Qwest Reports Continued Access Line Loss, to Offer Standalone DSL

Qwest Communications reported Q4 revenue of $3.5 billion, a 5.6% decrease from Q4 of 2002. For the full year, revenue was $14.3 billion compared to $15.4 billion for 2002, or a decline of 7%. The net loss for the fourth quarter was $307 million, or $0.17 per diluted share. Some highlights of the report:

• Access line loss continued at the same rate as Q3 2003. Total access lines, excluding the impact of 145,000 MCI lines disconnected in Q2, decreased by 3.9 percent year-over-year compared to 4.4 percent in the fourth quarter of 2002. Sequentially, access lines declined 0.9 percent for both the third and fourth quarters of 2003. The company said since launching its consumer bundle, the average consumer primary line losses have improved more than 30%.



• added 60,000 DSL lines in Q4, giving Qwest a total of 637,000 lines at the end of the year. Qwest plans to expand the DSL coverage area from 45% to more than 60% of total access lines by the end of 2004.



• Qwest plans to introduce stand-alone DSL service for customers who no longer require traditional phone service. Stand-alone DSL would allow customers to purchase only the services they want or need, including VoIP.



• Qwest plans to expand its VoIP coverage to the entire Minneapolis/St. Paul consumer market and introduce its business VoIP offering in the first half of 2004. Plans are in place to offer VoIP services in all major metropolitan markets within Qwest's local region by the end of 2004.



• CAPEX for Q4 was $615 million, compared to $561 million for Q4 2002. For full year 2003, CAPEX was $2.1 billion, compared to $2.8 billion in 2002.

http://www.qwest.com

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Ciena to Acquire Catena for $487 Million, Entering Broadband Access Market

CIENA will acquire Catena Networks, a privately-held supplier of broadband access equipment, for approximately $486.7 million in stock (77.5 million shares of CIEN). Catena Networks has deployed more than 5,500 integrated broadband access solutions for RBOCs, IOCs and CLECs. Catena's major customer include BellSouth and two other RBOCs.


Catena generated approximately $25 million in revenue in Q4 and is recently profitable. The company has approximately 250 employees. It has offices in Ottawa, Ontario and Research Triangle Park, North Carolina.


Catena's product line includes:

• CNX-5, a POTS+DSL linecard replacement for upgrading Lucent's SLC Series 5 (SLC-5) Digital Loop Carrier (DLC). The card-for-card upgrade eliminates the need for remote DSLAMs. It provides two lines of integrated POTS and two lines of DSL and replaces cards that provide two lines of POTS only. The product was first introduced in January 2001.



• CN100 Broadband Loop Carrier, which integrates the functions of a DSLAM, Digital Loop Carrier System and Media Gateway and enables remote provisioning and management. The product was first announced in June 2001.



• CN1000FX Fiber-to-the-X solution, which consists of new Optical Line Cards (OLCs) and Optical Network Units (ONUs) for Catena's CN1000 Broadband Loop Carrier Remote Terminal. Each Optical Line Card supports four ONUs via fiber connections. Catena's Optical Network Unit extends the POTS+ADSL loop electronics from the CN1000 Broadband Loop Carrier Remote Terminal closer to end-users. Each ONU supports 24 ports of integrated POTS+ADSL, narrowband special services and G.SHDSL, and is engineered to support VDSL. Catena's Fiber-to-the-X solutions are compliant with the ITU's G.983 series standards for Broadband Passive Optical Networks (BPONs), and Telcordia's GR-909 requirements for Fiber-in-the-Loop (FITL) access systems. The solution was first announced in June 2003.

http://www.ciena.com

• Catena Networks is headed by Jim Hjartarson, a co-founder of the company. Prior to forming Catena, Hjartarson was vice president and general manager at Cadence Design Systems, where he co-founded the Cadence Design Center in Ottawa, Ontario, Canada.



• Catena has raised $192 million in four rounds of funding. Investors include J. & W. Seligman & Co., Munder Capital Management, WestAM, Morgenthaler, Menlo Ventures, Berkeley International Capital, Worldview Technology Partners, The Goldman Sachs Group, Inc., Bessemer Venture Partners, BCE Capital and Silicon Valley BancVentures.

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Ciena to Acquire Internet Photonics for $150 million

CIENA will acquire privately held Internet Photonics, a supplier of carrier-grade optical Ethernet transport and switching solutions, for approximately $150 million in stock (24.4 million CIEN shares). Internet Photonics' Ethernet transport solution has gained momentum with North American cable MSOs, including deployments with six of top ten cable operators in the U.S. Carriers could also use Internet Photonics' solutions to deploy Ethernet private-line services.


Internet Photonics is based in Shrewsbury, New Jersey and Marlborough, Massachusetts. The company has approximately 110 employees. It generated approximately $5 million in revenue in Q4 and is not yet profitable.


Internet Photonics' product line includes:

• LIGHTSTACK MXA, a low-cost access device deployed at the customer premise or local CO/hub providing a managed demarcation point between the operator network and the customer and delivering Ethernet and/or SONET/SDH services.



• LIGHTSTACK MX, an access aggregation node that resides at the customer premise, hub, head-end, or central office and provides multiplexing of up to 8 GbE onto 10GigE wavelengths in a single stackable 1.75" high unit.



• LIGHTSTACK GSLAM, an aggregation solution that integrates optical transport, access service aggregation, switching, and add/drop multiplexing functionality. It can aggregate access circuits from the MXA and MX units. The platform offers the ability to crossconnect 64 Gigabit Ethernet connections.



• LIGHTHANDLER, a 40 wavelength passive optical add/drop and bi-directional optical amplifier that interfaces into existing SONET/SDH and DWDM networks. The 40 wavelength LightHandler platform, which has already been deployed by one major cable operator, provides video on demand (VOD) scalability as well as other service requirements in major metropolitan cable headends. Operators can start with a single four channel module and flexibly add modules to boost capacity to 40 channels at 10 Gbps. The product was introduced in January 2004.



• LIGHTSTACK NCS, a carrier-grade network configuration and service monitoring NMS. Its ability to simplify the tasks of network service provisioning, fault isolation, and performance monitoring makes it a powerful tool for enabling cable operators and carriers to profitably offer new Ethernet based services.

http://www.ciena.comhttp://www.internetphotonics.com

• Internet Photonics is headed by Gregory Koss, who was previously CEO of Sonoma Systems, a developer of ATM access equipment that was acquired by Nortel Networks in 2000. Its technical team is led by Dr. Martin Nuss, who was previously the Director of the Optical Data Networks Research Department at Lucent Technologies.



• Internet Photonics has raised $63 million in funding. Investors include The Sprout Group, ComVentures, Telesoft Partners, AT&T and New Venture Partners LLC, formerly the New Ventures Group at Lucent Technologies.

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Ciena Reports Revenue of $66 Million

CIENA reported revenue of $66.4 million for the fiscal quarter ending 31-January-2004, compared with $70.5 million for the same period last year. CIENA's reported net loss for the quarter (GAAP) was $76.7 million, or a net loss of $0.16 per share. There were 100 customers during the quarter, including 14 new accounts. There was one international customer that represented 17% of the quarter's revenue. Overall gross margin for products and services was 30.9%. The company ended the quarter with cash and short- and long-term investments valued at $1.52 billion.


Separately, CIENA announced its intent to acquire two companies, Catena Networks (broadband access systems) and Internet Photonics (optical Ethernet transport and switching).


Exclusive of any potential impact from the acquisitions, the company expects that revenue in its second fiscal quarter will be up by as much as 20% from its fiscal first quarter revenue.


"The acquisitions of Catena and Internet Photonics are part of CIENA's ongoing efforts to fuel long-term revenue growth and sustained profitability by expanding our addressable market; capitalizing on new growth opportunities in adjacent and complementary markets," said Gary Smith, CIENA's president and CEO. http://www.ciena.com

• In 2003m CIENA acquired Akara Corporation, a start-up developing SAN over SONET/SDH solutions. The deal was valued at $45 million consisting of $31 million in cash and $14 million in shares of CIENA common stock when it was announced in August 2003.



• Earlier in 2003, CIENA acquired WaveSmith Networks, a start-up based in Acton, Massachusetts, for its multiservice edge switching systems. The WaveSmith platform is designed for central office switching and applications such as DSL aggregation. CIENA valued the transaction at approximately $158 million, which is net of the return it will recognize on its earlier investment in WaveSmith.

Ciena is also partnering with Laurel Networks for edge routing and with Luminous Networks for multi-service provisioning platforms for RPR and SONET/SDH.

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Teknovus Ships EPON System-on-a-Chip

Teknovus, a start-up based in Petaluma, California announced shipment of a fully integrated Ethernet Passive Optical Network (EPON) controller for Optical Network Units (ONUs). The device is compliant with the emerging IEEE 802.3ah EPON standard. It integrates an 802.3ah EPON engine supporting multiple logical links, along with an EPON SERDES, two Ethernet PHYs, integrated buffers, and an embedded processor for management in a single package. The device also includes line-rate Layer 2/3/4 packet filtering and classification hardware, offers a broad suite of VLAN functions, and incorporates a rich set of management functions, statistics, and programmable alarms. http://www.teknovus.com

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Charter Adds 88,100 Cable Modem Users in Q4

Charter Communications reported Q4 revenues of $1.217 billion, an increase of 2% over last year's Q4 revenues of $1.189 billion. This growth is due primarily to a $49 million, or 47%, increase in high-speed data revenues, reflecting 437,400 additional data customers since December 2002, including 88,100 in the Q4.

• High-speed data revenues increased 65% year over year. Bundled customers increased 35% in 2003 and represent 22% of Charter's customer relationships as compared to 16% a year ago.



• Charter reported a net loss of 120,900 analog video customers over the past twelve months and a net gain of 2,100 digital video customers during the year.



• Charter ended the year with 6,431,300 analog video, 2,671,900 digital video and 1,565,600 high-speed data customers. The Company also ended the year with 24,900 telephony customers, principally in the St. Louis market, an increase of approximately 9% compared to the end of 2002.

http://www.charter.com

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Motorola Introduces Softswitch-based IP Multimedia Subsystem

Motorola's Global Telecom Solutions Sector (GTSS) introduced an IP Multimedia Subsystem (IMS) that complements its SoftSwitch (MSS) and Push-To-Talk over Cellular (PoC) core product initiatives. The Motorola IP Multimedia Subsystem (IMS) enables converged voice, data and video applications through standards-based interfaces. It is compliant with 3GPP and 3GPP2 standards for IP Multimedia Subsystems, and supports a variety of 2.5G and 3G wireless access networks, including GPRS, EDGE, UMTS, and CDMA, as well as emerging systems such as IEEE 802.11 WiFi, wireline and enterprise networks.


Motorola said its IMS architecture allows a single application to work across all IP enabled wireless access networks, instead of each one having to be customized to the underlying radio access technology and thereby having limited applicability. http://www.motorola.com

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AudioCodes Announces UMTS Compliant Media Gateway

AudioCodes has extended its Stretto converged (wireless and wireline) media gateway product family to comply with the Universal Mobile Telecommunication System (UMTS) R'4 and R'5 standards. AudioCodes' UMTS-enabled media gateways and blades enable OEM vendors to build and offer next generation cellular networks, based on carrier-grade, feature- rich, standards-compliant media gateways. Such gateways enable 3G operators to cap their investment in legacy TDM equipment or proprietary technologies. http://www.audiocodes.com

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BT to develop new National Network for the NHS

BT was awarded a seven-year contract valued at £530 million to procure, integrate and manage networking services for the New National Network for the NHS. The project, which is part of a £5 billion program to modernize IT systems used by the national health service, is described as one of the largest intranets in Europe. BT said the increased bandwidth provided by the network would open up a host of new opportunities to the 18,000 NHS sites in England. http://www.btplc.com

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China Telecom Expands IP-based PAS Network

China Telecom Corporation (CTC) awarded a contract valued at approximately $18.8 million to UTStarcom for expansion of its IP-based PAS (Personal Access System) network in the province of Gui Zhou. The IP-based PAS deployment in Gui Zhou in 2003 attracted 350,000 subscribers in its first six months. http://www.utstarcom.com

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Mexico's Ultravision Deploys Navini's Broadband Wireless

Mexico's Ultravision S.A. de C.V., which operates MMDS wireless cable television networks in over 40 cities, begin commercially deploying a Non-Line-of-Sight wide- area wireless broadband network using equipment from Navini Networks. Ultravision will deploy Navini's 2.6 GHz MMDS technology covering approximately 334,960 households in Puebla, San Andres Cholula and San Pedro Cholula. Ultravision will be able to offer a broadband service with download speeds up to 1.5 Mbps and upload speeds up to 550 Kbps. Financial terms were not disclosed. http://www.navini.com

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EC Notes Good Progress in Rolling out Broadband

A mid-term progress report published by the European Commission notes good progress in rolling out broadband access and in getting public services on line. Broadband penetration has almost doubled in the year to October 2003 and there has been strong progress in a number of policy areas. The report finds that future priorities should include a focus on interoperability, standards and multi-platform access, learning from practical experiences in other EU member states, focusing on content for new high speed services, and developing businesses models for e-services.


The eEurope 2005 Midterm Review is online at:
http://EURpa.eu.int/information_society/eEurope/2005/all_about/mid_term_review/index_en.htmhttp://europa.eu.int

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