Hot Telecom Daily News

Archives from January 25-29, 1999

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January 29, 1999

FCC Proposes Plan to Relax Regulations for Low-Power FM Radio Stations
The FCC has proposed a plan to relax regulations to enable new FM radio
broadcasters to transmit in areas from 2 miles to 18 miles in diameter,
which is much smaller than the area reached by most commercial radio
stations but roughly the same range as many college stations. This proposal
comes after the deregulation of the telecommunications industry in 1996,
which has greatly limited the diversity of programs offered to listeners.
Although a majority of the commission supported the plan, the National
Association of Broadcasters argued that the new station would interfere with
the signals of existing stations and also make the transition to digital
radio more difficult. If the measure goes through, the new rules would
legalize the practice of pirate radio broadcasting, and it would also enable
others who have petitioned the government for a change in the rules seek
broadcast licenses.

FCC Urged to Create Internet Gateway Through Cable Company Pipelines
The FCC has been urged by a group of consumer and media-access organizations
to create an Internet gateway through cable company pipelines. The group
asked the FCC to require cable television companies to open their access
lines available to all Internet service providers. Many competitors fear
that the proposed merger between TCI and AT&T could create a monopoly for
high-speed access to the Internet through TCI's cable networks.

Uniphase and JDS Fitel to Merge in $3.2 Billion Stock Swap
The Uniphase Corp. and JDS Fitel of Canada have agreed to merge in a $3.2
billion stock swap, creating one of the biggest manufacturers of phone
equipment parts. Under the terms of the agreement, Uniphase will pay 0.50855
share for each share of JDS, giving each 50 percent of the company.
Together, the combined companies will have sales of $420 million and more
than 3,600 employees worldwide. Kevin Kalhoven, Uniphase's chairman and
chief executive, will be co-chairman and chief executive of the combined
company. Jozef Strauss, president and chief executive of JDS, will be
co-chairman, president and chief operating officer.

Thomas and Betts to Acquire AFC Cable Systems for $504 Million in Stock
Thomas and Betts Corp. will acquire AFC Cable Systems, Inc. for $504 million
in stock. As part of the agreement, Thomas and Betts will exchange 0.83
share of its common stock for each share of AFC. Based on the company's
closing share price on Thursday, January 28, 1999, the deal values AFC at
about $38.44 a share.

Adelphia Communications Corp. to Buy Back FPL Group's Stake and Shares for
$257.2 Million in Cash
Adelphia Communications Corp. will purchase Adelphia shares held by FPL
Group for $257.2 million and FPL's stake in the Florida-based cable company.
Adelphia will buy back common preferred shares owned by FPL, the owner of
Florida Power and Light, for about $150 million and pay $107.5 million for
FPL's one-third interest in Olympus Communications LP, a partnership formed
in 1995 to provide cable service to 550,000 customers in central and eastern
Florida.

BCE Inc.'s Bell Canada Unit to Purchase Minority Stake in Manitoba Telecom
for $221 Million
BCE Inc.'s Bell Canada unit has agreed to purchase a minority stake in
Manitoba Telecom Services, Inc., the main phone company in Manitoba
province, for $221 million. BCE's investment is part of a joint alliance
under which the companies will work together to expand into western Canada
Bell's new national broadband company, aimed at the data-transmission needs
of corporate customers.

Intel Announces 2-For-1 Stock Split
As a result of strong fourth-quarter earnings from strong personal computer
sales, Intel Corp. announced that it would split its shares 2 for 1. The new
shares will be distributed on April 11 to shareholders of record on March
23. Shares of Intel climbed $4.375, to $137.1875. Shares touched a record
$143.6875 on January 20th after trading as low as $65.65625 on June 3rd.

America Online Inc. Sees Continued Revenue on Larger Subscriber Base;
Declares Two-For-One Stock Split
America Online Inc. expects to maintain its growth as its online service
attracts more subscribers and it benefits from the growth in online commerce
and marketing. The company's second quarter earnings at 22 cents a share
beat estimates of 13 cents a share, and 6 cents in the year earlier period.
In related news, AOL's board of directors approved a two-for-one stock split
that will be effective on February 22, and will increase the company's
outstanding shares to around $935 million.

Hewlett Packard Becomes First Computer Maker to Sell New Oracle Computer
System
Hewlett Packard will become the first computer maker to sell the Oracle 8I
database Appliance, which includes both hardware and software. The new
system is intended to simplify the complexity of running corporate computers
by hiding the operating system function and offering a computer that is
tailored to a single application. System applications range from Internet
Web and mail servers to specific business applications such as accounting
packages. At this time, no prices for the system have been established.

Ericsson Unveils AA Battery-Sized Phone; Profit Fell Less Than Expected
Ericsson has unveiled a new mobile phone that is the size of an AA battery.
The company hopes that the new phone, which is only 15 millimeters, will
enable them to catch up with its Finnish rival, Nokia, which dethroned the
company from the top cellular phone maker last year. In related news,
company profit fell less than expected in the fourth quarter, lifting the
stock 9 percent. Ericsson will not begin shipment on the phone until
midyear, so first quarter profits will be lower than last year's.

France Telecom Fined $1.8 Million for Hindering Competition
French competition regulators have fined France telecom $1.8 million for
illegally hindering rivals who sell lists of addresses and phone numbers to
direct marketers. This ruling could hurt France Telecom's dominance of a
market estimated by French authorities at 23.6 billion francs annually.
Also, the suit could bring on a civil law suit seeking $300 million that was
brought in US District Court in New York City by one of its rivals,
Group/Address-Filetech, whose 1992 complaint to French competition
authorities resulted in the 10 million francs fine.

January 28, 1999

AT&T Introduces Single Pricing Plan for Wireless and Long-Distance Service
AT&T has introduced a new communications package called AT&T Personal
Network, which offers different types of calling systems at the same low
rate on a single bill, so people can use them interchangeably. Like AT&T's
digital one rate program for travelling customers and heavy users of
wireless services, the Personal Network is beneficial to people who stay
within a smaller geographical area than travelling customers, but who still
rely on multiple communications services, including wireless. For $29.99 a
month, the Personal Network includes the same low rate of 10 cents a minute
on all local and domestic long-distance digital wireless calls consumers
make from their wireless home area.

GTE New Nationwide Fiber Network Now Two-Thirds Complete; Network Will
Deliver High-Speed Capacity for Internet and Voice Traffic
GTE Corp. announced that its new nationwide, high-speed, private fiber
network is more than two-thirds operational, and will be completed later
this year. Known as the Global Network Infrastructure (GNI), GTE has
activated approximately 12,000 miles of its planned 17,000-mile network.
This network is already providing capacity for Internet and voice traffic
along high-traffic corridors across the country including major markets such
as Los Angeles, San Francisco, Seattle, Houston, Dallas, Chicago,
Washington, D.C., New York and Boston. By mid-year, the GNI will span more
than 100 major markets from coast-to-coast, providing underlying capacity
for GTE business units so that they can offer a variety of services
including ATM, frame relay, long-distance, and private line services.

Project Oxygen to Increase Network Capacity to 1.28 Terabits
The minimum optical fiber cable capacity of the Project OXYGEN Network has
been increased to 1,280 Gbps, 1.28 terabits, per second, from a previously
announced capacity of 640 Gbps. The capacity increase results from technical
breakthroughs by Project Oxygen Ltd. suppliers Alcatel Submarine Networks,
NEC Corp., and Tyco Submarine Systems, Ltd., that allow the transmission of
32 wavelengths, or colors, of light over a single optical fiber through use
of dense wavelength division multiplexing technology. Each wavelength can
transmit 10 Gpbs of information, and each cable segment will contain a
minimum of four optical fiber pairs. The 1.28 Terabits per second means that
any single cable segment in the Network will be capable of carrying the
equivalent of approximately 688, 000 T-1 (or 516, 000 E-1) circuits.

January 27, 1999

FCC to Review Impact of Yesterday's Supreme Court's Ruling by Postponing
Rulings on Two Key Telecom Issues
Following the US Supreme Court's decision that gives the FCC the authority
to set rules to open the local telephone market up for competition, the
agency has decided to postpone two key telecommunications issues. The agency
was to vote on a plan that would encourage regional telephone companies such
as Bell Atlantic to construct new high-speed data networks. In addition, the
FCC was going to release a proposal to change the system under which those
regional companies pay about $600 million a year to new companies such as
e.Spire Communications to complete calls. Yesterday, the Supreme Court
upheld the FCC's authority to set the rules by which the regional telephone
companies must open their telephone networks to new competition. The court's
decision could provide the agency with more authority in deciding on other
telephone competition issues.

IBM Board of Directors To Vote on Stock Split
Directors of International Business Machines Corp. may vote to split the
company's shares. IBM last split its shares 2-for-1 in January 1997 as the
stock neared what was then an all time high. Speculation for a split mounted
last week as IBM's share touched a record 199 1/4 and directors prepared to
convene for the board meeting at the company's Armonk headquarters. IBM's
shares have about 85 percent during the past 12 months.

Northern Telecom's Fourth Quarter Profit Exceeds Expectations
Northern Telecom's fourth quarter profit exceeded expectations with strong
sales of Internet equipment and revenue from its new Bay Networks unit.
Earnings for the quarter were $486 million, or 72 cents a share, 2 cents
above forecasts. For the same quarter a year earlier, when there were no
charges or gains, Northern Telecom had net income of $390 million, or 74
cents a share. The per-share results in both periods reflected preferred
dividends. The company's latest period was the first full quarter for
Northern Telecom to include results from Bay Networks, which Northern
Telecom acquired for $6.7 billion in August.

America Online, Inc.'s International Subscriber Base Surpasses 3 Million
America Online, Inc.'s international subscriber base has surpassed 2 million
AOL members to reach a total of more than 3 million AOL and Compuserve
international members. AOL's international branded services have reached the
2 million member milestone just three years after the first AOL
international service was launched in Germany. By comparison, AOL's US
service took ten years to reach two million members. AOL plans to continue
its expansion into new markets. In 1999, AOL will launch a Chinese and
English language service in Hong Kong with partner Chine Internet
Corporation. The company previously announced plans in December to bring AOL
to Latin America with joint venture partner The Cisneros Group of Companies.

Globalstar Telecommunications Ltd. Granted Approval for Satellite Launch
Globalstar Telecommunications Ltd. has been granted approval to resume
launching satellites from Kazakhstan, allowing it to have 32 satellites in
orbit by the summer and to begin commercial services in September.
Globalstar's schedule was delayed last September after the company lost 12
satellites worth $180 million during a launching failure in Kazakhstan.

Microsoft Purchases $500 Million of Convertible Stock in NTL, Inc. For
High-Speed Internet Access Over Cable Lines in UK and Ireland
Microsoft Corp. will purchase $500 million of convertible preferred stock in
NTL Inc., which NTL will then spend on the deployment of high speed Internet
access over cable lines in the UK and Ireland. The deal extends an existing
cooperation pact between the two companies under which Microsoft has been
developing software NTL will use to allow consumers to access the Internet
through their television sets. In another transaction, Microsoft will
receive $1.2 million, five-year warrants to purchase NTL common stock at an
exercise price of $84 per share, in exchange for joint development of
digital products.

January 26, 1999

Supreme Court Makes Two Decisions That Could Delay Access to the Local Telephone Market
The Supreme Court has overturned the Federal Communications Commission rule
that requires the Baby Bell companies and other local incumbents to offer
access to almost all segments of their networks, including copper wires and
switches to their competitors. This ruling could possibly delay competition
in the local telephone market by making it more difficult for new companies
that offer services such as high-speed Internet access to gain access to the
incumbents' systems. In addition, the ruling will limit consumer choice for
local telephone service. Previously, the Supreme Court ruled that the
Telecommunications Act of 1996 gives the commission, not the state,
authority to set rules meant to rules meant to enhance competition. The
court argued that the FCC violated the act in that they failed to consider
whether forcing the local incumbents to provide access to each network was
necessary to promote competition and whether the new companies would be
impaired by having to get the network part on their own. The FCC is required
to develop a set of rules to determine which part of their networks the
local phone giants must resell to competitors, using the "necessary and
impair" standard.

AT&T's Fourth Quarter Earnings Rise 58 Percent to $1.99 Billion
AT&T's fourth-quarter earnings rose 58 percent to $1.99 billion, or $1.12 a
share, from $1.26 billion, or 70 cents a share, for the same period a year
earlier. This rise in earnings was a result of cost cuts and strength in its
business and wireless units offset a drop in core consumer long-distance
revenues. Fourth-Quarter results include a $313 million pretax gain for the
settlement of pension obligations for employees who accepted an early
retirement offer, as well as a $42 million pretax gain for changes in
accounting for software development costs.

Bell South's Fourth-Quarter Earnings Rise 37 Percent to More Than $1 Billion
Bell South Corporation announced that fourth-quarter earnings rose more than
37 percent to more than $1 billion. This rise was a result of strong digital
services sales growth and $172 million in one-time gains. In addition, the
company saw gains from the sale of its New Zealand wireless operations and
income from a loan settlement during the fourth quarter. Bell South earned
42 cents a share, up 16.7 percent from the same period a year earlier
beating analysts estimates by 1 penny.

Iridium's Fourth-Quarter Loss Lower Than Expected
Set back by several delays and problems with service, Iridium LLC's
fourth-quarter loss was lower than expected as the company reported a loss
of $440 million, or $3.12 a share. The loss was significantly lower than
analysts' consensus expectation of $3.46 a share. For 1998, the company had
a net loss of $1.26 billion, or $8.91 a share. Revenue for the quarter and
the year totaled a small amount at $186,000, as a result of late service
introduction. This smaller than expected loss is attributed to tight cost
controls after Iridium delayed its planned launch, first slated for
September 28, due to technical complications.

FCC's Audit of Baby Bell Companies' Equipment Could Force Billion Dollar
Write Off
The FCC will release an audit that will show that the Baby Bells have
billions of dollars in lost communications equipment. This audit could force
the Bell companies to write off the equipment, and it is certain to fuel
calls for the Bells to cut their rates. However, the audit will not have a
direct impact on phone-company rates, since under the current pricing
system, costs for equipment indirectly affect Bell companies charges to
consumers and long-distance carriers. Bell Company executives argue that the
FCC's 1997 audit, based on sample checks of 36 items at the companies'
central offices, was flawed. US West, for example, argues that they can
account for 96 percent of the equipment subject to the commission's audit.
Bell Atlantic Video Becomes First Telecommunications Carrier to Offer
Digital Broadcast Satellite Service
Bell Atlantic Video, a subsidiary of Bell Atlantic Corp., has become the
first telecommunications operator to offer Digital Satellite Broadcasting to
consumers in Philadelphia and Northern Delaware. This service will offer
more than 200 channels of programming, digital-quality pictures and
CD-quality sound from DIRECTV and US Satellite Broadcasting (USSB), as well
as broadcast television reception. Bell Atlantic Video began offering its
television service in the Washington DC metropolitan area and in New Jersey
last year. Coupled with Bell Atlantic's introduction of television service
in Philadelphia and northern Delaware, the company is offering new
subscribers $200 of programming when they sign up for service and order the
top programming packages from DIRECTV and USSB by February 21.

Broadcom to Purchase Maverick Networks For $103.9 Million in Stock
Broadcom Corp. has agreed to purchase Maverick Networks, Inc. for $103.9
million in stock. As part of the deal, Broadcom would issue 864,000 shares
of its class B common stock in exchange for all the shares of closely held
Maverick. Maverick shareholders would one share of Broadcom stock for every
15.675 shares of Maverick they own. This deal is part of Broadcom's plan to
transform corporate computer networks to handle telephone calls and video in
addition to computer data. Maverick, a startup company based in San Jose,
CA, will introduce a layer 3 networking chip that allows voice, video and
data networking in small company work groups at speeds as one gigabit per
second, during the second quarter.

GTE To Sell its Government Systems Subsidiary
GTE Corporation announced it will sell its government systems subsidiary to
raise $3 billion in after-tax revenue to help it cut costs and free cash for
expansion into Internet service and other areas with greater sales growth.
The military subsidiary, which is based in Needham, MA and employs about
7,000 people at sites in 23 states and several foreign countries, accounted
for about $1.4 billion in the company's sales for 1998, about 5 percent of
GTE's overall sales.

Intel Modifies Plans For Its User Identification Chip
Intel Corp. has modified its plans for deploying chip technology that could
identify computer users on the Internet. Previously, Intel had announced
plans to integrate identification numbers into new Pentium III
microprocessor that will begin shipping by the end of this quarter. The
company contended that the built in number would help link users with
specific machines, enhancing security for electronic commerce. However,
several privacy groups, including the Electronic Privacy Information Center,
Junkbusters and Privacy International, and one congressman argued that the
identifier could make it easier to compile electronic dossiers on consumers
and their Web transactions. The company will change utility software for the
new chips so that the identification feature is switched off unless users
turn it on. Originally, the software let users switch off the feature, but
it reverted to being on each time users turned on their machines.

Compaq Computer to Announce Plans to Make Initial Public Offering for its
Alta Vista Web Site
Compaq Computer Corp. will announce plans to sell or spin off part of its
Alta Vista Web site in a public offering. It has been expected that the
company would spin off Alta Vista, the number 11 web site, which uses
technology allowing users to search for subjects using simple questions.
Compaq has been enhancing the site by acquiring Shopping.com and by making a
deal with Microsoft Corp. to feature Alta Vista on Microsoft's MSN site.

Lycos Decides to Remain as an Independent Company
Lycos Inc. has decided to remain as an independent company despite rumors of
seeking potential partners. Recent reports from several newspapers reported
that Lycos had been in talks to sell a stake in the company to giants such
as Time Warner, Inc. and Bertlesmann A.G. as well as ABC, CBS and the News
Corporation. Previously, rival Excite Inc. was acquired by At Home
Corporation for $6.7 billion in stock; however, Lycos' President Robert
Davis argued that stand alone Web firms are set up to be more successful
online than traditional media giants such as Time Warner.

Texas-Based Startup Microtune Develops TV Tuner on a Chip
Microtune, a startup company based in Plano, Texas, has developed a TV tuner
on a chip to simplify TV sets, cable-set-top boxes and computers that
receive television signals. This new chip will work for both analog or
digital TV signals sent over the air or a cable. Also, Microtune plans to
produce a ship for satellite reception. Microtune has gained support by
several investors including George Soros management team and Quantum
Industrial Fund, Intel Corp. and Institutional Venture Partners from Menlo,
CA.

January 25, 1999

Hughes Electronics to Purchase Rival PRIMESTAR for $1.82 Billion
Hughes Electronics Corp. has reached an agreement with PRIMESTAR Inc. to
acquire the 2.3 million subscribers PRIMESTAR direct broadcast satellite
medium-power business and related Tempo high-power satellite assets in two
transactions valued at approximately $1.82 billion. With this acquisition,
Hughes would be left with only one competitor in satellite-TV broadcasting,
the EchoStar Communications Corporation. PRIMESTAR, publicly traded as TCI
Satellite Entertainment Inc, is also owned by Time Warner Inc, Cox
Enterprises, Comcast, US West, Inc. and Americom. The combinations of Hughes
unit DIRECTV and PRIMESTAR, along with US Satellite Broadcasting, advances
DIRECTV's position as a satellite-TV provider. Upon completion of the
transactions, DIRECTV will have more than 7 million US subscribers, more
than 370 entertainment channels delivered through five high-power DBS
satellites and the broadest distribution network in the DBS industry.

AT&T to Sell Internet Access Operations to At Home for $1 Billion
AT&T is considering selling its Internet access business to At Home Corp.
for $1 billion in stock. AT&T would continue to operate the communications
network used by the Internet operations, which include the WorldNet consumer
dial-up service, and would continue to assist At Home market the service.
Excite would provide information services and other programming to former
WorldNet customers if Excite's takeover by AtHome is completed. This
possible deal however is contingent upon AT&T's completion of its proposed
$40.9 billion takeover of Tele-Communications, Inc., which is expected to
close in mid-February.

Time Warner in Negotiations With Lycos and Others to Expand E-Commerce Role
To expand their E-commerce role, Time Warner, Inc. has been negotiating with
several Internet businesses, including retailer Cdnow Inc. and Lycos Inc. to
gain a stake in their businesses. Time Warner is looking to become a major
player in the online world. Since last summer, the company has stepped up
its e-commerce efforts, and promoted a publishing executive, Michael Pepe,
to be in charge of its new electronic commerce division. Lycos has held
discussions with several companies to sell a minority stake in the company
including Bertelsmann AG, CBS Corp., Walt Disney Corp., Viacom, Inc. and
News Corp. Lycos is in favor of selling a minority investment of between 5%
and 35% rather than an outright acquisition.

Sun Microsystems Announces Plans for 2-for-1 Stock Split
Sun Microsystems Inc.'s board of directors has approved a two-for-one stock
split, to be effected in the form of a stock dividend. Sun's stock dividend
is in response to the increase in market price for the company's common
stock over the last several months. It will decrease the price per share,
broadening the distribution and improving the marketability of Sun's common
stock. Subject to shareholder approval, the split will increase Sun's
authorized shares of common stock to $1.8 billion, and increase the number
of shares outstanding to 770.5 million from 385.2 million shares.

Cellular Communications International Inc. Accepts Revised Offer From
Olivetti S.p.A and Mannesmann A.G.
Cellular Communications International, Inc.'s directors have put forth
recommendations to accept a revised $1.8 billion bid from Olivetti S.p.A and
Mannesmann A.G. even as the company's shares traded above the offer price
for a third day. Previously, Cellular Communications rejected the two
companies' earlier bid last week, prompting them to raise their offer to $80
a share from $65.75. The board had accepted the previous offer as well,
setting in motion lawsuits from shareholders. The company's sole asset is
10.3 percent of Omnitel-Pronto Italia S.p.A, Europe's number 2 mobile-phone
network.

Fujitsu Network Communications to Develop New Telephone Network Division
Fujitsu Network Communications will announce plans to form a new division to
design and manage telephone networks. The unit, to be based in Richardson,
TX, will serve telephone companies, Internet-access providers and some
equipment makers.

Sprint, France Telecom, Energis' Bonari Consortium to Invest $2 Billion in
Brazil Concession
The Bonari Holding consortium, which is comprised of Sprint Corp., France
Telecom and Energis PLC will invest $2 billion in the telecommunications
concession that will compete with Embratel. The consortium bought the mirror
concession that will compete with the former Telecomunicacoes Brasileieras
long distance international operator last week for 55 million reals. Bonari
will begin operating the concession at the end of this year in 38 initial
Brazilian cities.

Peru Telecom Faces Competition as Four Companies Receive Approval to Provide
Long-Distance Service
Four companies have received approval to begin providing long-distance
service in Peru, becoming the first fixed-line competition to Telefonica del
Peru. These companies include Ormeno Communications Peru and Tele2000, which
is controlled by BellSouth of the US; and US companies FirstCom and Global
Village Telecom. The companies must now negotiate a fee with Telefonica del
Peru for access to the company's network.

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