the Malaysian government's Vision 2020 program aimed at making Malaysia a world center for new cyber lifestyles and business models. Marconi Malaysia's manufacturing plant opened in Kulim in 1985.

Cable & Wireless HKT (Hong Kong) plans to expand its local cable station facilities to accommodate the $1 billion Asia-Pacific Submarine Cable Network 2 (APCN2), a 10-company consortium cable that is expected to land in Hong Kong. The landing of APCN2 at the company's South Lantau cable station was endorsed by the Office of the Telecommunications Authority, and construction is planned to begin immediately following government approvals.

Level (3) Communications Inc. (Broomfield, CO) is making Asia a priority, particularly in Hong Kong, where deregulation of the local telecommunications market is continuing. Level (3) secured a facility for its Asian headquarters and plans to use the nearby Mass Transit Railway to connect to the fiber of several local carriers. In Japan, the company is building a facility in Tokyo's Minatoku district.

Wharf Holdings Ltd.'s New T&T Hong Kong Ltd. unit signed an agreement with China Telecom (Beijing) to interconnect their fiber-optic networks. The deal is expected to significantly increase voice and data capacity between Hong Kong and mainland China. Under the pact, New T&T will get direct connectivity to China Telecom's international gateway and access to its fiber capacity. The service is scheduled to be operational early this year.

Philippine Long Distance Telephone Co. (PLDT--Manila) will build a new backbone network using equipment from Cisco Systems Inc. (San Jose, CA). Cisco's multi-service switching technology will provide the integration of voice, data, and video and enable IP to be run over ATM or frame relay. PLDT's new OC-12 (622-Mbit/sec) network is being deployed by Fujitsu Philippines Inc. PLDT is part-owner in 30 existing international submarine cable systems, three of which terminate in the country.

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