Industry Update

Jan. 1, 2000

Lucent Technologies (Murray Hill, NJ) announced a realignment into four core businesses that will operate under one brand and be supported by the company's technology arm, Bell Labs. The businesses are service-provider networks, enterprise networks, NetCare professional services, and microelectronics and communications technologies.

Avanex Corp. (Fremont, CA) closed a $20-million round of venture financing through an investment group composed of Crosspoint Venture Partners, Mayfield Fund, JAFCO America, and Sequoia Capital. All members of the original investment group participated in this latest round. The company's first round of venture capital totaled more than $1 million and was followed by a second round of $2.5 million and a third totaling $6.5 million. Avanex manufactures photonic processors for the communications industry.

Marconi Communications (Cleveland) is supplying its SmartPhotoniX OSR multiservice SONET multiplexers to Bermuda Telephone Co. Ltd. (Hamilton, Bermuda). Bermuda Telephone is deploying a fiber-optic telephone network using SONET rings throughout the island. The platforms are intended to service both business and residential subscribers and the rings will be deployed at OC-3 (155-Mbit/sec) rates, upgradable to OC-12 (622 Mbits/sec) without interrupting services.

Teleglobe Communications Corp. (Reston, VA) established an ATM-based service connecting Asian and European research and education networks directly to more than 100 institutions that are part of the U.S.-based Science, Technology, and Research Transit Access Point (STAR TAP) initiative. This connection intends to provide the world's academic community with faster and more economical access to Internet research capabilities over the Teleglobe global ATM backbone. star tap was established as part of the National Science Foundation award to the University of Illinois (Chicago) to provide a common interconnection point between U.S. research and education networks and their foreign counterparts to develop and test new Internet technologies. Teleglobe also laid claim to being the first carrier to provide bandwidth services at wavelength and multiple STM-1 (155-Mbit/sec) levels to global carrier and Internet customers.

Splitrock Services Inc. (Woodlands, TX) announced plans to deploy $129 million in dial access and optical-networking equipment made by Nortel Networks (Brampton, ON). The equipment integration is part of a major network expansion over the next 18 months that will more than quadruple the capacity of Splitrock's nationwide broadband network. Splitrock's buildout is underway and planned for completion in the first quarter of 2001. Nortel is providing Splitrock with its CVX 1800 dial-access switches and OPTera LH high-capacity backbone-networking equipment.

CapRock Communications Corp. (Dallas) announced plans to participate in the construction of a fiber-optic network in Phoenix's core business district. The installation by CapRock and 11 other telecommunications providers will help the company accelerate its planned introduction of voice and data services to the Phoenix area and provide last-mile connectivity. The 12 companies are installing fiber-optic ducts in a 6-mi area surrounding the city's business nerve center.

Tyco Submarine Systems Inc. (Morristown, NJ) and Worldwide Telecom Ltd. (Hamilton, Bermuda) announced a capacity increase for Worldwide's transatlantic SDH fiber-optic self-healing ring network known as Hibernia. The capacity will increase from 1.28 Tbits/sec to 1.92 Tbits/sec on each segment using DWDM technology on each fiber pair. Hibernia will connect Boston to Europe using a 4-fiber, 48-wavelength system with each wavelength operating at 10 Gbits/sec, providing 480 Gbits/sec on per fiber pair on each segment. Hibernia is planned to begin services in first quarter 2001.

Racal Instruments (Irvine, CA) and Digital Lightwave Inc. (Clearwater, FL) announced a strategic partnership whereby the two companies will collaborate to provide their customers with advanced test systems and capabilities. The nonexclusive marketing agreement calls for Racal to deploy Digital Lightwave's technologies for test applications and systems, while Digital Lightwave will, in turn, designate Racal as its integrator of choice for functional test solutions.

GST Telecom Inc. (Vancouver, WA), a subsidiary of GST Telecommunications Inc. (Vancouver, WA), entered into a distribution agreement with Enron Communications Inc. (Portland, OR), a wholly owned subsidiary of Enron Corp. (Houston), to deploy Enron's ePowered application services to users over GST's Virtual Integrated Transport and Access (VITA) network. The agreement enables GST to deliver ePowered Media Cast, one of the first applications services enabling the delivery of TV-quality streaming video at an average speed 10 times faster than most current public Internet offerings.

Larus Corp. (San Jose) and Lucent Technologies (Murray Hill, NJ) renewed a contract for Larus to supply DS-1 lightwave multiplex systems to Lucent. The contract value was not disclosed. Marketed by Lucent as the DDM-Plus, the equipment is a four-channel DS-1 multiplex/demultiplex system that operates over singlemode or multimode duplex fiber-optic cable. The system is designed to provide lightwave extensions of T1 facilities between building, campus infra structure, and business-park applications, and to subscriber-loop carriers serving metropolitan areas.

APA Optics Inc. (Blaine, MN), a manufacturer of products serving the fiber-optic communications, optoelectronics, and laser industries, raised approximately $2 million through a private placement. The company expects to net approximately $1.87 million on the sale of 465,000 shares of common stock, using the proceeds to purchase equipment and fund product development, manufacturing, and marketing activities.

Pepsi Cola Canada (Mississauga, ON) was the recipient of a new 100Base-T Fast Ethernet LAN at its new two-story headquarters building and a WAN linking branch offices in all the provinces except Newfoundland. The systems were installed by Delphi Solutions (London) with structured cabling products from Alcatel Data Cables (New Holland, PA) and Hubbell Inc. (Orange, CT). Alcatel's plenum-rated premises backbone fiber-optic cable was used for the building's backbone infrastructure. Hubbell's fiber patch panels, racks, wire management, and patch cords were used for connection hardware.

Ocean Optics Inc. (Dunedin, FL), a manufacturer of miniature fiber-optic spectrometers and accessories, announced the creation of a division focused on the commercialization of innovative optical thin-film technologies. The new division, Ocean Thin Films (Largo, FL), will produce high-volume patterned dichroic optical filters, used to selectively transmit light according to its wavelength. Among other applications, these filters can be integrated into DWDM systems for telecommunications development.

The National Transparent Optical Network (NTON) Consortium--which includes Nortel Networks (Brampton, ON), GST Telecommunications Inc. (Vancouver, WA), the Department of Energy's Lawrence Livermore National Laboratory (Livermore, CA), Sprint Communications (Kansas City), and San Francisco Bay Area Rapid Transit (BART)--announced activation of the second major link of NTON. NTON is part of the Defense Advanced Research Projects Agency (DARPA)-sponsored SuperNet program, part of the U.S. government's Next Generation Internet (NGI) project. The link connects Portland and Seattle and is scalable to 160 Gbits/sec of capacity per fiber. The first activation was between Los Angeles and San Francisco via a 10-Gbit/sec SONET system. Two additional links will be placed in service in the first half of 2000 to complete the network, a 2000-mi, 16 wavelengths per fiber system between San Diego and Seattle.

SBC Communications Inc. (San Antonio) announced a $6-billion initiative, called Project Pronto, to create a next-generation broadband network to make broadband services available to 80% of its customers over the next three years. The network will converge voice and data backbone systems into a packet-switched platform. SBC intends to push fiber and DSL equipment closer to the end user by deploying voice trunking over ATM to create an integrated voice, data, and video backbone network. Primary suppliers for Project Pronto include Advanced Fibre Communications Inc. (Petaluma, CA), Alcatel (Paris), Lucent Technologies (Murray Hill, NJ), Newbridge Networks Ltd. (Kanata, ON), Nortel Networks (Brampton, ON), and Siecor (Hickory, NC).

Time Warner Telecom Inc. (Greenwood Village, CO) plans to connect customer-telecommunications traffic on a new 788-mi fiber backbone between Dallas, Ft. Worth, Houston, San Antonio, Austin, and Waco, TX. The intercity fiber network ring, deploying nondispersion-shifted fiber and DWDM technology is planned for operations by mid-2000. The Texas project is Time Warner Telecom's fourth regional cluster, following Florida, North Carolina, and southern California. The company also announced plans to enter the Dayton, OH, and Fayetteville, NC, markets with fiber-based network services by mid-2000.

Intermedia Communications Inc. (Tampa) selected Cisco Systems Inc. (San Jose) to provide its 12000 Gigabit Switch Router (GSR) series and 7200 series VXR routers for a major network expansion to Intermedia's nationwide OC-48 (2.5-Gbit/sec) IP fiber-optic network backbone. Intermedia has deployed Cisco equipment in its points of presence (POPs) in Atlanta, Chicago, Washington, DC, Dallas, Los Angeles, New York City, and San Francisco, and plans to upgrade all 70 POPs by early this year.

JDS Uniphase Corp. (San Jose) signed a definitive agreement with Optical Coating Laboratory Inc. (OCLI--Santa Rosa, CA) for the merger of the two companies. Under the agreement, JDS Uniphase will exchange 0.928 shares of its common stock for each outstanding share of OCLI, making the merger's value approximately $2.8 billion. Following completion of the transaction, anticipated in first quarter 2000, OCLI will operate as a wholly owned subsidiary of JDS Uniphase.

MAYAN Networks (Sunnyvale, CA) secured $60 million in third-round financing, bringing the total amount raised by the company to $90 million. MAYAN is developing the UNIFIER, a fiber-optic solution that aggregates, routes, and switches time-division multiplexing (TDM), Frame Relay, IP, and ATM traffic at the DS-0, packet, and cell level across layer 1, 2, 3, and 4 of the network. The company says it's on schedule to begin deployment of the product and thus become a significant player in the optical edge market.

Able Telcom Holding Co. (Roswell, GA) announced its subsidiary, MFS Network Technologies (Omaha), executed an agreement with Digital Teleport Inc. (St. Louis) to develop a joint fiber-optic route paralleling a portion of the Colorado Department of Transportation rights-of-way. Under terms of the agreement, MFS will design and deploy a 176-mi fiber backbone segment for Digital Teleport along I-70 east from the metropolitan Denver area to the Kansas/Colorado border. Both companies will control portions of the network and market excess capacity. The majority of the facilities are expected to be installed by the end of 2000.

GST Telecommunications Inc. (Vancouver, WA) completed the sale of the long-distance and interconnect equipment assets of Action Telecom Inc. (Abilene, TX) to NTS Communications (Lubbock, TX). Terms of the sale were not disclosed, and GTS retains Action's network-analysis management system product division. The sale, says GST, will enable the company to focus on its core integrated communications provider operations.

Cincinnati Bell Inc. (Cincinnati) completed its acquisition of IXC Communications Inc. (Austin), unveiling a new combined company, BroadWing Inc. (Cincinnati). The new company plans to leverage both local and national communications markets by combining IXC's Internet-driven services and Cincinnati Bell's management infrastructure. Broadwing will operate as two main business units--local, continuing to operate as Cincinnati Bell, and national, leveraging IXC's IP backbone carrier network.

PF.Net (Washougal, WA) completed its second strategic agreement with Lucent Technologies (Murray Hill, NJ) under which Lucent will design, construct, and support PF.Net's new nationwide broadband network for Internet service providers and wholesale carriers of data, video, and voice. With the new five-year contract, valued at $350 million, the combined value of agreements between the two companies could reach $550 million. The first agreement was for Lucent to provide its TrueWave RS fiber for the network over a three-year period. The construction of the PF.Net network has begun and is planned for completion in the fourth quarter of 2001.

Northwest Telephone Inc. (Wenatchee, WA) and Electric Lightwave Inc. (ELI-Vancouver, WA) announced an agreement that enables Northwest to use ELI's long-haul SONET fiber-optic backbone network to provide telecommunications services to businesses in Wenatchee and, in the future, to other eastern Washington communities. ELI's network is capable of transmitting OC-48 speed. The three-year contract is valued at more than $600,000.

Corning Inc. (Corning, NY) and Oak Industries Inc. (Waltham, MA) signed a definitive agreement for the companies to merge. Under the terms of the agreement, Corning will exchange 0.83 shares of Corning common stock for each share of Oak common stock. The transaction is valued at approximately $1.8 billion and is expected to close in the first quarter of 2000, pending regulatory and shareholder approvals. The addition of Oak is expected to extend Corning's optoelectronic product portfolio into new-market segments.

Adelphia Business Solutions (Coudersport, PA) selected Tellabs (Lisle, IL) as its preferred provider of wideband digital crossconnect and element management system solutions. The multimillion-dollar contract will place Tellabs' TITAN 5500 digital-crossconnect system into Adelphia's fiber-optic SONET network to support DWDM connections at OC-12 rates. The TITAN 5500 EMS will also be deployed under the agreement.

Kent Electronics Corp. (Houston) announced that Kent Datacomm, its network integration division, completed the acquisition of Orange Coast Datacomm Inc., Orange Coast Cabling Inc., and Go Telecomm Inc., three California-based network integrators comprising the Orange Coast Companies (Irvine and Santa Clara, CA). These companies provide end-to-end voice and data network solutions to major corporations. Terms of the transaction, announced last October, were not disclosed.

VersaTel Telecom International N.V. (Amsterdam) announced the connection of both the Amsterdam Bullewijk-Zuid and Schiphol Forward/Rijk business parks to its broadband network. The two local-access fiber-optic rings will provide direct access to VersaTel's planned 2200-km broadband network in the Benelux and 2000-km international fiber-optic network. Each local ring consists of 5 km of local access fiber. To date, VersaTel has connected five business park rings and one city ring to its broadband network, further expanding its local access network in the Netherlands.

France Telecom (Paris) selected Pirelli (Milan) as the supplier for the DWDM technology on its pan-European and metropolitan-backbone network. The contract involves the supply of turnkey links in metropolitan France and also covers international requirements. Pirelli will supply its Wavemux 6400 platform to provide a capacity of 32 channels at 2.4 Gbits/sec with the option of adding or dropping up to eight wavelengths at each intermediate site. It can be upgraded to 128 channels at 10 Gbits/sec.

SCI Systems Inc. (Huntsville, AL) announced an agreement with Marconi Communications Ltd. (Coventry, UK) whereby SCI will produce the sdh/dwdm telecommunications products that are the subject of an earlier agreement between Marconi and Nokia Telecommunications (Helsinki). Under a multiyear agreement, SCI will initially provide sdh/dwdm printed circuit board assemblies to Marconi from SCI's facility in Oulu, Finland. In support of this arrangement, SCI is also concurrently purchasing certain sdh/dwdm manufacturing assets belonging to Nokia which will be transferred from Nokia's Haukipudas, Finland, facility to SCI's Oulu facility. The multiyear agreement also envisions a worldwide partnership between SCI and Marconi on a variety of products.

Corning Cables (Merseyside, UK), the European cabling division of Corning Inc. (Corning, NY), strengthened its supplier agreement with Cable & Wireless Communications (London) with a new optical-cable range that will contain Corning LEAF optical fiber. The deployment includes the installation of cables in the center of London, linking into a larger European network. As part of the contract, Corning Cables will manufacture cables containing more than 200 fibers in a range of standard and variable lengths. This will be the first installation of Corning's LEAF fiber in the Cable & Wireless UK network.

Flute Ltd. (Cambridge, UK), a builder and operator of submarine fiber-optic networks, plans to offer dark-fiber capacity on its submarine network ring, named Concerto #1. The company, which is majority owned by Interoute Telecommunications Ltd. (London), announced the ring's 48 fiber pairs as available for purchase, offering terabit capacity between the United Kingdom, the Netherlands, and Belgium. Concerto #1, totaling 574 km, is the first of a series of seven subsea rings spanning the United Kingdom, Ireland, the North Sea, and the Baltic Sea planned for construction over the next three years.

Queensgate Instruments Ltd. (Bracknell, UK) signed a two-year, multimillion-dollar purchasing agreement to supply DWDM-channel-monitor cards to TTC (Germantown, MD). Queensgate DWDM channel monitors provide information on actual wavelength, power, and optical signal noise ratio of every carrier wavelength being transmitted in the fiber. The channel monitors are based on Queensgate's tunable Fabry-Perot technology.

Pacific Gateway Exchange Inc. (Burlingame, CA) announced its wholly owned subsidiary, Onyx Networks Inc. (Middlesbrough, UK), is teaming with Cisco Systems Inc. (San Jose) to provide IP data service worldwide as a Cisco Powered Network. Onyx has deployed Cisco's 12000 GSR series routers in its global IP backbone.

AT&T (New York City) announced a major effort to penetrate the telephone market in Latin America by forming a new company that will include FirstCom (Coral Gables, FL), a firm that has fiber-optic cable in three countries. The new entity, called AT&T Latin America, will be headquartered in Coral Gables. The deal, expected to close in first quarter 2000, brings together FirstCom with Netstream, a private Brazilian company. Last August, AT&T announced its intention to buy Netstream from Promon Tecnologia, a Brazilian technical giant. Under the terms of the merger, AT&T and Promon will contribute $70 million in cash to AT&T Latin America. AT&T will get 60% of the stock in the new company. Promon will receive 6%. FirstCom shareholders will receive the remaining 34%. FirstCom and Netstream have about 50,000 mi of fiber-optic cable and 1500 business customers in the cities of Santiago de Chile, Lima, Bogota, Sao Paulo, Rio de Janeiro, and Belo Horizonte.

Tyco International Ltd. (Hamilton, Bermuda) signed a contract with Bias Brasil (Brazil) to construct a fiber-optic submarine network cable connecting Brazil, Argentina, Uruguay, and the United States. The project, scheduled for completion by April 2001, is worth approximately $1 billion. Brazilian investors are investing 25% of the cost with U.S partners contributing the remaining 75%.

GlobeNet Communications Group Ltd. (St. David's, Bermuda) and Global TeleSystems Group Inc. (McLean, VA) entered into a memorandum of understanding to provide seamless, city-to-city undersea connections between Europe and South America. Under the agreement, GlobeNet will sell managed broadband services from a number of South American cities to Europe and GTS will sell similar services between European cities and South America. The services will be provided jointly on GlobeNet's Atlantica-1 network and GTS's FLAG Atlantic-1 undersea network. Both cable systems feature self-healing ring architectures. Atlantica-1's first leg from New York to Brazil is scheduled for operation in September 2000. FLAG Atlantic-1's northern undersea route will be completed in March 2001.

KDD Submarine Cable Systems Inc. (Tokyo) and Corning Inc. (Corning, NY) signed a multiyear agreement for the supply of Corning's Submarine LEAF and Submarine SMF-LS optical fibers. KDD will begin deploying the fiber in the TAT-14 transatlantic system, scheduled for completion in October 2000. Terms of the agreement were not disclosed.

Shanghai Bell Co. Ltd. (Shanghai), a joint Sino-Belgian venture, signed a contract with Bangladesh. The $213-million contract is Bangladesh's largest and will result in a main program-controlled network of 216,000 lines established for 60 telephone offices, 26 microwave stations, and 54 optical-transmission stations. Shanghai Bell has a 30% share of China's phone business and 50% of the phone-exchange market in Laos.

MCI Worldcom Japan Ltd. (Tokyo), a unit of MCI Worldcom Inc. (Jackson, MS), has begun laying fiber-optic cable in Osaka, Japan. After gaining a type-1 telecommunications license from the ministry of Posts and Telecommunications, MCI Worldcom Japan began laying its own fiber in several areas of Tokyo earlier this year. Plans call for four fiber loops in Osaka that will run around the Nishi and Chuo wards of the city. The network is scheduled for completion in the second quarter of 2000. The Osaka network will eventually link to those in Tokyo and will use capacity on the Japan-US fiber network, where plans are already underway for a direct link between the networks.

Lucent Technologies (Murray Hill, NJ) will provide transmission technologies to Guangzhou-Hong Kong's second DWDM network. Under the contract, Lucent will provide DWDM systems to the network, which is jointly owned by China Telecom and Hong Kong Telecom. Lucent provided transmission equipment to Guangzhou-Hong Kong's first SDH network in 1994. The installation of the new network is expected to be completed in mid-2000.

Teleglobe Inc. (Montreal) signed a memorandum of understanding with a number of Asian carriers to become an initial partner in the design and development of the APCN-2 submarine fiber-optic cable system. When completed, APCN-2 will have a capacity of 2.5 Tbits/sec with initial landing points in China, Japan, South Korea, Malaysia, and Singapore. Regional carriers with interest in the $1-billion project include KDD Corp. (Tokyo), Singapore Telecom, China Telecom Ltd. (Beijing), and Cable & Wireless HKT (Hong Kong).

Hutchison Whampoa Ltd. (Hong Kong) and Global Crossing Ltd. (Hamilton, Bermuda) agreed to form a 50/50 venture to pursue fixed-line telecommunications and Internet opportunities in the Hong Kong Special Administrative Region, China. The venture will combine Hutchison Whampoa's existing territory-wide, building-to-building fixed-line and certain Internet assets in Hong Kong with Global Crossing's international cable capacity and Web hosting, Internet applications, and data services. For its 50% share, Global Crossing will directly provide Hutchison Whampoa $400 million in Global Crossing convertible preferred stock. Global Crossing will also contribute international capacity rights on its global fiber-optic network and global data-center-related capabilities valued at $350 million, as well as $50 million in cash. In aggregate, Global Crossing's investment values the joint-venture enterprise, named Hutchison Global Crossing, at $1.2 billion.

Teleglobe Inc. (Montreal) announced it will take a significant stake as one of three founding partners in the Australia-Japan Cable system, a fiber-optic submarine cable between Australia and Japan. The 320-Gbit/sec (per fiber pair) cable is scheduled for completion in mid-2001. Teleglobe teams with other founding partners, Japan Telecom Ltd. (Tokyo) and Telstra Corp. Ltd. (Melbourne, Australia). The 10,200-km cable will originate in Sydney at the Paddington and Oxford Falls cable stations and have landing points at the Tanguison and Tumon Bay cable stations in Guam and the Maruyama and Shima cable stations in Japan. Teleglobe also signed a memorandum of understanding with a number of Asian carriers to become an initial partner in the design and development of the APCN-2 submarine fiber-optic cable system. When completed, APCN-2 will have a 2.5-Tbit/sec capacity with landing points in China, Japan, South Korea, Malaysia, and Singapore. The system is scheduled for completion in 2002.

Cabletron Systems (Rochester, NH) announced the international resources company, Broken Hill Proprietary Ltd., whose interests include oil, gas, steel, minerals, and information technology (IT) business solutions, has implemented a Cabletron ATM solution for its extensive Port Kembla Steel Works site in Port Kembla, Australia. The ATM backbone is connected to Ethernet segments used by more than 5000 users and is used to run all IT operations controlling the industrial plant. The network and all LAN implementations use more than 100 km of multimode and singlemode fiber-optic cable.

Lucent Technologies (Murray Hill, NJ) was awarded a contract to supply a packet-based multiservice core-network solution to EgyNet (Cairo) for its new virtual private network data-network service, designed specifically for Egypt's financial institutions. EgyNet's network, initially consisting of fully meshed nodes in nine major cities, will use Lucent's b-stdx 9000 multiservice WAN switch.

Oman Fiber Optic Co. (Oman) reported it has exported nearly 1000 km of fiber cables throughout the Middle East and the Indian subcontinent since beginning production in December 1998. Earlier this year, the company received a $3.3-million supply contract from Marconi Communications Ltd. (Coventry, UK) for use in a data communications link for the Oman Telecommunications Co., Oman's sole provider of telecommunications services.

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