Headline - November 5, 1999
TOP STORIES
ATM/BROADBAND NETWORKING
ADSL
ASIA PACIFIC
BRAZIL
CHINA
EUROPE
FIBER OPTICS
INDIA
INTERNET/E-COMMERCE
TOP STORIES
JDS to Acquire Optical Coating Laboratory for $2.8 Billion in Stock
As carriers continue to increase the capacity of their networks, the demand for optical fiber is increasing becoming more and more heavy on suppliers. To meet that demand, JDS Uniphase Corp. has reached an agreement to acquire Optical Coating Laboratory for $2.8 billion in stock. Under the terms of the agreement, JDS will exchange 0.928 common share for each share of Optical Coating. Following the news that it would be acquired by JDS, OCLI’s shares rose 41 percent, jumping $49 each, to $168.25, and JDS Uniphase’s stock was up 50 cents, to $192.
Microsoft-Led Group to Invest $500 Million in Teligent Inc.
With commuications carriers looking for alternative methods to transmit data on the rise, a group including Microsoft and Hicks, Muse, Tate & Furst, are in talks to invest $500 million in Teligent. Although the deal could fall through, an agreement could be officially announced today. Traditionally, fiber optic systems have been the dominant method to deliver data, which requires providers to spend millions of dollars to tear up streets to create new fiber optic networks. But Teligent and its partners argue that wireless technology can provide comparable capacity. According to those close to the talks, Microsoft and Hicks, Muse were close to signing a deal last night in which each would invest $200 million in Teligent. The final $100 million would be provided by a consortium that includes Chase Capital Partners; DB Capital Partners, which is affiliated with Deutsche Bank, and Olympus Partners, an investment firm based in Stamford, CN.
ATM/BROADBAND NETWORKING
ATM Forum to Set Final Specifications for Convergence of ATM and IP
Heavy communications traffic congestion will soon become a thing of the past for the Internet and end-users worldwide as new technology specifications from the ATM Forum, an international non-profit organization, are ready for the final ballot. Once introduced, the global communciations industry will enjoy a new level of speed and promising quality services made available by ATM. At its quarterly meeting held recently in Bangkok, the Forum’s Technical Committee focused its discussion on several technological aspetcs and specifications that will enable higher speeds and help ensure the quality of data in networking. Highlights of the discussions were the continued work in the AIM-IP Colloboration Working Group, the finalization of the UTOPIA Level 3 specification for higher speed hardware and a PHY/MAC Identifier Addendum to UNI 4.0 signaling addressing the needs of residential broadband access networks such as DSL.
ADSL
Covad Communications and Yahoo Sign Broadband Marketing Agreement
Covad Communication and Yahoo! Inc. have signed a co-marketing agreement designed to encourage the adoption of broadband services to residential and business Internet users. Under the terms of the agreement, Covad will market a co-branded My Yahoo! Start page service through Covad’s distribution channgels, targeting small businesses and consumers. This My Yahoo! Start page is expected to feature the extensive suite of Yahoo!’s free member services and a Covad broadband sign-up zone designed to help Covad’s customers offer the benefits of ADSL connection.
ASIA PACIFIC
Wireless Optus to Sell 10.6 Percent Stake in APPT to Telecom Corp. of New Zealand
Wireless Optus has reached an agreement to sell its 10.6 percent stake in AAPT Ltd. to the Telecom Corp of New Zealand, giving the company a foothold in the nation’s telecommunciations market. Optus, which is based in Sydney, said it would accept Telecom’s offer of 5.10 Australian dollars a share after its own bid for AAPT was blocked by Australia’s antitrust regulator earlier this year. The sale increases Telecom’s stake in AAPT to about 43 percent.
BRAZIL
Telefonica’s TelespPar, Telesp, CTBC, SPT to Merge as Single Firm
Telefonica SA’s Sao Paulo units Telesp Participacoes SA, Telecomunicacoes de Sao Paulo, Cia Telefonica de Borda do Campo and SPT Participacoes SA will merge into a single company to operate in the state of Sao Paulo. SPT is a consortium led by Telefonica controlling TelespPar, which in turn controls Telesp and CTBC. In a joint statement, the four companies said the merger still depends on approval by sector regulator Anatel and approval by the company boards and shareholders. The merger will not imply any changes to the shareholder structure of TelespPar and shareholders meetings will be held this November. Upon completion of the merger, the new company will be called Telecomunicacoes de Sao Paulo SA. Telefonica chairman Fernando Xavier Ferrerreira said that the restructuring of the companies will create a more competitive company with a greater investment potential and will raise market capitilization. Ferreira stressed that no debt will be transferred to the new company from the controlling group and the restructuring will have no impact on earnings but will improve the company’s cash flow.
CHINA
China’s New Foreign Policies May Hinder Motorola, Nokia, Ericsson’s Current Operations
The big three players in China’s telecom market could find themselves in a jam, as China moves to steps up its policies to promote its infant mobile phone industry. All foreign projects, which have been approved by local governments since 1994 must now be resubmitted to the state for approval, raising their possibility of their cancellation. The government is concerned that the staggering 90 percent market share controlled by the big three, Motorola, Nokia, and Ericsson. Also, it has taken a concerned and protective stance toward nine domestic makers chosen by the State Planning Commission to champion local brands. To strengthen their technological and economic strength, the state has decided to allocate 49.2 million in special funding raised through treasury bond issues. It worked out implementation of the policy at a recent meeting on nationalization of digital mobile telecom operators. The move follows the Ministry of Information Industry’s decsion to dedicate US$168.7 million of its 1999 mobile services sign-up fees to the purpose
EUROPE
SBC Officially Withdraws Bid for TPSA, Leaves France Telecom as Sole Bidder
SBC Communications Inc. has withdrawn its bid for a stake in state-owned telecommunications company TPSA, which the Polish government is in the process of privatizing, leaving France Telecom as the sole bidder for the stake. However, the government still wants to continue with the privatization.
Tele Danmark Acquires IBM’s Danmark’s Remaining 50 Percent Stake in Dan Net
Tele Danmark AS has acquired Internet Business Machine’s Danish Unit Danmark’s 50 percent stake in Dan Net AS, bringing Tele Danmark’s Dan Net holding to 100 percent. Dan Net is a well managed data communications company engaged in high-growth areas within e-commerce, Electronic Data Interexchange and data cleaning services for cellular operators worldwide.
Swisscom, Nokia, Ericsson, Orange and Diax Plan Swiss Forum on Mobile Expansion
Swisscom AG, Nokia Corp., LM Ericsson, Orange PLC and Diax AG are in the process of developing a forum in Switzerland to draw up nationwide recommendations for network expansion. The forum, which will specifically address residnent associations’ opposition to mobile base stations, will include representatives of operators, handset manufacturers and interest groups.
Siemens US Fiscal Year Sales Jump 42 Percent to US$14.8 Billion
Siemens AG’s US unit Siemens Corp. reported that full year sales in the US rose by 42 percent to 14.8 billion from 10.4 billion in 1998 New orders in the period rose by 34 percent to 15.8 billion from 11.8 billion. Full year sales at the company’s Power Transmission and Distribution unit rose by 51 percent following the continued increased demand by utility customers. Sales at Infienon Technologies, the semiconductor manufacturer, rose by 45 percent.
FIBER OPTICS
GST Telecommunications to Deploy Enron’s Advanced Internet Application Services
GST Telecommunications Inc.’s operating subsidiary GST Telecom Inc. has entered into a distribution agreement with Enron Communications, a wholly-owned subsidiary of Enron Corp., to deploy its ePowered Application Services to users of the World Wide Web. Through the agreement with Enron, GST further strengthens its product portfolio and is capable of delivering ePowered Media Cast to its customers. Media Cast – which can deliver up to one megabyte per second of broadcast-quality video to the desktop – is one of the first application services that enables the delivery of TV-quality streaming video at an average speed that is ten times faster than what is currently available on the public Internet.
Global Crossing Announces Early Termination of Hart-Scott-Rodino Waiting Period Relating to Acquisition of Racal Telecom
Global Crossing Ltd. has been notified by the United States Federal Trade Comission and Department of Justice of the early termination of the waiting period under the Hart-Scott Rodino Antitrust Improvements Act of 1976 for the filings made in connection with the acquisition of Racal Electronics Plc’s telecom business. The company’s acquisition of Racal Telecom is expected to be completed later this month and remains to the approval of shareholders of Racal Electronics Plc.
INDIA
Bharti BT Internet Targets 70,000 Clients by March, 2000
Bharti BT is on its way to having 70,000 customers by March 2000, its chief executive officer said on Wedensday. Arjun said the firm was interested in an initial public offering in the United States and a listing on the Nasdaq stock exchange, but a decision on such a move would have to be made by the shareholders of the joint venture partners. Bharti BT Internet, a 51.59 joint venture of Bharti Telespatiale and BT, launched its "Mantra Online" Internet service in May after India ended the monopoly on Internet services. The Mantra Online website at www.mantraonline.com was presently being viewed 2.5 million times a month, and said usage would increase further as portal sites increased the Indian content on the site.
Satyam Infoway Value Jumps Ten-Fold
The enterprise value of Satyam Infoway has increased more than 10 fold in the pat 12 months since its principal promoter Satyam Computer Services first placed a substantial portion of equity with Commonwealth Development Corporation (CDC). An analysis of Satyam Infoway's equity indicates that while 17 percent of its equtiy was placed with CDC for US$5 million in 1998, by October 1999, the company could command US$86 million for similar quantity (22 percent) on the Nasdaq. In the Intermittent period between the two transactions, Satyam Infoway's enterprise value grew from approximately US$30 million to around US$390 million, even as it ended financial 1998-99 (first year of full operations) with a net loss of INR 187 million. Insat 3B Urged by Vsat industry
Usha Communications Awards Amerivision Communications $5 Million Customer Management Supply Contract
Usha Communications Technology (UTC) has tied up with Amerivision Communications Inc., a multi-service telecommunications enterprise headquartered in Oklahoma city and is also a reseller of long-distance services through 40,000 affinity partnerships, in a US$5 million deal for supply and implementation of a range of mediation, provisioning, customer care and billing software systems. UCT has now clinched deals of over US$20 million in the past six months by launching its brand of billing and mediation of customer care products -Medusa and unicorn-in the international market. UCT has entered into alliances and bagged deals form majors such as compaq, Lucent, Vartech and telecom companies like Lanka Telecom. Currently, talks are on with global majors Nokia, Ericsson, Nortel and IBM for similar deals.
INTERNET/E-COMMERCE
CoStar Group to Acquire COMPS.COM for $102 Million
CoStar Group Inc. www.costargroup.com, a business to business provider of information services to the U.S. commercial real estate industry, and COMPS.COM ,www.comps.com, a national provider of comparable building sale information through the Internet and distributor of a range of other commercial real estate information services, have entered into a definitive merger agreement. At $7.50 for each COMPS.COM share, the deal is valued at approximately $102 million paid in a combination of CoStar Group stock and cash. At September 30th, 1999, COMPS.COM reported net tangible assets of $46 million, which is principally cash. COMPS.COM services approximately 20,000 customers in 47 markets from a growing database of over 400,000 commercial real estate transactions totaling over $466 billion. Under the terms of the merger agreement, each share of COMPS.COM will be exchanged for the right to receive $7.50 in cash or 0.31496 shares of common stock of CoStar Group, at the election of the holder and subject to adjustment to ensure that 49.9 percent of the merger consideration is paid in cash and 50.1 percent of the merger consideration is paid in shares of CoStar Group common stock. COMPS.COM will then become a wholly owned subsidiary of CoStar Group. The merger is subject to the approval of COMPS.COM stockholders, as well as various governmental bodies. The companies anticipate that the merger will close in the first half of 2000.
AOL Signs On 160 New Merchants for Holiday Shopping Season for its Shop@AOL Service
America Online has signed on 160 new merchants for its online shopping channel Shop@AOL for the upcoming holdiay season, increasing its number from 150 in 1998. It reported that 95 percent of current merchants have renewed their contracts, bringing it to a total of 275 merchants. Company executives said in the month of September over 1 billion was spent on the AOL shopping channel and in the first quarter to September, consumers spent a total of 2.7 billion at Shop@AOL. New merchants include Crate and Barrel Inc., Victoria’s Secret Inc. and Fogdog.com Inc.
Intermedia Seals Simon Property Group Deal Companies to Create World's Largest Retail Extranet
Intermedia Communications has signed a three-year, multi-million dollar agreement with Indianapolis-based Simon Property Group, the nation's largest owner and manager of retail real estate. This initiative is part of Simon's strategy to take advantage of Internet and e-commerce opportunities by combining the technologies of cyberspace with the benefits of a real world location. Upon successful completion of several beta tests currently underway, Intermedia plans to connect thousands of retailers at more than 150 of Simon's shopping malls across the country to next-generation advanced data networks. Intermedia will connect Simon Property Group tenants to its ATM and frame relay national network backbones through Simon's local area network, called TenantConnect.net.
"Today in Telecom" is a publication of Information Gatekeepers Inc. ©1999. 214 Harvard Ave, Boston, MA 02134; Tel: 617-232-3111; Fax: 617-734-8562
Headline - November 4, 1999
TOP STORIES
ADSL
CHINA
EUROPE
FIBER OPTICS
INDIA
INTERNET/E-COMMERCE
WIRELESS
TOP STORIES
Qualcomm Sets 4-For-1 Stock Split as Profit Quadruples
Shares of Qualcomm rose 16 percent to a record after the company reported profit more than quadrupled and set a 4-for-1 stock split. Qualcomm rose $29.06875 share, to $260.75. The stock has surged more than tenfold this year, giving the company a market value of $42 billion. It expects royalties from its CDMA technology to climb after doubling in the most recent quarter. Following its shareholder meeting on December 20, the company will set the date for the stock split.
Tyco International to Repurchase 20 Million Shares
In response to concern about questionable accounting practices, which resulted in a 31 percent drop in company stock, Tyco International Inc. announced its will repurchase about 20 million shares. More importantly, the questionable accounting procedures have made many question its ability to make acquisitions using its stock. However, Tyco denied the claims, and plans to maintain its current strategy of boosting profit by acquiring troubled companies. Since David Tice’s criticism of the company’s use of reserves surfaced, the company had lost $27 billion in market value. Tyco has used its stock as part of a buying spree that has totaled $30 billion in the past three years.
Blockbuster Becomes Premier Home Video Provider on AOL’s Entertainment Channel
The spirit of e-commerce continues to expand as America Online and Blockbuster Inc. launch a three-year strategic alliance making Blockbuster the premier home video provider on AOL’s Entertainment Channel and for AOL to be extensively promoted through Blockbuster key distribution channels. As part of the agreement, AOL will make a $30 million equity investment in Blockbuster.com that will be used for, among other things, joint development of broadband content and delivery. Under the three-year alliance, Blockbuster will have a continuous presence in the Home Video area of AOL’s Entertainment Channel. AOL members will have instant and direct access to the wide range of home videos and entertainment information available on Blockbuster.com.
ADSL
Alcatel to Ship 2.4 Million ADSL Chipsets for Fiscal, Beats Company Expectations
Alcatel predicts it will ship 2.4 million ADSL chipsets for the full year 1999, after shipments increased significantly in the third quarter. "Shipping 2.4 million chipsets was above even our expectations for 1999," said Pierre Garnier, director of telecom products for Alcatel’s microelectronic activities.
Wireless DSL Could Gives Long Distance Carriers Direct Entry to Local Phone Markets
Wireless DSL, a broadband access technology also known as LMDS fixed wireless service, motivated by MCI WorldCom’s pending merger with Sprint and may prove to be the long distance companies’ best strategy for entering the local access market, according to a new report by Insight Research. Sprint’s $1 billion in MMDS licenses reach roughly about 30 percent of US households; AT&T spent over $100 billion to reach the same number of households with TCI cable TV acquisition. Unlike cable companies who need to perform plant upgrades before they can offer cable mediums, LMDS/MMDS operators have huge chunks of spectrum ready to go and will be able to offer TV services, phone services, and high-speed Internet access. However, convincing customers that these new broadband wireless services will be as reliable as wireline may prove a tougher sell.
France Telecom Launches ADSL Internet Access Service
France Telecom has begun offering ADSL Internet access service in central Paris, plus the suburban communities of Issy-les-Moulineaux, Neuily-sur-Siene and Vanves. This new service, branded "Netissimo," is available only to subscribers in these areas for Internet access. Under the Netissimo brand, there will be two service offerings. With Netissimo 1, the service is 265 francs per month and provides 500 Kbps downstream and 128 Kbps upstream. And with Netissimo 2, designed for small business customers, will provide users with 1,000 Kbps downstream and 256 Kbps upstream. France Telecom received regulatory approval to offer the service on July 12, 1998. Netissimo service is available from all France Telecom sales offices in the areas covered by the new ADSL offer.
CHINA
Foreign Investors May Face Struggle in China’s Telecom Market without Dissolution of CCF Investment Agreements
China Unicom warned foreign partners they would have difficulty reentering China’s telecommunications market if they do not take a cooperative attitude towards the dissolution of their China China Foreign investment agreements. According to China Unicom spokesman Zhang Jiakun, this is one of the methods being used by the company to persuade foreign firms to accept the ending of their investment contracts, noting that the government previously said the contracts should be dissolved by September 30. The company was notified last year to cease all CCF venture contracts after the Ministry of Information Industry ruled such contracts to be illegal. CCF contracts involve cooperation with a Sino-foreign joint venture, enabling Unicom to bypass a ban of direct foreign involvement in China’s telecom sector.
EUROPE
Olivetti Could Become a Prime Takeover Target as Stock Continues to Suffer
Olivetti SpA, who in May rose as the victor in one of the fiercest takeover battles in recent European telecom history, could now become the prime target of a takeover as it stocks continue to drop. Since it took over former Italy phone monopoly Telecom Italia, a company five times its size, in May, Olivetti’s stock has dropped 42 percent. Although an imminent takeover seem unlikely, many investment bankers argues that as Europe’s telecommunications industry enters a new wave of megadeals, they are already going around the continent to launch an attack on Olivetti, which controls 55 percent of Telecom Italia. The latest telecommunications deals launched by giants illustrate how inexpensive Olivetti really is. On Tuesday, Olivetti could have been acquired for about US$30.6 billion, about the same that Germany’s Mannesmann will pay for Orange PLC.
Terra Networks Retail Tranche is 83 Times Subscribed
The retail tranche for the public share offer of up to 30 percent of Telefonica SA’s Internet unit Terra Networks SA is already 83 times subscribed. The offer in Spain opened yesterday. Expansion reported that a total of 231,000 orders, worth 4.7 billion eur, have been filed for the offer, meaning that the whole offer including the greenshoe is seven times subscribed. The final price for the offer is due to is set November 15.
Omnitel Predicts Internet will make Up 10-15 Percent of Business in Next Few Years
Omnitel Pronto Italia predicts that the Internet will comprise about 10-15 percent of its total sales revenues in the next few years. Chief executive officer Vittorio Coalo added that Omnitel is planning to set up a fixed-line Internet service provider. One of the distinguishing features of the company’s plans is to create its own branded web content site that will center on music, and car and bike racing.
Deutsche Telekom Has No Plans to Sell Stake in Wind
Deutsche Telekom AG has no plans to sell its 24.5 percent stake in the Wind Telecommunicazioni SpA consortium. Enel SpA owns 51 percent and France Telecom the remaining 24.5 percent of Wind.
Scottish Power’s Thus Launches One-Stop Call Center Service
Thus, the Scottish Power PLC telecommunications arm set for a separate listing next week, has formed a venture with Rotch Property Group and Sir Rober Mcalpine Ltd. to provide a one-stop service for companies wishing to set up a call center. At the new call center, Thus will provide call center services, while McAlpine will manage the design and construction of the building and Rotch will provide capital funding and sale and leaseback opportunities.
Cable & Wireless Opens First of 20 Web Hosting Centers
Cable & Wireless PLC has opened the first of at lest 20 worldwide data and web hosting centers. The first of the new centers, opened on November 3 in Reston, Va, consists of 33,000 square feet of raised floor space, with rack space for 5,000 servers. Five others will follow this within a year, and others to be added over the following two years.
Azkar to Acquire Assets of Philips Spain Logistics Unit
Transportes Azkar SA has reached an agreement with Royal Philips Electronics NV to buy and manage its Philips Servicios Logisticos SA unit for an initial period until December 31, 2002. The company expects to post revenue of about 7.0 billion ptas over the period from the deal. Philips Logisticos operates warehouses on the outskirts of Madrid and in Las Palmas, Canary Islands and employees 70 people. In 1998, sales by Philips to its distribution network reached over 190 billion ptas.
FIBER OPTICS
Lucent’s Nexabit Unit Launches Router Capable of Transmitting Data at 10 Gbps
Following a string of acquisition of startup companies for the telephone maker, Lucent’s new Nexabit Systems Unit, has launched a new router that can transmit data at 10 Gbps, much faster than the best devices made by Cisco Systems and Nortel Networks. The new NX64000 device will allow Net traffic speed to meet the large gains in transmission capacity via fiber optic channels. With the product launch barely out of the bag, AT&T has begun testing a Nexabit NX64000 device to speed traffic between Cambridge and New York City.
INDIA
National Internet Backbone to be Ready by February
The first phase of the national Internet Backbone with a bandwidth of 8 Mbps is slated to be completed by February across 45 cities. A first set of 5 key cities will have access to this backbone by November end and the spread will go up to 45 cities by February. A national Internet backbone is being considered imperative to harness the tremendous demand for the Net in the country. Five type A cities - Delhi, Jaipur, Calcutta, Bangalore and Madurai - will be covered in the first phase. Implementation in other 40 cities will be taken up in the second section. The Rs 40 crore project, awarded to Crompton in July, is nearing completion. Crompton has identified this as a turnkey project. For easier identification and a focused approach to each location, the 45 locations spread across the country are classified into 4 geographical sectors. The project team at Crompton Greaves, which has the mandate for implementation, has further divided the project into two sections. The first part of the project, which will cover 5 cities, will be completed by November.
MTNL Cellular Services Won’t Affect Existing Operators
The entry of Mahanagar Telephone Nigam Ltd. (MTNL) into cellular services is not expected to erode viability of the existing players in these cities, according to analysis carried out by international marketing consultancy Frost & Sullivan. Consumers would however benefit from the entry of both MTNL and the Department of Telecom (DoT), since prices are set to decline in a competitive environment. Both government operators are expected to make an entry in 2000-01. The change in the market structure is expected to bring down the prices further. In order to expand the market and counter competitive tariffs from DoT/MTNL, the private operators are likely to introduce pre-paid packages with competitive pricing. Send on marketing is also set to increase from the current level of 15 percent (of revenues) to around 20 per cent in coming years.
AG Recommends 5 Percent Penal Charge for Restoration of Koshika License
Attorney General Soli Sorabjee has recommended a penal charge of five per cent over and above the 35 per cent of the outstanding license fee, which was due from Koshika Telecom for restoration of the company's cellular licensees. The 40 percent of dues will amount to INR 14.5 billion, as the total outstanding license fee of Koshika Telecom is INR 36.4 billion. However, as bank guarantees totaling INR 94 crore have been encashed by the department of telecom, the actual demand on account of license fee may only be in the range Rs 50 crore.
Quebec to Fund IT Start-Ups in Andhra Pradesh
Andhra Pradesh and the provincial government of Quebec have set up a US$25 million IT incubation fund for identifying and financing IT startups in the state. The institution of the fund, which is expected to be operational in a few months from now, is expected to develop further into a sister-state relationship between the two governments towards larger cooperation in the IT sector, Ken Sagar, director, international development, Tertium International Inc, told The Financial Express. Tertium, a Canadian venture capital fund, has brought the two governments together and is helping out in identifying IT companies to be financed by the fund but is not participating in the fund.
Radio Paging Firms Seek Parity with Metropolitan Cellular Operators
City-based radio paging service providers have started lobbying intensely with the Communications Minister, demanding concessions on par with the metro cellular operators. The paging service providers' demands include a drastic 70 percent reduction in their license fee commitment, six months' extension on effective date of the paging licensees and implementation of calling party pay regime and revenue- sharing formula as recommended by the Telecom Regulatory Authority of India (TRAI). To realize those demands, Mr. Sanjay Dalmia and Mr. Y K Modi met Mr. Ram Vilas Paswan on Tuesday. While Mr. Dalmia owns one of the successful paging services companies in the country - EasyCall, Mr. Modi heads the association of radio paging licensees - Indian Paging Services Association.
INTERNET/E-COMMERCE
Equinix to Invest $1.2 Billion to Build 30 Internet Traffic Centers
Equinix, an emerging startup that builds communications exchanges for managing Internet traffic, will invest $1.2 billion over the next four year to build 30 new centers. Bechtel Corp. has agreed to design and build the centers. The company, which has support giants such as Microsoft and Cisco Systems, opened its first exchange near Washington, DC in July. It plans to open other centers in Newark, NJ later this month and in San Jose, CA early next year. Already MCI WorldCom, Concentric Network and Akamai Technologies lease space inside Equinix’s centers for computers that process Internet traffic. To finance the expansion plan, the company is close to announcing a second round of equity investors and will likely sell bonds.
WIRELESS
AT&T Revamps Wireless Offerings with New Low-Cost Wireless Calling Plan
To assuage customer concerns over capacity bottlenecks with its wireless network in the New York metropolitan area, AT&T plans to launch a lower cost version of its popular wireless-calling plan. Under the plan, AT&T will offer customers a new Digital One Rate monthly plan priced at $59.99 for 300 minutes. This plan was radical change from traditional plans as it eliminated long-distance chargers and roaming fees for calls made outside a caller’s home calling area. This offering, which comes only a few months after it said it was overwhelmed by the number of calls its handles under the current Digital One Rate plan, made some question the new initiative.
"Today in Telecom" is a publication of Information Gatekeepers Inc. ©1999. 214 Harvard Ave, Boston, MA 02134; Tel: 617-232-3111; Fax: 617-734-8562
Headline - November 3, 1999
TOP STORIES
ADSL
BRAZIL
EARNINGS/STOCKS
EUROPE
FIBER OPTICS
INDIA
JAPAN
WIRELESS
TOP STORIES
Bell Atlantic Falls Short of Opening Lines to Local Competition in New York
Bell Atlantic Corp.’s aspirations to offer long-distance phone service again comes to a halt as the Justice Department finds some lingering problems to open its local lines to competition. The Justice Department has provided this analysis to the Federal Communications Commission in connection with Bell Atlantic’s application to provide long-distance service in New York. It suggested to the FCC two alternative responses to the application. One would be to deny the application in a manner that clearly identifies the remaining steps Bell Atlantic must take to secure approval. The other would be to grant the application on the condition that the company would not be permitted to offer the services until it takes steps and demonstrates that its performance.
Nortel Networks Invests US$ 400 million to Triple Global Production Capacity for Optical Internet Systems
In response to a tripling demand for optical networking systems, Nortel Networks will invest an additional US$ 400 million in its booming optical networking and components business. The investment will create about 5,000 jobs in the company's optical business and triple production capacity in 2000. This is in addition to the doubling of production capacity already this year. This strategic investment will expand and accelerate the development and deployment of the company's market-leading Optical Internet systems. The investment includes establishing a new facility in Ottawa for the fabrication of precision lasers and performance-defining optical components. Such components are critical to the creation of Nortel Networks recently released DWDM 6.4 terabit systems. The company plans to build new facilities in Ottawa and occupy a new facility in Montreal, Canada; expand existing campuses in Paignton, United Kingdom, and Monkstown, Northern Ireland; and increase its supply chain and customer service capabilities in Atlanta, Georgia, and Raleigh, North Carolina in the United States.
ADSL
Focal Communications to Deploy Pairgain’s HiGain Solitaire for HDSL2 Offering
Focal Communications Corporation has selected HiGain Solitaire for HDSL2 deployment in Focals advanced network. Focal plans to use PairGain’s HDSL2 solution to provision T1 services faster in the 14 metropolitan markets it currently serves, as well as future markets the CLEC enters. Focal is one of the first CLECs to embrace the new standards-based technology and become a pioneer in HDSL2 deployment. Focal will be deploying HDSL2 technology for its "on-net" T1 strategy, and will use HiGain Solitaire to bring a portion of its T1 services "on-net." This will enable the company to provide its customers with the superior service they have come to expect, while substantially reducing its transport expenses. Focal will use the HDSL2 solution as an alternative to leasing T1 services from the ILEC. To deliver these services, Focal will utilize collocation space leased from the ILEC to house PairGains equipment, thus increasing Focal’s control of line implementation, monitoring and maintenance.
BRAZIL
Globo Cabo to Launch Cable-Based Internet Service
Pay Television provider Globo Cabo will launch its Virtua Internet service provider within the next two weeks, pending regulatory approval. It will be Globo Cabo’s first major project launch since the company, a unit of Globo Comunicacoes and Participacoes, sold an 11.5 percent stake to Microsoft Corp. in August for US$126 million. The company expects Virtua to attract 50,000 customer during the first 12 months.
EARNINGS/STOCKS
Newbridge Networks Shares Fall 25 Percent on Low Earnings Warning
Following its warning that second quarter results would be lower than expected from sluggish sales, shares of Newbridge Networks dropped 25 percent. Profit for the quarter ending on October 31, would be 8 to 10 cents a share, roughly half the 19 cents a share many securities analysts had forecast. This marks the seventeenth time in the last 11 quarters that the company warned of disappointing earnings. And, the hits just keep coming as Newbridge chairman, Terrence Matthews, indicated that profit for the next two quarters might be below forecasts as well. Company sales for the recent three months are expected to total $480 million, down from $495 million in the first quarter, but higher than estimates in 1998. In the wake of its poor showing, Alan G. Lutz, who had been recruited from Compaq a little over a year ago, has left the company, to be replaced by another Compaq alumnus Pearse Flynn, who came over to Newbridge in January.
Packard Bell NEC to Dismiss 88 Percent of Current Workforce
As it continues to struggle to keep itself afloat, Packard Bell NEC announced that it would lay off as much as 88 percent of its work force in the United States. In addition, its chief executive would resign and it would stop selling the Packard Bell brand in the United States. By the end of the first quarter 2000, the company will cut about 2,600 jobs to 300 to 400 positions. It was expected that the computer maker would reduce its losses from $650 million last year to $100 million this year. However, it only reached $150 this year. Packard Bell did consider other options, including possible mergers. One the areas that will be most affected by the layoffs will be the company’s Sacramento headquarters, where it will reduce its employee size to 100 from 1,600.
EUROPE
SBC Communications Reconsiders Bid for Telekomuikacja Polska
SBC Communications is having second thoughts about acquiring a stake in Telekomunikacja Polska, Poland’s state telephone company, leaving France Telecom alone in the running for the $3 billion strategic partnership, but a new bidder could be waiting on the sidelines. British Telecommunications is considering the possibility of a run for the stake in the company. The sale of 25 to 35 percent of TPSA will be Central Europe’s largest telecom privatization. However, SBC would not comment on its operations, which cited concerns over Poland’s blurry regulatory environment and TPSA’s shrinking monopoly
UPC Launches US$672 Million Bid for EnecoKabelTV and Telecom
UPC has made a $672 million bid for the Dutch cable company Eneco KabelTV and Telecom. France Telecom’s Casema unit, which has 1.1 million customers in the Netherlands, is also in talks with Eneco, which declined to disclose if Casema had made a bid. Eneco had 585,000 TV subscribers in 1998.
Telefonica Extends Management Incentive Payment Scheme to Terra Networks Unit
Telefonica SA has extended its special incentive payment scheme to its Terra Networks unit. It cited the prospectus for the IPO of up to 23.6 percent of Terra Networks, book building for which begins on November 4. Apart from the existing stock options available to some 1000 of Telefonica’s top managers, and the group has also offered similar incentives to management at its Telefonica Internacional SA and Telefonica Publicidad e Informacion SA units. In the case of Terra Networks, 14 million shares from the public offer have been reserved for a special bonus scheme for its managers, which will mature in April 2004.
Despite Problems KPN will Continue Ukraine Operations
Royal KPN plans to continue operations in the Ukraine where it has profitable stakes in the country’s fixed-line operator Utel and mobile operator UMC. However, Marten Pieters, responsible for KPN’s Central and East European operations said, "We may have to reconsider our position if the government continues to adopt its current stance.’ For political and financial reasons, the Ukranian government is tightening the screws on foreign investors by raising taxes. In addition, the government intends to repurchase the 10 percent of the shares in fixed line operator Utel it sold to KPN.
Ericsson Sells 2 Production Units to Solectron Corp. as Part of Restructuring Program
LM Ericsson has decided to sell its production units in Longuenesse, France and Oestersund, Sweden to Solectron Corp. of the US as part of the company’s restructuring program. Solectron will offer all 1,150 employees employment. Also, Sweden’s AU-System will take over the operations and personnel of Ericsson’s design unit in Oestersund, affecting slightly more than 70 employees, while it is outsourcing its inventory and logistics functions to Caterpillar Logistics Services. In Katerineholm, Flextronics International Sweden AB will take over parts of the production of Ericsson’s mobile telephone systems, including 100 employees.
KPN to Make Bid for Slovak Telecom
Royal KPN NV plans to launch a bid for Slovakia’s national telecommunications operator Slovak Telecom. The Slovakian government is expected to begin privatizing state-owned Slovak Telecom this year, but the size of the stakes to be offered is unknown. Percentages range from 35 to 51, and KPN’s acquisition strategy is to acquire controlling stakes.
Mannesmann Will not Rule out Further Acquisitions
Following its recent acquisition of Orange PLC, Mannesmann is not showing any signs of slowing down, as Klaus Esser asserts that the company will not rule out further acquisitions in the near future. However, the company’s main priority is becoming a major presence in the Europe’s mobile data communications market. Esser noted that the company is now present in Austria, Switzerland, Belgium, Italy and France.
OPTA Will Impose Fines on Dutch Telecom Operators who Fail to Offer Number Portability Services by 2000
To improve the service quality of number portability, Dutch telecommunications regulator OPTA said it will impose fines of up to 250,000 nfl per month on operators who do not offer seamless number portability services to clients by March 2000. Customers should know within three days of a request when their numbers will be switched to the new service provider. If it finds that 95 percent of telecommunications providers are not meeting this rule, OPTA will begin charging a fine of 75,000 nfl per month from next March to companies giving up a number and of 250,000 per month receiving the number. According to OPTA, a majority of customers complained about slow, complicated services regarding number portability since the service’s introduction in April.
FIBER OPTICS
General Electric Company to Acquire Nokia’s SDH/DWDM Transport Equipment Business
Marconi Communications, a subsidiary of The General Electric Company, PLC (GEC), have signed an agreement according to which Marconi will purchase Nokia's SDH / DWDM transport equipment business. Marconi will pay Finnish Marks 430 million (£46 million) in cash on completion. An additional subsequent payment, of up to Finnish Marks 192 million (£21 million), is anticipated dependent on the future performance of the business, resulting in a potential maximum total payment of Finnish Marks 622 million (£67 million). The business to be transferred to Marconi incorporates Nokia’s existing SDH and DWDM transport product range and the brand name Synfonet. Key customers for the business are major telecommunications companies throughout the world, such as cellular operators, dedicated network companies and advanced fixed line operators, including operators in fast growing Asian markets. In related news, both companies have signed a related OEM agreement, under which Marconi will supply Nokia with SDH / DWDM products. Under the agreement, Nokia will continue to supply SDH / DWDM products and customer services to certain customers as part of its full telecommunications system offering.
Time Warner Telecom Enters Two New Markets With Fiber Networks in Dayton, OH and Fayetteville, NC
Time Warner Telecom, Inc. plans to enter Dayton, Ohio and Fayetteville, North Carolina by mid next-year. These are the 23rd and 24th markets Time Warner Telecom will serve with fiber-based network services. The initial Dayton network will include a fiber backbone to be built in the downtown area to serve major Dayton-area employers with dedicated and switched data, voice and Internet access. In related news the company reported a118 percent increase in third quarter revenue and financial information for the third quarter and nine-month period ending September 30, 1999. The Company reported third quarter 1999 revenue of $71.3 million, an increase of 118 percent compared to $32.7 million for the same period last year. For the nine-month 1999 period, total revenue was $177.3 million, up 117 percent from the same period in 1998.
INDIA
Big-bang strategy to sort out telecom and Internet barbs
The Prime Minister's Office has devised a big-bang strategy to iron out wrinkles in India's telecommunications and Internet policies. The three-pronged strategy aims to review the TRAI Act of 1997, remove obstacles in the growth of Internet and e-commerce and to implement changes in the Telegraph Act of 1885. It is planning to set up a group to study the TRAI Act and recommend changes that will strengthen the regulator. This will have to be done quickly, since the government is planning to amend the Act in the winter session of Parliament, commencing on the third or fourth week of November.
Minister Stresses on Meeting the Target
Union communications minister, Ram Vilas Paswan, said that stringent action would be taken against officials for any failure in meeting the target of providing 45,000 new telephone connections in rural India this year. Embarking upon an ambitious program of providing telephone facilities in all villages by 2002, he also announced that action would be taken against erring officials if telephone complaints were not attended within three hours. He added that meeting the targets would be the responsibility of both the Department of Telecommunications and private operators.
Rolta Launches Internet Service in Mumbai
Rolta India has launched its Internet service, RoltaNet, in Mumbai. The company has packed the offer with lot of free software and free surfing hours to attract users in the city. It is also offering 64 Kbps direct connections to corporate. Rolta India has invested around INR 500 million in the project. It has established a 4 Mbps international bandwidth for its service. A call center has been set up to support the service.
Iridium and BPL Launch Global Roaming Service
Iridium India has launched Iridium World Roaming Service with BPL Mobile Communications Ltd. This will enable the Iridium subscribers to roam into cellular networks both domestically and internationally. It will now offer existing Indian cellular subscribers global roaming facilities using a single number. The cellular users can now purchase or even rent a satellite phone adapter to enable them to be available to both Iridium users, and will be able to roam across cellular protocols like GSM and IS41, which were previously incompatible networks.
JAPAN
NTT to Reduce Interconnection Rates on US Calls
The US government has asked Nippon Telegraph and Telephone Corp. to reduce its interconnection rates charged to its competitors. Reduction in interconnection rates will provide the right opportunity for companies to compete. Usage of the Internet in Japan lags behind that in the United States because of high phone fees, which largely stem from high interconnection rates charged by NTT. More importantly, US officials argue that high interconnection rates are impeding development of electronic commerce in Japan. Japan is seeking to introduce a new model for interconnection rates in 2000, but the current proposal is significantly above other rates available in countries such as the US.
WIRELESS
Nextel to Launch 30,000,000 Share Offering
Nextel Communications Inc. has priced its underwritten offering of 30,000,000 shares of its Class A common stock at $83-13/16 per share. The closing of the transaction is expected to occur on November 5, and the number of Class A common shares outstanding after the transaction will be 345,065,052. Nextel intends to use the $2.4 billion in net proceeds from the offering to fund capital expenditures, investments, working capital needs and for other general corporate purposes. Morgan Stanley Dean Witter, Goldman, Sachs& Co., Credit Suisse First Boston Corp., Deutsche Bank Securities Inc., Merrill Lynch, Pierce, Fenner & Smith Inc and PaineWebber Inc underwrote the offering for Nextel.
"Today in Telecom" is a publication of Information Gatekeepers Inc. ©1999. 214 Harvard Ave, Boston, MA 02134; Tel: 617-232-3111; Fax: 617-734-8562
Headline - November 2, 1999
TOP STORIES
ADSL
ASIA PACIFIC
BRAZIL
EMERGING TELECOM MARKETS (ISRAEL)
EUROPE
FIBER OPTICS
INDIA
SUBMARINE FIBER OPTICS
WIRELESS
TOP STORIES
FCC’s Kennard Dismisses Rumored Plans to Impose Internet Access Charge
In response to fears raised last week by House Majority Leader Dick Armey, the FCC’s Chairman William Kennard said the agency is not considering any change to current rules, which exempt Internet services, from per-minute access charges. Last week, Armey wrote a letter to Kennard reminding him of an April 1 promise he made not to impose access charges on Internet services and expressing surprise at a news report that suggested the FCC will reexamine that policy. However, Kennard argued that "the news report does not reflect the Commission’s policy or my views."
FCC Rejects AT&T’s Proposal to Increase Residential Long Distance Charges
The Federal Communications Commission yesterday declined AT&T’s request to increase residential long-distance fees by 51 cents a month and launched an investigation of the company’s prices. In defense of its request, the long-distance giant said it needed to increase the fees in order to comply with a recent federal court decision in New Orleans as well as action last week by the FCC that increased subsidies for rural telephone carriers. Those two actions effectively increased by about 500 million charges paid by long-distance carriers to a federal fund that subsidizes telephone services for low-income people, schools and libraries, and for rural areas where services are more expensive to deploy.
Sprint Faces 7 Lawsuits for Accepting MCI WolrdCom’s Takeover Bid
Only a month after it had agreed to be acquired by MCI WorldCom for $115 billion, seven lawsuits have been filed against Sprint Corp. Last month’s takeover, the world’s largest, has attracted six shareholder lawsuits in a district court in Kansas, where Sprint is based, and one in New York. All the suits accuse the company’s directors of breaching their fiduciary duties to shareholders and seek to force the company to auction itself to the highest bidder or pay compensation.
Lucent Technologies to Lay off 1,200 Union Positions by End of Year
As it begins to phase out its premise wiring operations, Lucent Technologies announced that it would cut 1,200 union positions by the end of the year through a voluntary buyout. In addition, the company plans to close customer care cents in Silver Spring, MD and Tucson, AZ, which employ a total of 180 people. Several of the cuts come from Lucent’s business communications unit, which posted flat revenue for the fiscal fourth quarter ended September 30.
ADSL
US West to Launch DSL Service in Rival SBC’s Territory
Making a move to expand its service offerings, US West will unveil plans to introduce DSL services in its rival SBC Communications territory by the beginning of next year. According to Joseph Zell, president of US West’s data networking unit, said the company plans to leverage the existing partner Qwest Communications that has fiber optic networks and other operations throughout Colorado. US West are the latest Baby Bell phone company to enter markets outside its traditional monopoly territory. When Bell Atlantic and GTE receive regulatory approval for their merger, both companies plans to enter at least 21 markets outside its traditional service area.
ASIA PACIFIC
Kim Woo Choong Steps Down as Chairman of Daewoo
Feeling the strains of public pressure, Kim Woo Choong, along with 12 of his top managers, have decided to resign to take responsibility of the financial problems of Daewoo Group. Creditors augured that Kim has held back efforts to restructure Daewoo’s affiliates. Now that both Kim and his associates are out of the picture, creditors and analysts contend that the restructuring process will become easier. Since it launched three new restructuring programs, the Seoul stock index rose more than 5 percent.
BRAZIL
Corning LEAF Fiber and Single-Mode Fiber Selected for Impsat’s South American Network
Impsat has selected Corning Inc. as a primary optical-fiber supplier for its South American broadband network being constructed by Nortel Networks. Under the terms of the agreement, Corning will supply LEAF fiber for Impsat’s Brazilian long-distance network, and Corning SMF-28 for the company’s metropolitan networks in Brazil and Argentina.
The Impsat build is the largest network planned for South America to date. This phase of Impsat’s Pan-American connectivity and multi-service network will consist of a 3,500-km, long-haul, fiber-optic network connecting the cities of La Plata, Buenos Aires, Rosario, Santa Fé, Córdoba, San Luis, and Mendoza in Argentina; as well as São Paulo, Rio de Janeiro, Curitiba, and Belo Horizonte in Brazil. It will provide broadband local access for all the cities served in Argentina and Brazil, covering 1,600 city blocks and 1,000 square kilometers through a combination of metropolitan fiber-optic rings and 10- and 38-gigahertz wireless systems. Additionally, more than 40 intermediate-size cities will have access to the network in these two countries.
AT&T Forms New Public Company AT&T Latin America
AT&T plans to form a new public company, to be named AT&T Latin America, that will merge the operations of Netstream, the competitive local exchange company AT&T is acquiring in Brazil, and FirstCom, a publicly traded company with competitive telecommunications operations in Chile, Colombia and Peru. AT&T, together with Promon Tecnologia, its Brazilian partner, will contribute Netstream and US$70 million in cash. In exchange, AT&T will own approximately 60 percent of the stock in the company, Promon Tecnologia will own approximately 6 percent, and the former FirstCom shareholders will own approximately 34 percent on a fully diluted basis. Promon Tecnologia and the former FirstCom shareholders will own Class A shares of AT&T Latin America, and have one vote per share; AT&T will own Class B shares, and will have ten votes per share. AT&T Latin America expects to invest approximately $500 million over the next five years, and intends to apply for listing on the NASDAQ. The new company will provide first-mile data and voice connectivity in major Latin American countries; it will establish a full range of business communications services in countries where it operates; and it will connect its customers to the new Concert, AT&T’s global venture with BT.
EMERGING TELECOM MARKETS (ISRAEL)
Virtual Communities Inc. Goes Public
Virtual Communities Inc (VCI), provider of comprehensive solutions for the development and management of web-based communities and an operator of ethnic online communities, has completed its merger with a subsidiary of HDG. VCI's wholly owned Israel subsidiary, Virtual Communities Israel Ltd. began operations in Jerusalem in 1996 producing an online Jewish community called virtualjerusalem.com. The site has grown into what the Company believes is the largest online community for Jewish and Israel-related content. VJ is best known for 24-hour news and unique features including the KotelKam, a live camera on the Western Wall; Send-a-Prayer, a service in which users can send email to the Western Wall; and vjradio.com, an English language online radio station broadcasting local and global news, features and music from Israel. VCI's corporate headquarters and marketing and sales office are located in New York City and its subsidiary is located in the Technology Park in South Jerusalem. The Company's research and development, programming and production services are based in Israel.
EUROPE
UK Government to Launch 2.5 Billion Stg Mobile License
The department of Trade and Industry will publish bidding rules for a 2.5 billion stg auction to take place in March for the next generation of mobile phone licenses. Mobile operators such as One2One, Orange PLC, Vodafone and Cellnet, will be keen to bid. Under the new rules, five operators will be allowed to run the new Universal Mobile Telecommunications Services and will permit other cellular phones to access the Internet and video services and deliver high-quality telephony. Department of Trade and Industry insiders believe the new licenses, the first in Europe on the UMTS system, could result in a fierce bidding war with each one raising 500 million stg or more.
Viag Interkom to Reduce Internet Access Tariffs
Viag Interkom will reduce prices for Internet access beginning on November 9. Under the new tariff structure, customers will enjoy a 0.03 dm per minute charge, including telephone fees for Internet access, and monthly fee of 18.90 dm.
British Telecom Seeks Double Stake in Airtel for US$2Billion
British Telecom is seeking to double its stake in Airtel for US$2 billion. Currently BT owns 17 percent of the Spanish mobile operator in which Vodafone AirTouch PLC and Banco Santander Central Hispano SA also holds substantial stakes. However, BT would not comment on such a deal.
FIBER OPTICS
Intermedia Communications Deploys Cisco High-End Routers for Coast-to-Coast OC-48 IP Optical Network
Intermedia Communications has selected Cisco 12000 Gigabit Switch Router (GSR) series and Cisco 7200 series VXR routers for a major network expansion to a nationwide OC-48 Internet Protocol (IP) optical fiber network backbone. In addition to using Cisco's solutions to achieve increased scalability, port density and manageability, Intermedia will leverage Multi Protocol Label Switching (MPLS) capabilities in Cisco IOS for the delivery of comprehensive Internet, voice and video services to its 90,000 business customers nationwide. By the end of 1999, Intermedia will deploy the Cisco equipment in its POPs in Atlanta, Chicago, Washington DC, Dallas, Los Angeles, New York City and San Francisco, with plans to upgrade all 70 POPs by early next year.
INDIA
TRAI plea against stay on Calling-Party-Pays Regime Rejected by the Supreme Court
The Supreme Court dismissed a petition filed by the Telecom Regulatory Authority of India (TRAI), challenging the Delhi High Court stay on implementation of the calling-party-pays (CPP) regime for cellular mobile users. The Supreme Court said that it would not interfere with the order passed by the Delhi High Court or in the proceedings as the matter is still at a preliminary stage. November 16 has been fixed as the next date of hearing on public interest litigation filed by consumer organization, Telecom Watchdog, and the two petitions filed by the Mahanagar Telephone Nigam Ltd. To make matters worse for the TRAI, even the paging services association had moved the High Court against the CPP regime.
Karnataka government announces sops for information technology
The Karnataka government announced an array of fiscal incentives and a host of focussed initiatives to boost information technology (IT) industry in the state, including the setting up an IT Task Force and an independent department of IT. Under the fiscal incentives, there has been an 100 per cent exemption from payment of entry tax on computer hardware, peripherals, accessories and raw materials and other inputs used in the IT industry. A 100 per cent sales tax exemption too has been brought into effect for all IT industries (both manufacturing and trading). In addition, there has been an exemption from payment of works contract tax on the annual maintenance of IT products and equipment.
Department of Telecom to Expand Fiber Network to Meet Internet Access Demand
Union communications minister Ram Vilas Paswan said that the Department of Telecom Services would strengthen the national circuit by laying optical fiber network to expand Internet connections. He assured that all the districts in the country will have at least one Internet node by 2000, and there will be telephones in all villages by 2002.
VSAT Industry Urges for Satellite Capacity to Spur Growth
The VSAT industry has achieved a growth rate of 50 percent during the first three years. However, for the past 18 months, it has been reeling under 10 per cent to 15 per cent growth rate. Analysts and industry players said that though the industry has the potential to thrive at 50 per cent, but unless the government assures and gives necessary satellite capacity it would be difficult to revive the industry. Although the growth of VSAT worldwide is 65 percent, in India the growth rate remains choked because of factors like inverted license fee structure where the percentage of license fee goes up as a percentage of revenue. The high license fee has forced the VSAT industry of being cost uncompetitive.
SUBMARINE FIBER OPTICS
Alcatel to Build North Sea Links of the Pangea 1 Cable Project
Alcatel has been awarded an US$84 million contract to build the 957 km (595 mile) North Sea portion of the 6,000 km (3,720 mile) Pangea 1 cable project serving Northern Europe and Scandinavia, according to Joseph J. Kapusinsky, Pangeaís Senior Vice President, Engineering and Operations. The contract calls for two cables and related transmission equipment, one linking the U.K., and Denmark, and the other linking the U.K. and the Netherlands, Mr. Kapusinsky said. The system supports Pangea’s self-healing ring configuration that will serve the U.K., Netherlands, Germany, Denmark, Norway, Sweden and Finland starting in the 4th quarter of 2000. The fully funded Pangea 1 system will operate at an initial capacity of 160 Gigabits per second, Mr. Kapusinsky said. Served cities include London, Amsterdam, Dusseldorf, Hamburg, Copenhagen, Malmo, Stockholm, Goteborg, Helsinki and Oslo.
GLOBENET/GTS GlobeNet, GTS to Market Undersea Fiber Optic Cable Connections between Latin America and Europe
GlobeNet Communications Group Ltd. through its wholly owned subsidiary, Atlantica Network (Bermuda) Ltd., and Global TeleSystems Group, Inc. have entered into a Memorandum of Understanding to be the first providers of high-quality, 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 (FA-1) undersea network. Both cable systems feature a self-healing ring design. Atlantica-1's first leg--from New York through Bermuda to Fortaleza, Brazil--is scheduled to be ready for service in September 2000. The full northern ring of the system, including Fortaleza to Venezuela to Florida and back to New York, is slated to be operational by year-end 2000. An additional link from Fortaleza to Rio de Janeiro is scheduled to be ready for service by February 2001. Atlantica-1 has a design capacity of 1.28 Tbps.
Worldwide Telecom and Tyco Submarine Systems to Increase Trans-Atlantic Capacity to 1.92 Tbps
Worldwide Telecom Ltd., has increased the capacity of tits Hibernia self-healing SDH ring network, will increase from 1.28 Tbps to 1.92 Tbps on each segment using DWDM technology on each fiber pair. The WFI undersea Trans-Atlantic able connection between Boston, USA and Europe will utilize a 4-fiber pair, 48-wavelength configuration. The undersea cable system will be installed by TSSL, and Hibernia will be the first Trans-Atlantic subsea ring network utilizing 48 wavelengths at 10 Gbps line rate and will have 480 Gbps per fiber pair on each segment, for a total of 1.92 Tbps fully protected capacity. Worldwide Telecom's Hibernia System network will have landing points in Halifax, Canada; Boston, USA; Dublin, Ireland; and Liverpool, England and will interconnect with WFI's existing North American terrestrial longhaul backbone network and will connect customers end-to-end, over a seamless international high capacity system. Hibernia represents a unique opportunity to connect Worldwide Fiber's US network to future European customers.
WIRELESS
Wireless Associations to Launch Internet Usage Pact
To ease the problem of international cell phone usage for travelers, the GSM Association and the Universal Wireless Communications Consortium, have agreed on a pact that could eventually allow about 290 million cellular phone users to use their phones almost anywhere in the world. Both companies represent two of the three incompatible digital wireless standards in the US. GSM is the single standard in Europe, with an estimated 220 million cellular subscribers worldwide. And the UWCC represents companies such as AT&T that use TDMA, which includes about 70 million subscribers. However, the third standard, CDMA is not part of the alliance. With the new alliance, users whose phones are based on the GSM or TDMA standards to make and receive calls from country to country. To access this new program, subscribers will have to purchase a new multinetwork phone, and phone network will need to reach roaming agreements to enable billing of these calls.
"Today in Telecom" is a publication of Information Gatekeepers Inc. ©1999. 214 Harvard Ave, Boston, MA 02134; Tel: 617-232-3111; Fax: 617-734-8562
Headline - November 1, 1999
TOP STORIES
ADSL
BRAZIL
EUROPE
INDIA
INTERNET/E-COMMERCE
SOUTH AMERICA
TOP STORIES
Nextel Launches $6 Billion Bid for NextWave’s Radio Spectrum
Nextel Communications is willing to pay more than $6 billion for radio spectrum that the government auctioned to NextWave Personal Communications Inc. for $4.7 billion in 1996. However, the deal is not going anywhere because government licenses for the spectrum are tied up in NextWave’s bankruptcy proceedings, and federal regulators have not been able to make an end-run around the court by convincing Congress to let them reclaim the licenses and auction them immediately. In June 1998, NextWave Personal Communications filed for protection under Chapter 11 of the federal bankruptcy code. But the problems did not stop there. When the FCC launched an auction of the licenses in 1996, eight companies that bid more than they could pay filed for protection under US bankruptcy laws.
Craig McCaw Makes Move to Save ICO Global Ventures from Bankruptcy with $1.2 Billion Investment
As investors continue to sour at the prospect of satellite phone ventures, ICO Global Communications Ltd.’s board has approved a financing plan in which telecommunications investor Craig O. McCaw and his affiliated companies Teledesic LLC and Eagle River Investments LLC will lead a group of international investors that will provide up to $1.2 billion to ICO. Under an agreement reached on October 31, McCaw and his affiliates will lead a group of existing ICO investors to provide $225 million debtor-in-possession financing expected to be completed by November 8, and $275 million in a second financing round expected to be completed at the end of January 2000. McCaw and his affiliates have also agreed to underwrite the remaining $700 million exit financing expected to be completed by the second quarter 2000 upon consummation of the reorganization plan.
Nortel Recasts Strategy to Meet Demands of the Internet Commerce Boom
When a large customer stepped up its order for Nortel’s high-speed telecommunications networking equipment from $90 million to $160 million, and then to $270 million in the space of 90 days, the company realized it had to move fast to keep from falling behind. In its latest effort to transform itself from a traditional telecommunications maker, it wants to effectively compete against networking powerhouses such as Cisco Systems and Lucent Technologies. One of its first moves into the Internet networking market was its acquisition of Bay Networks, a producer of Internet equipment for a final price of $6.9 billion. Nortel claims that its Internet strategy is already boosting its earnings. During the first nine months of 1999, the company’s earnings from operations jumped to $970 million, up 65 percent from 1998. Revenue climbed to $15.22 billion, a 29 percent rise.
ADSL
Axessa Deploys Turnstone's Copper CrossConnectCX100 as Local Loop Management Platform for DSL Services
Axessa, a competitive local exchange carrier based in New Orleans, has chosen Turnstone's Copper CrossConnect CX100 as its local loop management platform for DSL services. Axessa will install the Turnstone solution in central offices to automate the copper loop and limit the labor costs associated with deployment and maintenance of high-speed services for small- and medium-sized business customers in Louisiana. With Turnstone's Copper CrossConnect CX100 installed in the central office between the Main Distribution Frame (MDF) and DSLAMs, Axessa can determine remotely and in advance whether a link to a customer premise is capable of supporting a particular type of DSL service. Through remote software controls, Axessa can perform loop qualification that verifies the connections can deliver the required service quality and speeds. Additionally, with the Turnstone solution deployed, Axessa's field technicians will be able to generate audible tones to aid installation and crossconnect subscriber loops to different DSL equipment ports.
BRAZIL
Canbras Wins Cable Television License Bid
Canbras Communications’ newly formed joint venture company has won a bid for a cable television license to operate in the metropolitan Sao Paulo cities of Diadema and Maua, and a separate joint venture company has submitted the winning bid for the license for the city of Cianorte in Panama State. The three winning bids totaled R$1.06 million and will add a population of approximately 759,000 and 196,000 homes to Canbras’ franchise area. The awards of these new licenses are subject to confirmation by Anatel. With the new license win, the company will hold interests in 15 CATV licenses in the Greate Sao Paulo area, with a total population of 5.4 million and 1.4 million households, and in 4 CATV licenses in cities in the State of Parana, with a total population exceeding 700,000 and over 190,000 households.
Marconi to Install High-Speed Fiber Optic Backbone in Brazil
Marconi Communications has won a contract worth GBP 10 million (ITL30 billion) to supply a latest-technology Synchronous Digital Hierarchy (SDH) fiber optic transmission system to Telecentro-Sul, one of Brazil's largest telecommunications operators. The contract covers the turnkey installation of an SDH core network optimized to carry data at speeds of up to 2.5Gbps, along with a full range of digital cross connect and other SDH products. The new network will serve as a high-speed backbone between Telecentro-Sul's nine local operators, which together provide telecommunications services to a 4,000 square kilometer area covering the capital Brasilia and the highly industrialized Brazilian high plain. The SDH fiber backbone represents the first phase of Telecentro-Sul's ongoing network upgrade and expansion program, which aims to deliver faster, more reliable service to customers throughout the region.
EUROPE
Tele Danmark to EGM on December 10 to Elect New Members to Board of Directors
Tele Danmark will hold an extraordinary general meeting on December 10 to elect new members to the board of directors At a recent board meeting the board of directors were informed that Deborah Lenart wishes to resign from her position as a member of the board of directors of the company. The change in composition of the board should be seen in light of the merger between Baby Bells Ameritech Corp. and SBC Communications Inc.
British Telecom to Increase Cost of Calling Mobile Lines from BT Lines
British Telecommunications will increase the cost of calling mobile phones from BT lines beginning on December 1, by at most 1 pence per minute. The charges, however, do not affect customers who have joined the BT Together scheme, which began on November 1, nor prices for business customers on the BT customer commitment schemes.
Telecom Italia Board Approves Separation of Siemens Venture Italtel
Telecom Italia SpA’s board of directors has approved the separation of its joint venture with Siemens AG Italtel SpA. The separation plan will give it the Italtel activities related to fixed line, voice, data and images while Siemens will receive the activities related to mobile communications and transmission systems. Recently the board approved the separation plan in relation to the trading plans of Telsi Ltd., the company through which Italtel is owned jointly by Telecom Itlaia and Siemens. It is currently in the process of developing contacts with the main telecommunication operators with the purpose of starting a new industrial project aimed at improving client assistance, products and technological developments.
France Telecom Plans IPO for Dutch Media Services Group in 2001
Dutchtone Group, a cable, mobile and Internet service provider controlled by France Telecom SA, plans to sell shares to the public after 2001. France Telecom, which now holds about 86 percent of the group, will likely maintain a majority stake after the IPO, with minority shareholders ABN Amro Holding NV and Rabobank Nederland selling their stakes. Dutchtone’s mobile segment will likely not be profitable before 2002 or 2003, while Casema and EuroNet are currently almost breakeven. It aims to have 2.5 million customers by the end of 2000, with 1.1 million Casema clients, l million mobile subscribers and 75,000 Internet users via its cable network.
German Consumer Telephone Prices Down 11.4 Percent
As competition in the hotly contested German telecommunications market continues to flourish, the Federal Statistics Office reports that consumer telephone prices are down 11.4 percent from 1998, after falling 12.0 percent in September and 1.6 percent in August. Rates for mobile telephone services fell by 9.0 percent in October from September. The largest year on year price reductions were seen on domestic long-distance calls, which were down 43.3 percent year-on-year, with foreign call prices also down 20.5 percent. Local calls saw a 7.4 percent rise in prices, while connection and basic fees remained stable compared to last year.
Sonera to Sell Mobicentrex Unit to Sweden’s Trio
Sonera Oyj has agreed to sell its Mobicentrex business unit to Sweden’s Trio AB, with the consideration to be paid in new shares representing 21 percent of the enlarged capital base. Based on the October 26 share price for Trio on the O-list of the Stockholm stock exchange, the stake will be worth about 18.8 eur. Trio will add the unit product, which is a software-based platform that allows operators to offer virtual switchboard services for mobile communications to companies.
INDIA
MTNL's Subsidiary to Begin Operations by November 21
MTNL's wholly owned subsidiary for Internet and value-added services, Millennium Telecom, will officially begin operations on November 21. The company, which has already been registered in Mumbai, will have an initial authorized capital base of INR 1 billion. Paging and value-added services like ISDN will form part of the new company. Millennium Telecom would have a separate chief executive, its own offices and outlets, formulate its accounting practices and marketing strategies. However, existing infrastructure facilities of MTNL will be made available to Millennium Telecom.
VSNL to Launch New Net Service
Videsh Sanchar Nigam Ltd. (VSNL) will launch a new Internet service, with a host of additional features, in a week. The services, priced at existing rates, will initially be open only to new customers. Only 5,000 connections will be provided initially, though the new system is capable of servicing about 500,00 customers. The new service will not be based on a single server but on a centralized system, which would ensure faster access to the connection and no mail delays. It will have an enhanced messaging system and provide an online payment module.
Hughes Ispat Will Soon Complete Financial Closure
Hughes Ispat Ltd., which holds the basic telecom license for Maharashtra and Goa, is close to completing its financial closure, which has been pending for more than a year. It is hoping to raise a total of US$720 million, comprising of US$390 million in debt and fresh equity of US$330 million. The US$720 million will be primarily deployed to expand its network base. The company will shortly be expanding its equity base. Currently, the company has an equity base of $ 180 million, with Ispat Industries holding a 51 percent stake while Hughes Electronics Corporation and US-based Alltel Corporation hold a stake of 34 and 15 per cent respectively.
Delhi High Court Delays Implementation of CPP
The Delhi High Court stayed the implementation of the calling party pays (CPP) regime, scheduled to come into effect from November 1. It has fixed November 16 as the next date of hearing on a public interest litigation filed by consumer organization, Telecom Watchdog, against the revenue sharing regime notified by the Telecom Regulatory Authority of India. Under the CPP regime, landline phone users were to pay airtime charges in addition to normal call tariffs for calling a cellular number. Basic operators too opposed this regime saying that this would lead to substantial losses as the revenues were to be shared between the landline and mobile operators. The delay is likely to extend to lower rentals and call charges notified by TRAI.
JT Mobiles to Use Railway Backbone
The Railway board has granted access to JT Mobiles Ltd. (JTM), the cellular service provider in Karnataka and Andhra Pradesh, to offer the railway backbone to JTM for its cellular infrastructure. The company is also looking at a tripartite agreement with National Thermal Power Corporation, Andhra Pradesh State Electricity Board and the Railways to use their network of pylon to carry its voice traffic.
Revenue Department to Develop Initiative to Check E-Commerce Fraud
The revenue department will put in place norms for checking evasion of incomes arising out of e-commerce transactions, close on the heels of the government clearing the Information Technology bill. E-commerce transactions are currently negligent, but once the IT bill is cleared, the volumes are expected to quadruple. This would make it essential for the revenue department to be on its toes. Technically, all incomes are taxable but because of the nature of transborder transactions, which are seamless, it is difficult to establish the incidence of tax. As a result, the scope for tax evasion is immense. Officials say that it would be difficult proposition to check evasions, considering that e-commerce is a new field.
INTERNET/E-COMMERCE
America Online to Initiative 2-for-1 Stock Split on November 22
America Online’s boards of directors have declared a two-for-one split of its common stock. On November 22, stockholders will receive one additional share for every share they own on the record data of November 8. Following the effective date of the split, AOL will have approximately 2.2 billion shares outstanding.
SOUTH AMERICA
Elcotel Continues Success in South America
Telecentro, SA of Argentina has selected Elcotel's Komet payphone system to fulfill their new public communications venture in Argentina. Elcotel's Komet is an intelligent payphone designed to operate under demanding environments in international wire-line and wireless networks. The Komet can be configured to accept coins and cards, including intelligent chip cards and credit cards. Telecentro will install up to 500 Elcotel units in the first phase of the project, which is expected to begin in the next quarter of this fiscal year. Elcotel expects that revenue from this project will exceed US$2.5 million over the next 18 months.
"Today in Telecom" is a publication of Information Gatekeepers Inc. ©1999. 214 Harvard Ave, Boston, MA 02134; Tel: 617-232-3111; Fax: 617-734-8562 |
