Headline - December 10, 1999
TOP STORIES
ADSL
ASIA PACIFIC
CABLE OPTICS
EUROPE
FIBER OPTICS
INTERNET
MEXICO
EMERGING MARKETS (UTILITIES IN TELECOMMUNICATIONS)
SATELLITE COMMUNICATIONS
WIRELESS
TOP STORIES
Motorola Moves to Assist Iridium in Restructuring Process
To enable the company to continue operations through early next year, Motorola will invest $20 million in Iridium, a troubled global satellite telephone venture. As a result of poor interest, Iridium filed for Chapter 11-bankruptcy protection in August. Motorola’s loan will enable the company to continue its operations through the middle of February and give company officials more time to develop a restructuring plan.
In addition to Motorola’s good charity, others have expressed interest in acquiring a large stake in the company. Craig McCaw, a cellular telephone connoisseur, has expressed interest in taking control of the company. However, Iridium would not disclose who the potential investors are and Mr. McCaw was unavailable to comment on the situation. McCaw has taken a vested interest in helping struggling satellite companies out of ruin. Just last month he agreed to raise $1.2 billion to bring ICO Global Communications, another satellite telephone service, out from Chapter 11.
Tyco International’s Shares Drop 23 Percent on News of the SEC’s Investigation into the Company’s Merger and Accounting Practices
Investors yesterday drove down Tyco International’s stock price 23 percent following the company’s announcement that the Securities and Exchange Commission was launching an inquiry into the company’s merger and accounting practices. The company said that the SEC has launched a "nonpublic informal inquiry" related to charges and reserves taken in connection with acquisitions made by Tyco, which has grown extensively through several mergers and acquisitions over the past six years.
Company shares dropped $8.25, to $28 in New York Stock Exchange trading, on volume of 114 million shares, the largest daily volume in the company’s history. This listing was the company’s lowest since October 1998 and was less than half the prices realized in July when company Chairman Dennis Kozlowski raised $170 million by selling shares, and Mark Swartz, Tyco’s CFO, sold $108 million of his shares in the company.
At the end of October, a report by David Tice, an analyst and money manager who writes a newsletter "Behind the Numbers, criticized the company’s accounting practices. Tice argued that large charges Tyco had taken after it made acquisitions inflated later reported profits.
AT&T Says Bell Atlantic is Stealing Millions of Dollars From Maryland Consumers
AT&T claims that Bell Atlantic has overcharged Maryland consumers over $200 million over the last three years for inflated access fees charged to long distance companies, causing telephone customers to pay higher prices than necessary for long distance calls within the state.
AT&T asked the Maryland Public Service Commission (PSC) to move quickly to reduce to cost the access fees that Bell Atlantic-Maryland charges long distance companies to connect calls to and from homes and businesses. AT&T said this reduction will result in savings for Maryland telephone customers.
Bell Atlantic-Maryland currently requires long distance companies to pay about five cents per minute for connecting calls to its local telephone network. Bell Atlantic's actual cost (which includes a reasonable profit) to make those connections is less than half a cent per minute.
ADSL
NorthPoint Communications Secures $250 Million of Credit Facilities
NorthPoint Communications Inc. has closed on $250 million of senior secured credit facilities. The sole lead arranger and syndication agent for the credit facilities, which closed today and consists of $250 million in committed financing and $50 million in the form of a pre-approved incremental facility, is Goldman Sachs Credit Partners LP CIT Group's Structured Finance Unit, formerly Newcourt Capital, and CIBC World Markets acted as documentation agent and administrative agent, respectively.
ASIA PACIFIC
Lucent Technologies Partners with UPS Worldwide Logistics Asia for Supply Chain and Service Support
UPS Worldwide Logistics Asia has signed of a multi-million dollar logistics an distribution agreement with Lucent Technologies Singapore Pte Ltd. to serve the Asia Pacific Region.
Under the terms of the agreement, UPS WWL Asia will be responsible for the distribution, warehousing, order management and fulfillment, returns management, and inventory functions for warranty and repair support across a broad range of Lucent products available in Asia. UPS WWL will also manage a regional spare parts depot located in Singapore.
CABLE OPTICS
MediaOne Road Runner Internet Access Service now reaches Over 200,000 Subscribers
MediaOne Road Runner, the high-speed Internet service of MediaOne, one of the nation's leading broadband services company, has surpassed the 200,000-customer mark. MediaOne Road Runner has nearly tripled its customer base from early December of last year. Quarter over quarter growth in 1999 has ranged from 22 percent up to 38 percent.
"It took us 29 months to reach our first 100,000 customers and just nine months to add the second 100,000. Reaching 200,000 customers is a great milestone for us," said Tom Cullen, vice president of MediaOne Internet Services. "We're encouraged by the remarkable growth this year and are looking forward to next year, when millions of more homes will be able to get our high-speed Internet service.
EUROPE
BellSouth and KPN Telecom to Jointly Acquire E-PLUS
BellSouth Corporation has exercised its right-of-first-refusal to purchase Vodafone's 17.243 percent share of the German wireless carrier E-Plus and that it will exercise its right-of-first-refusal to purchase VEBA/RWE's 60.25 percent share of E-Plus.
In addition, BellSouth is forming an alliance with KPN Royal Dutch Telecom. KPN is providing BellSouth a US Dollars 9.4 billion loan to purchase the Vodafone and VEBA shares. KPN will subsequently convert the loan into a 77.493 percent share of BellSouth GmbH, the holding company that will own and operate E-Plus. Following the closing, BellSouth and KPN will share control of E-Plus.
BellSouth has the option to convert its 22.507 percent of E-Plus into a 19 percent ownership interest in KPN or a stake in KPN Mobile of equivalent value. KPN Mobile is a holding company for all of KPN's wireless investments, that is expected to go public in the first half of 2000.
FIBER OPTICS
LightPath Technologies Inc. Participates with Others in LightChip Inc.'s Second Equity Offering
LightPath Technologies Inc. has invested $1.0 million as part of the $16 million second equity round announced by LightChip, Inc. earlier today. This equity round was priced at a multiple of the initial round in 1998 whereby LightPath invested $1.2 million of a $7.2 million funding. In addition to LightPath, LightChip Inc., a Salem, New Hampshire optical networking company, sold shares to Morgenthaler Venture Partners, AT&T Venture Fund and J.P. Morgan Ventures. LightPath maintains an equity ownership position of 18.3 percent, which adjusts to 14.6 percent given full consideration to all potential dilutive shares.
Since the completion of its own $4.1 million private placement in early November, a number of existing warrants and other options have been exercised, as well as a stock purchase by Mr. Robert Ripp at the time that he joined the Board of Directors. The result has been the receipt of an additional $1.7 million, bringing the total of new cash into the Company over the past five weeks to approximately $5.8 million.
INTERNET
AT&T Enters Instant Messaging Battle Against America Online
As the instant messaging fight comes to a boil, AT&T has decided to enter the fight to push America Online Inc. to open its instant messaging network to other rivals’ customers. Only hours after the long-distance giant opened the gates to enable its subscribers to exchange real time text over the Internet with AOL’s 50 million subscribers, AOL blocked the move much like the moves it made against Microsoft Network earlier this year.
AT&T was able to find a way around AOL’s block late yesterday afternoon, but executives said the company eventually gave up because AOL has the final say over who reaches its customers via its free Instant Messenger software. Further, the company maintained that the attempt was more of a symbolic move and would most likely be abandoned if AOL does not let up the gates to the service.
MEXICO
New Iusacell Announces Placement of US$350 Million of its 14.25 Percent Senior Notes Due 2006
Nuevo Grupo Iusacell SA de CV announced that US$350 million of its 14.25 percent Senior Notes due 2006 were placed today in an offering pursuant to Rule 144A and Regulation S. and carry a rating of B1 by Moody's Investor Service and B+ by Standard & Poor's.
Approximately US$134 million of the net proceeds will be placed in a security account to pay the first six semi-annual interest payments. The remaining proceeds will be used primarily to fund recent capital expenditures, future investments in Iusacell's existing cellular operations, as well as for general corporate purposes. These investments allow the Company to expand digital network capacity, increase coverage and better meet its customers' requirements for quality service.
EMERGING MARKETS (UTILITIES IN TELECOMMUNICATIONS)
FPL Group Forms New Telecom Subsidiary To Wholesale Fiber Optic Network Capacity
FPL Group Inc. is launching a new telecommunications subsidiary to wholesale fiber-optic network capacity to telephone, cable television, Internet and other telecommunications companies in Florida.
The new subsidiary will acquire an existing 1,600-mile, inter-city fiber network from its sister subsidiary, Florida Power & Light Company, and begin independent operation January 1, 2000. The company said it expects the new subsidiary to have revenues between $30 million and $40 million in its first year of operation.
The existing network interconnects cities from Miami to Jacksonville on the East Coast of Florida, Lake City in North Florida, and Tampa south to Naples on the West Coast. FPL Group's new subsidiary plans to invest approximately $100 million in the near-term, to expand the existing network within major cities throughout Florida. Expansion of the network in Miami already has been completed, and projects in Fort Lauderdale and West Palm Beach are in advanced stages of engineering.
Williams Communications Signs $130 Million Network Services Contract With Prism Communication Services
The network unit of Williams Communications Group Inc. has signed a $130 million agreement with Prism Communication Services, Inc., a leading integrated communications carrier, to provide long-term capacity and fiber on Williams' fiber optic network.
The majority of the value in the transaction is in long-term network capacity on the Williams Multi-Service Broadband Network. Williams Communications will also provide collocation and fiber maintenance services over the 20-year agreement.
Prism, a subsidiary of Comdisco Inc., will use the network capacity and fiber to augment the national expansion of its advanced communications network. The company, which has already established a strong presence in the New York City metropolitan area, with the launch of its brand RED is rapidly constructing its robust network to offer integrated voice, data, video, Internet and other secure business services to 33 markets in the United States. The fiber acquired in this transaction will connect key business centers in the east, including Chicago, Cleveland, New York, Washington, D.C., and Atlanta.
SATELLITE COMMUNICATIONS
Titan Corp. to Acquire Advanced Communications Systems for $175 Million in Stock
The Titan Corp. has reached an agreement to acquire Advanced Communications Systems, a rival company that primarily serves the needs of the government, for $175 million in stock. Under the terms of the agreement, Titan will pay about $20 for each share of Advanced Communications. Shares of in Advanced Communications, which is based in Fairfax, VA, rose $3.25, to $17.75, and Titan’s shares fell 25 cents to $28.4375.
Boeing Enters Minority Partnership with SkyBridge for Satellite Development
The Boeing company has become a minority partner in SkyBridge, a satellite communications company, under which the companies will jointly launch six satellites beginning in 2002. SkyBridge, which is predominantly controlled by the European space industry giant Alcatel, will use the six launchings to place 40 satellites into orbit. The company eventually plans to have a constellation of 80 communications satellites, to be used for telecommunications and Internet-like data transmissions. Terms of the deal have not been released.
WIRELESS
BellSouth Corp. to Target Rural Customer Base with Wireless Test
BellSouth Corp. will test wireless systems as a means to bring high speed Internet access services to rural customers. The test will take place early next year in Houma, La, about 60 miles southwest of New Orleans. This is intended to help BellSouth see if wireless connections are profitable and technically feasible. About a dozen customers will participate in the test.
Leap Wireless International, Inc. Announces Proposed Public Offering
Leap Wireless International Inc. intends to make an underwritten public offering of 3,000,000 shares of its common stock plus 450,000 additional shares of common stock in the event of an exercise of the underwriters' over-allotment option. The Company intends to conduct the offering during the first calendar quarter of 2000 and plans to register the offering under the Securities Act of 1933.
Leap Wireless International Signs Memorandum of Understanding to Acquire Operating Licenses in Denver, Pittsburgh
Wireless communications carrier Leap Wireless International, Inc. has entered into a memorandum of understanding to purchase PCS operating licenses in Denver, Colo. and Pittsburgh, Penn. for an undisclosed amount. Leap and the seller expect to finalize a binding agreement by Jan. 15, 2000. The agreement, if executed, will give Leap the right to add nearly 5 million POPs to Leap's holdings for use by its domestic subsidiary, Cricket Communications, Inc.
The acquisition will be subject to certain conditions and approval from the Federal Communications Commission. Leap expects Denver and Pittsburgh to become the largest markets to offer the unique Cricket service, which seeks to make wireless communications simple, worry-free and affordable for all users by enabling customers to make and receive all their local calls for one low, flat monthly rate.
Once the binding agreement is signed, Leap will have licenses or rights to acquire licenses to offer the Cricket service to approximately 29.2 million potential subscribers (1998 POPs) in markets across the country such as Albuquerque, N.M., Charlotte, N.C., Dayton, Ohio, Little Rock, Ark., Memphis and Nashville, Tenn., Salt Lake City, Utah, Spokane, Wash., Tucson, Ariz., Tulsa, Okla., and Wichita, Kans.
"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 - December 9, 1999
TOP STORIES
CABLE OPTICS
EUROPE
INDIA
MEXICO
TOP STORIES
Nortel Comes Closer to Ink Deal to Acquire Qtera Corp. for $3.5 Billion in Stock
In the effort to keep from falling behind in the rapidly changing optical networking market, Nortel Networks is coming closer to reaching a deal to acquire the Qtera Corp. for $3.5 billion in stock. Although executives said the deal could be officially announced within the week, they have warned that the talks could still dissolve. According to one person close to the talks, there is an 85 percent chance that the two companies would complete a deal. And another person said that the negotiations have about a 90 percent chance of success.
This proposed deal is representative of an ongoing trend of the traditional large communications companies to acquire young startup companies that have a niche focus on an emerging technology that will emerge as a dominant element in the communications business. But the trend does not stop with Nortel.
In recent months both Lucent Technologies and Cisco Systems have acquired optical networking companies to accelerate their move into this hot space. First, Cisco’s acquisition of two new upstart optical networking companies, Monterey Networks and Cerent Corporation to step aboard the optical networking speed train. And, second, Lucent Technologies, through its acquisition of Nexabit Networks, have integrated that company’s technology to create its own terabit routing system.
Corning Inc. Accelerates Fiber Optic Business with Acquisition of Siemens AG’s Optical Cable and Hardware Businesses for US$1.4 Billion
Looking to expand its dominance in the burgeoning fiber optic market, Corning Incorporated has signed a definitive agreement to acquire Siemens AG's optical cable and hardware businesses and the remaining 50 percent of its two co-investments with Siemens Siecor Corporation and Siecor GmbH for US$1.4 billion.
Corning expects the transaction to close in early 2000 after customary regulatory approvals. The company plans to fund the transaction with proceeds from both a common stock offering and debt issuance. Corning expects that the acquisition will cause dilution of less than 5 percent in 2000 earnings per share, and to be accretive thereafter.
As part of the integration of the acquired operations, Corning will create a new operating unit, Corning Communications Europe, which will be headquartered in London. Cliff Hund, a senior marketing professional with experience in Corning’s fiber and European cable businesses, will serve as president of Corning Communications Europe and will be responsible for driving and integrating Corning Communications’ European strategy. Gerhard Konig, a Corning general manager with experience running businesses in both Germany and the United States, will serve as managing director Europe – Cable/Hardware and Equipment. Konig will be responsible for European operations and operational integration. Both Hund and Konig will report to Lyons.
Upon completion of the deal, Siecor GmbH will become part of Corning’s worldwide optical-fiber manufacturing operations. The transaction price includes US$145 million of contingent performance payments to be paid, if earned, over a four-year period, and approximately $120 million of assumed debt.
AT&T Appoints Former Hughes Executive as New Chief Financial Officer
On the hunt for talent in the communications field, AT&T will appointed Charles Noski, a Hughes Electronic Corp. executive as its new chief financial officer. After being pursued by the long distance giant for weeks, Noski ultimately accepted the offer. Noski, 47, will take the place of Daniel Somers who was recently named as the head of AT&T’s Broadband and Internet unit where he will oversee the company’s foray into the cable television services market.
CABLE OPTICS
Cablevision Agrees to Sell Ohio Cable Systems to Adelphia
Cablevision Systems Corporation and Adelphia Communications Corporation have executed definitive agreements under which Cablevision will sell its cable systems in the Greater Cleveland metropolitan area to Adelphia for total consideration of $1.53 billion in cash and securities. The transactions are valued at approximately $5,000 per subscriber for the 306,000-subscriber operation.
The combined $1.53 billion purchase price for the transactions will be composed of $990 million in cash and $540 million in Adelphia Class A Common Stock. Cablevision expects to use the proceeds to reduce outstanding debt.
This acquisition increases Adelphia's total subscriber base to more than 5.3 million customers. It also substantially increases Adelphia's presence in the Great Lakes region to more than 1.3 million customers stretching from the western suburbs of Cleveland through western Pennsylvania to Buffalo, New York. Adelphia's other operations within this region include the Empire Sports television network and the commercial telephone networks of Adelphia Business Solutions ("ABIZ") in the cities of Cleveland; Pittsburgh; Erie, Pennsylvania; and Buffalo.
EUROPE
Enitel to Acquire Telia’s Norway-Based Unit Telia Norge
Enitel has signed an agreement to acquire Telia Norge from state-owned Telia of Sweden for US$252.6 million. The company has been negotiating a deal to buy Telia Norge, a fixed-line subsidiary of Telia, for more than a month. In order to complete the deal, Telia must sell off Telia Norge because of its merger with state-owned Telenor of Norway.
Deutsche Telekom's T-Online Exceeds 4 Million Customers
T-Online, the Internet access and online service provider subsidiary of Deutsche Telekom AG has further extended its position as the dominant online service in Germany and Europe. At the beginning of December, there were more than 4 million customers accessing the Internet via T-Online. Moreover, T-Online has gained more than 1.3 million new customers in the past 11 months.
T-Online also said traffic volume has also grown significantly since the introduction of the new prices for "T-Online eco one" on October 1. The number of minutes online grew by a third. The number of sessions also increased in these two months by more than a quarter to 165 million. The company noted that customers not only are logging on more often, they also are staying online longer.
Enterprise Customer Management - March 14 - 16, 2000 NEC, Birmingham
Enterprise Customer Management (ECM) 2000 is the UK's definitive customer relationship management (CRM) event, aimed at educating the key decision makers in all companies who are responsible for managing customer relationships profitably. It is not a technical IT show, but an event which interprets the IT solutions for sales, marketing, customer service, IT and the board in every major organization and highlights their business benefits.
ECM is a showcase for every customer management technology. Integrated front office solutions, sales force and marketing automation software, Computer Telephony Integration, Enterprise Resource Planning (ERP) systems, I-CRM and the networking systems and Intranets that link all these technologies together will all be demonstrated on the show floor.
The centrepiece of the show, the ECS summit, is a free educational program. Renowned experts and practitioners, for example BT and Oracle, clearly explain CRM solutions and how users such as Scottish Widows, The Labour Party, MCL (Mazda Cars), First Direct and Ifonline has applied CRM to create competitive advantage.
Nortel Networks & BT Tel Perform First Live Calls on New Internet Telephony Network
The first live telephone calls on one of the world's largest Internet telephony and multimedia IP network, supplied by Nortel Networks, have been successfully completed. In line with the announcement made in May 1999, the initial deployment of BT Tel's IP Telephony network is now complete. Existing Spanish BT customers, including both business and residential customers, will be migrated to the IP network, one of the most advanced communications networks in the world, in the coming weeks. The opportunity to subscribe is now available to millions of potential Spanish customers.
Last week, and only 6 months after Nortel Networks started deploying BT Spain's IP Network, Teofilo de Pozo, Managing Director of BT's Spanish wholly owned subsidiary, BT Telecommunicaciones S.A. (BT Tel) was able to make the first Internet telephony call over the new network.
The IP network will enable BT Spain to roll out to customers exciting new services in the future including IP videoconferencing, VPNs, freephone, unified messaging and more. Business customers of BT Spain will be able to access voice mail, conference call services and access email over the IP network.
Using the latest IP technology from Nortel Networks this IP-based telephony network is unique in supporting full interoperability with traditional telephone networks and is completely scalable.
Viatel Completes Acquisition of Destia Communications Inc.
Viatel Inc. has completed its acquisition of Destia Communications Inc.
In the merger, each share of Destia Common Stock is being converted into 0.445 share of common stock of Viatel, Inc. Effective December 9, Destia Communications' stock will no longer be traded on the Nasdaq Stock Market. The combined company will have approximately 47 million outstanding shares.
Concurrent with the closing of its acquisition of Destia, Viatel also completed its exchange offer whereby it exchanged $686.03 principal amount of its 11.50 percent senior dollar notes due 2009 and US$71.24 in cash for each 11.0 percent senior discount notes due 2008 of Destia Communications.
All of Destia's 11.0 percent senior discount notes were tendered for exchange. Further, Viatel completed a private placement of approximately US$64 million of 11.50 percent notes, the proceeds of which will be used to meet the company's obligations under the exchange offer and to purchase collateral for the 11.50 percent notes.
INDIA
DTS to Slash Domestic Long Distance Calls by May 2000
The Department of Telecom Services (DTS) will slash domestic long-distance telephony (STD) tariffs and strengthen the optical fiber backbone for long-distance telephony. STD calls will cost much less from May next year once the long-distance telecom sector is privatized. Officials, however, refused to divulge the details of the new tariff structure.
To improve the quality of service, DTS has set a target of an additional 100,000 root km of optical fiber network by 2000-01, up from 60,000 root km this year.
Broadband Internet services via satellite may be introduced within the next two or three years.
Foreign Investment Promotion Board Approve Rupert Murdoch’s Acquisition of a Four Percent Stake in Zee
The Foreign Investment Promotion Board has cleared Rupert Murdoch’s recent acquisition of about 4 percent equity in Zee. The equity stake was part of Subhash Chandra's payback deal for Murdoch's 50 percent holding in Asia Today Ltd. (ATL) and Siti Cable.
Zee promoter Subhash Chandra had to pay Murdoch nearly US$300 million to take his stake to 100 per cent in ATL and Siti. About half of this will be paid in two tranches next year, beginning in March.
Shyam Telecom to Invest INR9 Billion Over Five Years Wireless Local Loop Systems
Shyam Telecom has chalked out an investment of INR 9 billion over a period of five years in basic and wireless in local loop telecommunications services. This investment will be made through Shyam Telelink, a subsidiary of Shyam Telecom.
The company is on the verge of financial closure for the projects. An equity issue will be made amounting to INR 4 billion in which the Shyam group will have a majority stake, while the rest will be placed with institutional investors abroad. For the balance INR 5 billion, the company plans to offer tax-free bonds.
Shyam Telecom has plans to diversify and expand on several fronts. Around INR 700 million will be spent on expanding its present business operations, out of which INR 525 million will be invested in the development of new products such as multi-access radios, WiLL and various Vsat and DAMA systems.
Microsoft and PricewaterhouseCoopers India to Establish E-Commerce Showcase
Microsoft and PricewaterhouseCoopers (PWC) in India have signed a memorandum of understanding for setting up e-commerce showcase. PWC will establish a center of excellence for e-commerce with Microsoft technology at Salt Lake in Calcutta. In the next one-year, the two companies will target e-commerce, enterprise resource planning, business intelligence and vertical market segments.
Fibcom Widens Base to Service Net and Phone Segments
Fibcom is widening its base to cater to private fixed-line phone, mobile phone and Internet service providers and utility segment. The company claims that it has the largest installed base of indigenously manufactured SDH telecom transmission equipment in India. The company is soon launching its dense wavelength division multiplexing and passive optical network.
ZDNet to Launch Indian Web Portal in January
ZDNet will officially launch its Indian portal in January 2000, and is currently in the final stages of negotiations with various Indian newspapers and technical and business magazines for possible news sharing arrangements. The portal will provide India-specific technology as well as information technology business-related news on a daily basis. The company is also setting up an Indian server, and will also set up its Indian office in Mumbai.
Nortel Networks May Establish Research Unit in India
Nortel Networks is planning to activate its operations in India in the next one year, and is considering the possibility of setting up a research laboratory in India for product development. Joseph Samuel, managing director of Nortel's India operations said that the company is also interested in equity participation in smaller companies, even start-ups, who could undertake product development for Nortel especially in IP related areas. Outlining Nortel's future strategy, he said that it would lay special emphasis on being the vendor to companies setting up infrastructure to support the explosion in Internet activity in the country.
MEXICO
Leap Wireless International Joint Venture PEGASO Launches Service in Mexico City
Leap Wireless International Inc.’s Mexican joint venture, PEGASO, has launched service in Mexico City. PEGAS initiated service in one of the world's largest metropolitan areas, home to approximately 20 million people. PEGASO has now completed launches in Mexico's four major cities, after kicking off service in Monterrey, Guadalajara and Tijuana earlier this year.
Wireless penetration has grown in Mexico from 1.8 percent at the end of 1997 to 3.5 percent at the end of 1998 and 5.6 percent in July 1999, according to COFETEL (Mexico's Federal Commission of Telecommunications).
Leap owns 28.6 percent of PEGASO. Other shareholders include Grupo Televisa, the world's largest Spanish-language media company; Grupo Pegaso, a privately held conglomerate; and financial investors Citicorp Equity Capital Latin America, AIG-GE Capital Latin America Infrastructure Fund, and Nissho Iwai Corporation. Infrastructure vendor Ericsson is providing CDMA radio base station products, base station controllers and deployment and network management services. Alcatel is providing network infrastructure with radio systems, site acquisition, site deployment and services.
"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 - December 8, 1999
TOP STORIES
CHINA
EUROPE
FIBER OPTICS
INDIA
JAPAN
WIRELESS
TOP STORIES
Bell Atlantic’s Wireless Alliance with GTE and Vodafone AirTouch to Sell $15 to Billion Overlapping Wireless Assets
In what may be one of the largest deals in the consolidating wireless industry, Bell Atlantic, Vodafone, and GTE announced that they will all rid of their overlapping wireless systems to win the government’s approval to create the US’s biggest wireless company. With a combined cache of systems in 96 markets, the sale will be worth a total of US$15 to US$20 billion.
More importantly, the sale will facilitate the emergence of new companies to emerge, which has been happening at a rapid pace in the industry. One example that comes to mind is Germany’s Mannesmann AG, which transformed itself from a traditional industrial company, to building a wireless network throughout Europe. The company has now become the targets of the largest takeover bid at $114.5 billion from Vodafone.
The newly combined company will include Bell Atlantic’s East Coast wireless properties with Vodafone AirTouch’s US assets, which are scattered throughout the Mississippi river area. Also, included in the network will be GTE’s wireless assets, which operate throughout the US. When combined, these markets include three million total wireless customers throughout the country, including areas such as San Francisco, Chicago, and Greenville, SC.
Microsoft Moves to Increase Internet Subscribers Through Joint Web Portal Agreement with AT&T Canada
As a way to attract Internet subscribers, AT&T Canada and Microsoft have joined forces to develop a web portal site At this time, financial terms of the deal have not been disclosed. Beginning next year, residential AT&T customers of AT&T Canada will have access to a customized version of Microsoft’s msn.ca Web site. The portal, which will consist of single Web page, will link users to an array of information and services such as free e-mail. Revenue from the portal will be divided between AT&T Canada, Canada’s largest CLEC and Microsoft.
CHINA
Lucent Technologies Wins Major Supply Contact from China Unicom
As it looks to expand its foothold in China’s telecommunications market, China Unicom has awarded Lucent Technologies to supply them with ATM and IP solutions to China Unicom's broadband multi-service national backbone network.
The new network, covering up to 100 cities in China, is expected to become China's leading integrated data-voice network for the next generation and will enable China Unicom to give individual customers services such as data, IP voice, fax, video and other feature-rich multimedia services. For enterprise customers, it will provide lease line connection, Virtual Private Network (VPN), LAN line connection services.
Lucent's ATM and IP solution for China Unicom's new network includes the company's GX 550 smart core ATM switch, CBX 500 and B-STDX 9000 multiservice Wide Area Network (WAN) switches, (which support ATM, Frame Relay and IP on the same platform), IP Navigator MPLS, and NavisCore network management control software, all part of Lucent's portfolio as acquired through the acquisition of Ascend. The solution also includes Lucent's market-leading PacketStar Access Concentrators.
EUROPE
Aol Europe Ranks Number One in Time Spent per Member Online
AOL Europe welcomed the findings of the independent Internet ratings organization, Media Metrix that ranked its membership number one in time spent online - key indicator of customer loyalty and e-commerce potential.
The Media Metrix Digital Media Audience Ratings Report was compiled using data from panels in the UK, France and Germany in October. Details of the findings are available in the Notes for Editors.
AOL members in each of AOL Europe's major markets, which include Germany, the UK and France, average 30 minutes daily within the AOL service's world-class exclusive content and communities. By contrast, Media Metrix found that the users of other ISPs and portals spend only three minutes or less daily with their provider's proprietary content, or barely enough time to view more than a couple of Web pages.
Media Metrix also found that the AOL brand has achieved the second-highest reach of all European online services. Driving AOL Europe continued strong growth is attractive new pricing plans in the UK and Germany. AOL UK launched its revolutionary `Off-Peak All The Time' pricing scheme, enabling members to get online for 1p per minute whatever the time of day or day of the week, plus monthly subscription. In Germany, the introduction of a similar scheme recently drove the AOL Germany membership over the one million member mark.
Nokia Becomes Europe’s Largest Stock
According to the Dow Jones Stoxx 50 index of Europe’s largest stocks, Nokia has risen to the top of the list as the largest company by market capitalization. Company stocks have jumped 20 percent in Stockholm trading on December 3 and December 6 before closing at $171.33 on December 7. The Finnish cell phone maker knocked Britain’s BP Amoco, which has a market capitalization of 189 Euro from its top spot with 5.90 weighing in the index.
Vivendi and Elektrim Come Closer to Forming Joint Partnership
Making its first move into what may be a joint partnership, Poland’s Elektrim has reached an agreement with French conglomerate Vivendi to convert a loan arrangement into equity. Under the terms of the agreement, Vivendi will pay Elektrim US$150 million in cash immediately and a further US$100 million before December 18. In addition, the agreement converts into equity the outstanding portion of a US$615 million loan given to Elektrim by Vivendi at 10 percent annual interest. Elektrim’s most valuable asset is a 51 percent stake in Polska Telefonia Cyfrowa, Poland’s largest mobile telephone operator.
Versatel Makes Move into German Telecom Market with Acquisition of VEW TELNET for US$120 Million
VersaTel Telecom has made its move from its home base in the Netherlands as it reaches an agreement to acquire VEW TELNET of Dortmund Germany for US$120 million for VEW TELNET. VEW TELNET has approximately 225 employees and 4,000 business customers currently under its belt.
VEW TELNET operates an approximately 1,400 km, 18 fiber SDH network, consisting of an STM 16 ring with over 160 SDH nodes/PoP locations and 7 points of interconnection with Deutsche Telekom. To accelerate local access fiber connections VersaTel has secured the right to jointly build additional fiber network and customer connections with VEW ENERGIE by utilizing its power network rights-of-way. In addition, VEW TELNET was operational in 33 CO locations, representing more than 10 percent of the addressable market in the Westphalia-Lippe region.
VersaTel intends to expand VEW TELNET's network to increase its access to Deutsche Telekom's main 325 CO locations in the region, which cover 80 percent of the regional market. Its primary aim is to use Deutsche Telekom's existing copper infrastructure to deploy xDSL access as well as build local access fiber connections, to provide a full package of high bandwidth, local access services to German customers. Also, the company signed a 12-month telecommunications services contract with VEW ENERGIE and VersaTel, which will enable the company to market its services to VEW ENERGIE's existing power customer base.
VEW TELNET is also a member of RegioNet, a cooperation between 6 adjacent regional carriers to reduce termination costs and realize interconnection synergies in Germany. It is a wholly owned subsidiary of regional electricity company VEW ENERGIE AG, and is a four years old telco in the German region of Westphalia-Lippe. It owns Class 3 and 4 German licenses, and its territory is contiguous to VersaTel's existing broadband network in the Benelux. Its territory includes the heavily industrial eastern Ruhr District, and has more than nine million inhabitants and over 240,000 addressable business customers.
FIBER OPTICS
CIENA’s Shares Jump 23 Percent on Rumors of Metro DWDM Contracts with iaxis Williams, and Qwest
CIENA shares were up 23.7 percent to $60.0625 on rumors that the company had won a major metro DWDM contract with Qwest Communications and that the company's program with Williams Communications was still on track. The latter is following the reputed meeting of December development deadlines set between the two companies when the original $40 million over three years contract was signed on November 4th
The resurgence of the shares (knocked back recently by a stern market report which said the company faced stiff competition) was also enhanced by a parallel formal announcement from CIENA around midday that European telco iaxis had issued purchase orders for CIENA's MultiWave Metro optical transport systems for deployment in its iaxisenroute pan-European network, and announced plans starting in January to trial CIENA's MultiWave CoreDirector intelligent optical core switch.
KPNQwest to Repair Damaged Undersea Cables in Under a Week
Despite poor weather conditions, KPNQwest expects to repair two torn underwater fiber optic cable connecting mainland Europe and Britain in under a week. Also, the company said the damage to the cable by fishing boats is prompting the company to accelerate the installation of its dry cable, which will run through the channel tunnel. The line should be finished in the first quarter of next year. Despite the service outage, services to European customers were restored immediately.
Alidian Networks Moves to Break into Optical Metropolitan Area Network Market
Alidian Networks has introduced a new metropolitan-area network (MAN) architecture that applies optical technology to both access and transport functions, resulting in a platform that scales cost-effectively from the edge of the access network to regional central offices or points of presence (POPs).
Alidian's Optical Service Network (OSN) architecture blends the reliability of SONET with the scalability of dense wave division multiplexing (DWDM), adding key elements that those technologies lack: awareness of the various services (e.g., IP, ATM, Frame Relay, TDM/Voice) being transported and cost-effectiveness. Carriers can quickly provision new data and voice services in real time, transport them along with existing services deployed on legacy equipment, and maintain quality-of-service guarantees.
Targeted at integrated communication providers (i.e., CLECs, ILECs and IXCs) who are building out their fiber facilities to address planned demand increases, the OSN architecture simplifies the carrier infrastructure by providing, a single solution for metro access and transport.
Key architectural innovations include the ability to 1) transport multiple protocols in native mode without conversion to a common protocol such as ATM or placement in rigid SONET/TDM time slots, 2) pack multiple protocols onto a single wavelength rather than "burning" separate wavelengths for each, 3) add, drop or move individual services on or off wavelengths at different destinations, creating efficient mesh topologies, 4) use a thin layer of SONET with enhanced reliability and bandwidth efficiencies, and 5) scale cost-effectively by using DWDM optics only where needed.
A family of products based on the OSN architecture will be introduced in early 2000.
INDIA
Telecom Regulatory Authority of India Seeks Dispute Resolution Role
The Telecom Regulatory Authority of India (TRAI) has submitted a detailed note to the Department of Telecommunications (DoT) seeking an amendment in the principal act to accord it the role of an umpire to settle disputes.
TRAI has stated that there are three possible ways for dispute settlement between a licensor and the licensee or between service providers - the courts, arbitration and TRAI. According to the regulator, "what needs to be appreciated is that players in the telecom sector seek a dispute resolution mechanism that is expeditious, cost effective and more importantly, independent. The mechanism should also have the requisite competence to deal with highly complex techno-economic issues that may arise in the sector."
The TRAI Act must therefore clearly state that TRAI will settle all disputes arising out of or in connection with the license granted to a service provider and also those pertaining to its functions as set out in section 11 of the TRAI Act.
Comptroller and Auditor General Warns TRAI of Taking Tariff Issue to Parliament
The Comptroller and Auditor General (CAG) has warned the Telecom Regulatory Authority of India (TRAI) that it will take the issue of tariff fixation to Parliament if the latter continues to drag feet over the submission of tariff records for auditing.
In a letter addressed to TRAI, CAG officials wrote "if the requisitioned records are not produced to the audit within a week's time, there is no other option than to report the matter to Parliament."
CAG also stated that the audit report could not be completed because of the non-cooperation of the TRAI officials. The tariff fixation was an executive function and had huge financial implication in terms of revenue of the government.
Court Wants Cellular Firms to Pass on Migration Benefits to Consumers
The Delhi High Court recently ruled that the benefits of migration to the revenue-sharing regime should be passed on to the consumer by way of reduced tariffs.
In its order, the court clarified that the revenue-sharing package must be implemented in full, and corresponding reduction in rental, if any, will be implemented. The bail-out package migrated private operators to a revenue-sharing regime, involving a write-off of 70 per cent of committed license fees, and hence the benefits should be passed on to the consumers.
HFCL May Offer Stake to Foreign Funds
Himachal Futuristic Communications Ltd. (HFCL) is working on a major financial restructuring which include retiring INR 1.5 billion debt and private placement of equity shares of foreign institutional investors to mobilize at least INR 3 billion.
HFCL, which also needs more working capital in view of the INR 9 million orders in hand, has informed the stock exchanges about its intention to infuse fresh equity.
The preferential allotment to foreign funds is likely to be made at a premium over the current market price. Besides retiring more than 50 percent of its INR 3 billion debt, HFCL also plans to invest over INR 1 billion in software development business and R&D. the company has identified software as a major future thrust area.
Usha Martin Group Floats Venture Fund for Telecom Start-Ups
The Calcutta-based Usha Martin group has floated a venture capital company, UMVentures, for funding software and infotech start-ups and expansion projects.
The initial seed capital for UMVentures has been kept at INR 250 million. However, the group did not rule out the possibility of bringing in strategic partners to expand the venture capital's fund base. UMVentures has already funded its maiden venture by picking up 30 per cent equity in the Mumbai-based INR$350 million software company, Melstar.
This is part of the Usha Martin group's effort to increase their exposure in software, infotech and telecom related business.
Bharti and SRF to Jointly Develop Virtual Satellite Wide Area Network
SRF Ltd. has joined forces with Bharti BT to interlink its business operations around the country on a wide area network based on Vsats. The network will help SRF deploy messaging system and will be used for transmitting data and voice across multiple locations.
Compaq India Unveils Online Management Systems
Compaq India has launched Compaq Services Network, an online management system to connect its authorized service channel partners and customers. It provides enhanced business capabilities including technical information, warranty diagnostic tools and business operations tools like online parts ordering and tracking.
Intel Considers Investing in India to Beef Up Internet Strategy
Intel Corporation is looking at investment options in Indian companies in the telecom sector and complementary technologies. As part of its investment strategy, Intel may invest up to $10 million to pick up 10-20 percent stakes in companies that provide complementary technologies to its Internet strategy.
Intel has decided to look beyond PCs and focus on networking requirements in the new environment. Another strategy is to pick up companies that help increase the capabilities of the PC platform and microprocessors. It is also looking at companies that help it to explore new business opportunities.
Department of Telecommunications to Launch Mobile Services by March 2000
The Department of Telecommunications (DoT) will start wireless in local loop based mobile services in Hyderabad, Chennai, Patna and Calcutta by March 2000, Union communications minister, Ram Vilas Paswan, said. A 5000-line wireless in local loop in Hyderabad was in an advanced stage of validation. Meanwhile, the minister has also committed to upgrade of the Andhra Pradesh Wide Area Network.
JAPAN
SEGA Spin-Off ISAO and Nortel Networks Develop Online Video Game System
Nortel Networks has joined forces with ISAO Corp. of Japan, a spin-off of Sega, to develop a game system that will enable more than 5,000 on-line players to compete in the same game simultaneously using Sega's Dreamcast system, it was announced today.
The huge number of interactive game players is being made possible through Nortel Networks' high-performance Internet technology that is being provided to ISAO, the builder of the one of the world's largest and fastest game server network. The network -- which ensures faster access and no delays -- is expected to be fully operational in Japan in early December.
ISAO is teaming with Nortel Networks to enable more than 5,000 players to simultaneously play Sega's new high-powered interactive video -- Virtual-On Oratorio Tangrum. The network will support additional interactive video games to be rolled out in the future. ISAO selected Nortel Networks' CVX 1800 access technology to boost the speed, reliability and bandwidth of its network system.
Sales of its Internet-ready, 128-bit Dreamcast console, which uses a consumer's TV set as its screen or game monitor, already have reached 1 million units in North America since being launched in the United States on Sept. 9.
Worldwide Fiber Completes Long-Haul Network Based on Nortel Networks' OPTera Solutions
Worldwide Fiber Network Services Ltd. has completed the first phase of its global optical network, lighting the first span of its optical long-haul network from Vancouver to Calgary. This marks the first in-service deployment of Nortel Networks' OPTera LH optical networking system. The OPTera LH span, which went live November 7, 1999, was deployed under a recently signed US$300 million global supply agreement with Nortel Networks.
Hibernia is a 12,200-km subsea optical network linking Boston, Halifax, Dublin and Liverpool. Hibernia will offer transparent optical channels on a switched protected ring in addition to a self-healing SDH ring network, with an initial capacity of 160 Gbps on each segment. The network can be potentially upgraded to more than a terabit per second per fiber on each segment, using DWDM technology.
WIRELESS
1999 CDMA Americas Congress Concludes; Conference Sets Stage for Wireless Internet in the New Millennium
Within just weeks of the turn of the century, major wireless and Internet companies congregated at the 1999 CDMA Americas Congress in San Francisco last week and discussed the convergence of the two industries. Attracting more than 700 attendees, the annual Congress, hosted by the CDMA Development Group (CDG), featured keynote presentations from Microsoft, Yahoo! Everywhere, Sun Microsystems, Cisco Systems and Wireless Knowledge, as well as discussions about CDMA technology's leadership role in the proliferation of wireless Internet and information services in the new millennium.
The 1999 CDMA Americas Congress was held Nov. 30 - Dec. 2, 1999 at the San Francisco Marriott Hotel. The conference sessions focused on cutting-edge services and devices and their benefits for consumers. Additional topics addressed were the financial and technical requirements for establishing next generation networks and services, as well as the evolution to a mobile environment. Participants included leading analysts, solutions providers, application developers, operators and manufacturers. At the conference, Motorola demonstrated an end-to-end solution for CDMA high-speed packet data rates up to 64 Kbps, while Lucent Technologies and Sun Microsystems announced the development of the infrastructure needed to support next-generation Internet business applications.
"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 - December 7, 1999
TOP STORIES
EUROPE
FIBER OPTICS
INDIA
INTERNET/E-COMMERCE
NETWORKING
TOP STORIES
AT&T Efforts to Open Cable Lines to Competitors is Met with Criticism
AT&T plans to give customers a choice of Internet service providers that wish to use its high-speed Net access services, including the company's broadband cable and fixed wireless systems was embraced by the Federal Communications Commission, but industry players greeted the new initiative with great skepticism.
Earlier today, the company reached a deal with MindSpring Enterprises, allowing the company to use AT&T's high-speed networks. Users of AT&T's "broadband" network previously had to sign up through Excite@Home, a subsidiary of AT&T. But once AT&T and Excite@Home's contracts expire in 2002, MindSpring will be allowed to use AT&T's cable systems.
However, competitors and consumer groups argue that the exclusive distribution agreement is unfair and anticompetitive. Although the long-distance giant has the support of federal regulators, who claim they won’t push open access, AT&T is trying keep an about face with the government, which must approve its pending acquisition of MediaOne Group.
Speaking at the AT&T's analysts' conference in New York, chairman Michael Armstrong said he hopes that opening up the company's network to other ISPs will accelerate the number of people signing up for broadband Net access.
The company said customers will be able to use AT&T's fixed wireless systems to connect to an ISP of their choice once the systems are up and running beginning next year. Those using AT&T's broadband cable systems will have the same choice once technical issues have been addressed, and after AT&T's exclusive contract with Excite@Home expires in mid-2002. AT&T said it will not extend that exclusivity agreement.
SAP Chooses IBM over Oracle as Main Database Supplier
International Business Machines may become SAP AG’s main database supplier, marking a milestone in the company’s effort to distribute its database for use on computers other than its own services. However, this new alliance could be a major blow to Oracle Corp., whose software could be knocked off the primary choice by IBM’s DB2.
Under the terms of the proposed agreement, SAP will make IBMs DB2 its preferred development platform, which means it will cooperate with IBM so that future software works best with DB2. IBM would not disclose how much revenue it expects from the alliance, but expected a large increase in its SAP-related market share, which is currently a fraction of Oracle’s share.
EUROPE
Nvision Secures US$11 Million in Second Round of Financing
Nvision has successfully completed a second round funding of US$11 million. The investment is led by Warburg Pincus, and is supported by Schroder Ventures, which invested in the first round. It adds to Warburg Pincus' global portfolio of 16 Internet businesses and to the $2 billion it has invested in European growth companies since 1983.
The investment will be used to fund expansion, including new offices in London and the North of England which will be opened early in 2000, as well as recruitment, training and development for 160 additional staff by the end of next year. The funds will also be used to establish an Architecture Laboratory and a European Innovation Center focusing on Internet developments such as new mobile telephony, technologies such as WAP (wireless application protocol) and interactive television. NVision's clients include EW Blanch, IPC, Waterstone's, Granada Media, Thomas Cook, IPC Magazines, BNB, Fine Art Developments and confetti.com.
PSINET Invests in Netlife Subsidiary CSPSource.com
PSINet Inc. has made an investment in CSPSource.com Inc, New York, a subsidiary of Netlife USA, Inc. The parties have agreed not to publish any financial details.
The market for business-to-business solutions in the US is growing rapidly. By 2002, US marketing research institutes expect the number of ISPs to increase five-fold to more than 50,000 ISPs and Commerce Service Providers (CSPs), with an ISP business-to-business volume of some $63 billion.
Philips and Ericsson Mobile Communications Join Forces to Bring Bluetooth-Based Products to Market
Philips Semiconductors has signed a co-operation & development agreement with Ericsson Mobile Communications to develop and manufacture Bluetooth for future applications. This agreement enhances both companies' leading position in driving the evolution of Bluetooth technology and in strengthening one proven core architecture so that Bluetooth is more quickly and more widely adopted.
The market for Bluetooth compliant products, which communicate with each other via radio transmission therefore eliminating the need for wires, is expected to reach US$1.3 billion by 2002(1). And with over 126 million Bluetooth-enabled products such as cell phones, notebook PCs, digital cameras and other handheld devices expected on the market by 2002, it is a market predicted to grow even faster than cell phones.
The co-operation agreement enables the two wireless leaders to work towards a common goal -- offering advanced system-on-chip solutions for standard, as well as customized products with a high level of support and service. The co-operation will see Ericsson and Philips Semiconductors pool their know-how and resources to further develop solutions based on the current Ericsson Bluetooth Core and Bluetooth protocol and Philips Semiconductors IC expertise. To further encourage the adoption of this standard, ARM LTD. will support joint solutions through a previous agreement with Ericsson.
Britain Joins STAR*Home IP-Based Network
star*home announced that Britain is to join its global Internet Protocol (IP) network. As a result, roaming mobile subscribers visiting Britain will soon be able to access voice mail, customer care and other familiar services from their home network.
star*home will enable the millions of business visitors visiting in Britain each year, to enjoy an array of mobile value-added services, including such as easy access to their voicemail back home, simply by dialing `*-h-o-m-e' (*4663) or by using their home-network short codes.
The star*home network consists of a global IP network and IntelliGate platforms connected to mobile networks via digital telephony interfaces. star*home plans to install IntelliGate platforms in over 10 countries worldwide by the end of 1999.
France Telecom Selects Cobalt Networks Server Appliances to Deliver Secure Web Services and Internet Access for Schools in France
Cobalt Networks Inc. has been selected to provide France Telecom with server appliances for educational organizations in France. DNS Telecom, a systems integrator, teamed with Cobalt Networks to provide France Telecom's Scol@gora servers which offer Web content filtering, optimized performance using caching proxy, virus protected e-mail, and other core Web services.
FIBER OPTICS
GST Telecommunications Activates Local Network in Houston
GST Telecommunications Inc. has activated its metropolitan area network in Houston, continuing the integration of that key Texas market into its core ICP operations.
GST turned up its 38-mile multiple conduit fiber backbone through Houston's central business district, connecting with its existing voice and data switches. GST is now poised to offer a broad range of facilities-based voice, data, and integrated communications solutions to Houston business customers over its own next-generation fiber optic network.
Optical Solutions Inc. Moves to Accelerate Mass Deployment of FiberPath
Optical Solutions Inc. has engaged organizational initiatives designed to accelerate the mass deployment of its FiberPath solution. As announced late last month, FiberPath allows telecommunication service providers to economically deliver bundled voice, CATV and high-speed data services, while establishing the core infrastructure to provide enhanced services to each home. FiberPath allows these services to be provided over one highly reliable and secure Passive Optical Network.
In order to accomplish its objective of increasing sales and deployments of its FiberPath solution exponentially and in conjunction with its accelerated product development schedule, the Company has begun a search for a new Chief Executive Officer, effective immediately
INDIA
Department of Telecommunications Moves to Amend TRAI’s Act and Indian Telegraph Act
The Department of Telecommunications (DoT) has begun work on amending the
Telecom Regulatory Authority of India (TRAI) Act, 1997 and the Indian Telegraph Act. The DoT initiative follows an announcement to this effect by President K R Narayanan in his address of Parliament in October.
Amendments to both Acts will be taken up in a meeting this month. In the case of the Indian Telegraph Act, DoT is likely to set up a committee. The New Telecom Policy clarifies the role of the telecom regulator on two areas of ambiguity. It states that the TRAI will have the power to adjudicate on disputes between service providers, including the government-owned Department of Telecom Services and Mahanagar Telephone Nigam Ltd. In the case of licensor-licensee disputes, TRAI will play an arbitrator's role.
FIPB Refers Hutchison Max Deal to Cabinet
The Foreign Investment Promotion Board (FIPB) has decided to refer an investment of INR 1.6 billion in the holding company of Mumbai cellular operator Hutchison Max to the Union Cabinet.
The INR 1.6 million investment was to have made in the holding company, Telecom Investment India Ltd. Since the proposed investment was through the preference share route, concern was expressed that loopholes in the Companies Act on guidelines pertaining to preference shares would be used to transfer management control of TIIL and hence of Hutchison Max Telecom to the foreign operator Hutchison Whampoa.
The preference share route was used to fund the INR 5.6-billion sale of Max India's equity in the joint venture to CGP. CGP holds 49 percent stake in TIIL, which bough the 40 percent stake in Hutchison Max from Max India.
Securities and Exchange Board of India (Sebi) May Relax Rules on IT Companies’ Entrance into Internet Business
The Securities and Exchange Board of India (Sebi) is considering allowing information technology (IT) companies in the Internet business freer access to capital markets.
The IT companies in the Internet sector may be allowed to float an initial public offering (IPO) without having to report profits for three consecutive years. It will, however, be mandatory for their projects to be approved by financial institutions with over 10 percent stake being held by the institutions.
VSNL to Develop Net Portal
Videsh Sanchar Nigam Ltd. (VSNL) is planning to develop an India-interest portal in a fortnight, it has also decided to slash its Internet tariffs further. VSNL has decided to change its current Internet service Web site into a portal, which will offer news and channels of information on business, finance and entertainment. Final touches are being given to the portal, which will be named as VSNL.Internet.com.
VSNL Predicts Stock will jump to US$100 in Initial Public Offering
Videsh Sanchar Nigam Ltd. (VSNL) is hoping for the ICO Global stock to list at price of about US$100 per share post-restructuring to ensure that the US$150 million investment by it in ICO does not suffer major erosion in value. VSNL is also hoping to get some new distributor licenses and has no plans as of now to sell-off its stake in ICO.
Post financial restructuring of ICO Global the existing shareholders will be left with only 26 percent stake. VSNL, which currently has a 7 percent stake in the venture, would thus be left with a little less than 2 percent equity stake in the satellite telephony venture.
VSNL had recently declined to invest a further US$50 million in the rights issue of ICO Global.
Delhi High Court Approves New Telecom Policy
The Delhi High Court directed that the new telecom policy must be implemented as a consequence of the Union Cabinet approving the policy. The court fixed January 24, 2000 as the next date for hearing on the public interest litigation challenging the New Telecom Policy.
Information Technology Bill to be Tabled in Parliament
A separate petition, which seeks lowering of rentals and blocking of the calling party pays regime, is pending before the court and will come up for hearing on December 15.
The Information Technology (IT) Bill, meant to provide a legal framework for Internet-based transactions, electronic contracts and prevent computer crimes is likely to be tabled in Parliament this week. The government is also looking at liberalizing procedures for setting up call centers in the country and is in talks with the Department of Telecommunications on this.
Europe Star to Provide Ku-band Service for Internet
Europe Star will offer bandwidth on its Ku-band transponders to the Internet service providers, Vsat service and distance education. The first satellite is scheduled for launch in mid-2000, and will carry around 30 transponders with eight focused on the Indian subcontinent. The fixed satellite service provided by the company will enable India and the region to develop its internal communications infrastructure.
Though at present, the space policy does not permit the use of Ku-band transponders from foreign satellites, the government is expected to change its policy.
INTERNET/E-COMMERCE
Teleglobe Reaches Multicast Distribution Agreement with Yahoo!
Teleglobe has reached a multicast distribution agreement with Yahoo! Inc. Teleglobe, a provider of advanced global broadband services, will provide IP Transit over its multicast-enabled global Internet backbone network to deliver broadband streaming media programming from Yahoo!
As part of the agreement, Teleglobe and Yahoo! will work together to help Teleglobe’s global ISP customers become multicast enabled, allowing them to provide the full benefits of multicast programming to their local subscribers. Customers of ISPs served by Teleglobe will have access to a selection of multicast and broadband video and audio programming through a co-branded page on Yahoo! Broadcast.
NETWORKING
Intel Invests $14 Million in Ancor Communications
Intel will invest $14 million in Ancor Communications, a networking technology maker that develops switches, interface adapters and application-specific integrated circuits based on Fibre Channel. Under the terms of the agreement, Intel and the Eden Prairie, Minn.-based Ancor will develop and market switches based on the InfiniBand technology.
InfiniBand was formerly referred to by the working name "System I/O." It governs how devices such as network cards plug into powerful computers and how processors within those systems will communicate with each other. The companies plan to bring the new switches based on InfiniBand in 2001.
"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 - December 6, 1999
TOP STORIES
ASIA PACIFIC
CABLE OPTICS
EMERGING TELECOM MARKETS – ISRAEL
EUROPE
FIBER OPTICS
INDIA
INTERNET/E-COMMERCE
SOUTH AMERICA
TELEPHONY
TOP STORIES
AT&T’s Initial Public Offering of its Wireless Tracking Stock to Generate $10 Billion
AT&T’s proposed initial public offering of about 20 percent of its wireless business, is expected to be the US’s largest offering, generating between $8 to $10 billion in cash for the company. This move will signify the first time the company has made a major change to its corporate structure since the 1995 spin-off of Lucent Technologies. C. Michael Armstrong, AT&T’s chairman, will announce the move today at an analyst meeting in New York. The remaining shares of the tracking stock will be distributed to AT&T shareholders.
In related news, the phone company will announce a series of measures that will demonstrate its dedication to opening up its high-speed networks to Internet service providers. This strategy will affect how other companies gain entrance into the cable and fixed-wireless systems it is currently building.
Taking the top helm of the new wireless unit, which will be temporarily called AT&T Wireless Group, will be AT&T President John Zeglis, who in 1984 deigned the original breakup plan of AT&T in 1984. Following the IPO in the spring, AT&T plans to distribute the remainder of its tracking stock to shareholders sometime during the fall.
AT&T Joins Forces with CapRock Communications, PF Net, and Touch America to Make Major Expansion in Fiber Optic Network
In response to unprecedented growth in demand for high-speed bandwidth and Internet-based services, AT&T announced an aggressive plan to work with three telecom companies to add a new fiber-optic network that will link 30 major metropolitan areas nationwide.
AT&T estimates these 30 cities will represent 80 percent of the future domestic demand for high-speed services. Deployment of this new overlay network will also enable AT&T to be among the first to offer ultra-high-speed bandwidth OC-192 services now and OC-768 services when that technology becomes available.
Working with CapRock Communications, PF.Net and Touch America, AT&T will overlay the new conduit and fiber on existing routes. The new overlay network will include 16,500 route miles of the fiber optic cable. AT&T will work with CapRock Communications, PF.Net, and Touch America to deploy 10,500 miles of fiber optic cable. In addition, AT&T has already installed 3,100 miles of the new cable and plans to deploy another 2,900 miles on its own.
ASIA PACIFIC
Starhub Launches Free Internet Service in Singapore
In a move to gain more customers, Starhub, a consortium that consists of British Telecommunications, Nippon Telegraph and Telephone and Singapore Technologies Telemedia and Singapore Power, have launched the city’s first free, unlimited Internet access service. Beginning in April, Starhub will break Singapore Telecommunications’ monopoly on fixed-line telephone services.
CABLE OPTICS
MediaOne Brings Local Telephone Competition to New Hampshire
MediaOne will begin offering local telephone service in Salem, Plaistow, Derry and Hampstead, New Hampshire as of December 15. MediaOne's Digital Telephone Services will be offered to New Hampshire residents with a full spectrum of popular calling features and an optional regional calling plan at prices between 21 and 37 percent lower than the competition.
Digital Telephone Services is a local telephone service that includes 15 calling features, such as Caller ID, Call Waiting and Last Call Return (*69) and unlimited local calling for a monthly price of $26.95.
MediaOne's Digital Telephone Services' customers in New Hampshire will also be offered MediaOne's Unlimited New Hampshire regional calling plan. With this plan, New Hampshire customers will be able to place an unlimited number of calls in the 603 area code for an additional monthly price of $22.95.
MediaOne is also offering a bundled service price for customers in New Hampshire that subscribe to the company's high-speed Internet service. Customers of MediaOne's Digital Telephone Services and Road Runner high-speed Internet service will be able to purchase the Unlimited New Hampshire calling plan for only $15.95 per month.
EMERGING TELECOM MARKETS – ISRAEL
Koor and the Israel Corp. Form Joint US$100 Million Telecommunications Venture
Koor Industries Ltd. and the Israel Corp. will form a US$100 million telecommunications joint venture that will either vie to acquire state-owned Bezeq Israel Telecom Ltd. or compete with it.
This is the first concrete step taken by the two holding companies toward their previous announced goal of jointly bidding for control of Bezeq. He said the companies now intend to bring in a major foreign investor to join them in the bid.
If the two companies fail to win the expected tender, they might invest in a company competing with Bezeq.
The tie-up comes amid expectations of two major developments in local telecommunications next year - the sale of most or all of the government's remaining 54 percent stake in Bezeq and the opening of the domestic fixed-line telecommunications market to competition. The segment is now Bezeq's last remaining monopoly.
Each of the holding companies will invest US$50 million in their new joint venture, which will also invest in companies in the fields of Internet, communications, cables, and telecom companies inside and outside of Israel.
EUROPE
ADC Awarded US$1.8 Million Digital MMDS Contract to Construct Ireland’s First Digital Terrestrial Broadcast Network
ADC’s unit Irish Multichannel, headquartered in Limerick, Ireland, has awarded ADC a US$1.8 million contract to supply multipoint multichannel distribution service (MMDS) systems for a large-scale digital wireless video network. The network is among the first in the world to operate in accordance with the new digital video broadcast (DVB T) digital terrestrial broadcast standard.
Under the terms of the agreement, ADC will provide multichannel transmitter systems and antenna combiners for 16 cities and towns in Ireland. Off Air Electronics Ltd. of Dublin, ADC's global partner, is the main contractor. Off Air will add installation, training and engineering services for turn-up of the network, which will serve more than 120,000 subscribers.
Irish Multichannel will begin to deploy services immediately in Cork, Limerick and other cities, offering subscribers 60 television channels with expansion potential to 120 channels.
Europ@Web Makes US$20 Million Strategic Investment in LeisurePlanet.com
Europ@Web, the Internet investment arm of the Arnault Group, and Leisureplanet (www.leisureplanet.com), an international Internet-based travel services provider that is majority owned by Leisureplanet Holdings Ltd., has made a direct investment of $20 million to acquire a 27 percent equity stake in Leisureplanet.
As part of the transaction, LPHL will have the right to invest an additional $10 million into Leisureplanet, at the same valuation as the Europ@Web investment, on or before January 31, 2000.
Leisureplanet Leisureplanet is a leading international leisure travel e-commerce company, providing travel booking and customer services to on-line consumers through its own web sites, partner sites and international media companies including Yahoo!, Lycos and InfoSpace. The service features the world's largest image-rich hotel database; flight, car and hotel reservation facilities; package holidays and cruises; and comprehensive proprietary travel guides on more than 180 travel destinations.
chello Broaband Wins Best Consumer ISP Award for 1999
chello broadband n.v., Europe's first broadband internet service provider and an operating company of United Pan-Europe Communications (UPC), has won the coveted award of 'Best Consumer ISP' in Europe.
The recognition came at last night's European ISP Awards, held as part of the closing ceremony of ISP 99, in Amsterdam. Judges making the decision came from major European Internet companies, and were looking for the ISP which most "recognizes the needs of home and home office Internet users and provide services and facilities to meet their needs." Entrants had to be able to "demonstrate success in terms of the numbers of users and also new thinking, in terms of design, usability and market appeal."
chello broadband allows cable customers throughout Europe to benefit from the m@ximum internet experience: always on, super-fast broadband internet service for a flat fee each month running across AORTA, Europe's first and largest broadband IP network and Europe's largest distributed caching service. CD-quality sound, pin-sharp pictures and a full range of global, national and local content partners are available - all in the language of the country in which the service is offered.
FIBER OPTICS
IBM Introduces Ready-to-Go Optical Networking Solution for S/390 Data Centers
IBM introduced the IBM Fiber Saver, an optical connectivity "solution in a box" designed to provide S/390 customers with reliable data transfer at a lower price. Fiber Saver is the first offering resulting from an agreement between IBM and Nortel Networks to provide server connectivity solutions based on Nortel's optical networking technology.
IBM Fiber Saver is designed to meet the demands for high-speed network connections and data transfer for customers with multiple IBM servers in different locations. It also is ideal for enterprise customers who need continuous access to data and applications including e-business, business intelligence and disaster recovery solutions.
The IBM Fiber Saver package includes configuration planning, an assembled ready-to-go unit and service installation, making it the industry's only prepackaged total solution for high-speed server connectivity. IBM's new package allows customers to drastically reduce installation time from days to as little as four hours, depending on configuration.
INDIA
TRAI Recommendations for Long Distance Telecom Sector
The Telecom Regulatory Authority of India (TRAI) is likely to finalize its recommendations early on the terms and conditions on which private companies will be allowed to compete in India's domestic long-distance telecom sector.
TRAI will suggest whether service providers should be restricted to regions, how many firms should be allowed to enter and what the license period should be. The regulator may recommend a limited number of players for a three-five year transition period. The government may accept TRAI's recommendations in toto.
Government Reviews Direct Foreign Investment Processes for Earth Stations and Uplinking
The Information & Broadcasting (I&B) Ministry has decided to review the foreign direct investment (FDI) processes for uplinking of earth stations. It will also consider whether non-resident Indian (NRI) equity should be kept out of 20 percent foreign equity cap.
The catalyst for this review has been Zee's proposal to uplink from India through its earth station at Delhi. The NRI holding in Zee, currently, is over 70 percent, much above the existing limit of 20 percent.
India Net Business to Scaling US$160 Million by 2001
The International Telecom Union (ITU) has estimated that the total worldwide e-business in the first decade of the next century will touch US$300 billion from US$43 billion in 1998.
The volume of Internet-based business in India the end of 1997 is a paltry US$3 million. ITU estimates that this figure is likely to move up to a sizable US$160 million by the end of 2001. According to recent report by ITU, the US dominates the e-commerce.
Chief Minister Pitches for Ku-Band Transponder for Internet Use
The Andhra Pradesh chief minister Chandrababu Naidu has urged the Prime Minister to permit the use of Ku-band transponders from foreign satellites for the use of Internet-based services, as this would solve the bandwidth problem in the country.
In a letter to the Prime Minister, Naidu said that the government should expedite clearances and permissions to licensed private agencies to set up international Internet gateways using any available satellite system with the least expensive transponder capacity.
ICICI to Acquire Internet Portals for Distribution of Financial Products
ICICI Ltd. is looking at acquiring or setting up portals on the Internet for developing its business. The focus will be on the customer share rather than on the market share.
Its subsidiary ICICI Infotech is evaluating the two options for distribution of financial products. ICICI had recently set up a division on e-commerce and is interacting with ICICI Infotech to develop and implement new products. The data processing capabilities of ICICI Infotech may be later leveraged to serve multinationals and other corporations.
ICICI's organizational structure may be changed, with all the products converging into a common distribution channel. The company will soon unveil its business-to-business e-commerce platform for 1000 corporations.
Draper International to Increase Stake in lexsite.com
Venture capital firm Draper International is increasing its holding in the
Internet-based legal database lexsite.com from 51 per cent to 55 per cent. The increase in stake will be done through the preference issue route. The additional funds raised will be used to fuel the expansion plans of the company in the areas of providing comprehensive legal and commercial information service in India over the Internet.
Draper will pump in INR 2.747 for the four per cent stake. According to the plans, Draper India will be alloted 41,000 equity shares through the preferential route for a face value of INR 10 each at a premium of INR 57 each. Draper has invested 330,000 equity shares constituting 51 per cent of the equity share capital under the automatic approval route for an undisclosed amount earlier this year.
INTERNET/E-COMMERCE
Mayo Clinic to Form Joint Internet Firm with Private Equity Investor
To expand its presence in the electronic health market, Mayo Clinic plans to form a private Internet company with an outside investor to create a new web site. This measure is the company’s newest move to use its brand recognition in the research and education enterprises. Moreover, the move signifies the growing recognition of among major health care organizations that the Internet is not only a marketing resource but also a tool in delivering medical care to their patients.
Although several of the major medical centers have established web sites, few have made the move to develop a private Internet company intended to not only provide patient information but to make money. Other companies which have set up similar ventures include Intelihealth Inc., a joint venture company formed in 1996 by John Hopkins Medical Institutions and Aetna Inc.’s Aetna US healthcare unit
Under the proposed plan Mayo will hold a majority stake of the new for-profit company, which will be managed by a physician-led board of directors. Shansby Group, a San Francisco investor, will be the outside investor. At this time, the amount of the investment has not been disclosed and there aren’t any plans to look for any other capital from other sources.
SOUTH AMERICA
Convergence Communications Invests US$109.5 Million in Latin America’s Internet Market
Looking to claim a piece of Latin America’s high-speed Internet market, Convergence Communications Inc. has raised US$109.5 million to expand its broadband networks in Mexico, Venezuela and Central America. CCI is just one of many foreign companies working with local phone companies and one another to offer high-speed telecommunications services to Latin American companies and governments.
With the growth in automation and computer use, the demand for broadband services in Latin America has surged dramatically. Analysts estimate that the region’s broadband market is expected to grow about 35 percent a year, compared with about 25 percent growth in cellular services and about 7 percent growth in fixed-line services.
One of the most aggressive players in the South American telecom market is AT&T, which are currently in the process of acquiring CLEC carriers with operations in Brazil, Chile, Colombia and Peru. And, in November, the company announced it would merge these companies into a publicly traded company called AT&T Latin America. And, Latin American companies are looking to gain a stance in the US market. Impsat Corp. of Argentina, a networking company backed by Morgan Stanley Dean Witter and British Telecommunications, is planning an initial public offering in the US.
To finance the investment, CCI raised $83.5 million from private equity investors in the US and Latin America, including TCW/Latin America Partners of New York and FondElec Group Inc. of Stanford, Connecticut. An additional $26 million credit facility was provided by one of the equity investors.
TELEPHONY
Convergent Networks Wins $52 Million Contract from Global NAPs for Next Generation
Convergent Networks, a provider to carriers of packet-based, telephony grade switching and signaling solutions, has won a multi-year contract valued in excess of US$50 million from national CLEC Global NAPs. Global NAPs is a CLEC focused on providing high volume, high usage services to companies such as WebTV, Mindspring, MSN, Netcom and Ziplink. Global NAPs chose Convergent Networks' solution for its ability to immediately and cost effectively address the CLEC's current Internet access traffic demands, and its flexibility to meet the need for future innovative and integrated service delivery.
The agreement with Global NAPs places Convergent Networks represents the company’s largest announced customers win to date. Convergent Networks has continued to set the pace for competitors since its launch in April 1999.
The company's first customer win, a $30 million deal with 2nd Century Communications, was followed by a number of industry milestones including the first successful interconnect test between a traditional LEC and an ATM-based CLEC.
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