Deutsche Telekom Claims Financial Turn Around

Deutsche Telekom issued its financial results for 2003, claiming a financial turn-around for the company based on a double strategy of debt reduction and growth in profitable services. Kai-Uwe Ricke, Deutsche Telekom's CEO, said the company exceeded its financial targets in many key areas. Some highlights of the report:

• For 2003, net revenue increased by 4% year-on-year to EUR 55.8 billion EURs.



• Net income was EUR 1.3 billion EURs.



• EBITDA was EUR 18.3 billion, a head of a target of EUR 16.7 billion to EUR 17.7 billion for the year. This represents an increase of 12.1 percent, considerably higher than revenue growth.



• Net debt has been reduced by a total of EUR 17.7 billion since 2002. At the end of 2003, net debt was EUR 46.6 billion.



• The number of DSL lines increased from 2.8 million to 4.0 million
  
  
• T-Mobile continues to be a growth driver for the company, especially T-Mobile USA, which ended the year with 13.1 million users, up by 3.1 million for the year. T-Mobile Europe ended the year with 61 million users, up by 7 million for the year.



• For 2004, the company is forecasting adjusted EBITDA of at least EUR 19.2 billion, along with continued profitable growth and flexible use of free cash flow. Ricke also reiterated a pledge to generate a dividend for shareholders for distribution in 2005.

Ricke also spoke out against proposed legislation in Germany that would require Deutsche Telekom to offer its competitors products for resale without any restriction. He said Deutsche Telekom does not reject resale in principle, but worries that the proposed law would dampen the incentive to invest in new infrastructure. http://www.telekom.de

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Reaction to Powell's 30 Day UNE-p Negotiating Proposal

AT&T: "Chairman Powell's call is not one for negotiation but rather a call for surrender. Clearly this will mean an end to a competitive local marketplace, not only for the millions of customers who have chosen competitive carriers as their local providers but also for the millions of others who are benefiting from the lower prices that competition brings," said Jim Cicconi, AT&T general counsel.



CompTel/ASCENT Alliance: "The competitive industry has been trying to negotiate with the Bells for eight years, without success. Chairman Powell now proposes that we negotiate for 30 days. And by signaling that the FCC will raise wholesale rates, absent a commercially negotiated agreement, the Chairman has eliminated any incentive of the Bell companies to negotiate in good faith. The lesson we have learned is that once the Commission eliminates access to a UNE at cost-based rates, the Bells have absolutely no incentive to negotiate in good faith," said H. Russell Frisby Jr., CEO of the CompTel/ASCENT Alliance, an industry group representing facilities-based carriers, providers using unbundled network elements, global integrated communications companies, and their supplier partners.



Citizens Against Government Waste: "Even before the decision is made as to whether or not to appeal, the FCC stands ready to flush more tax dollars into the black hole of endless bureaucratic proceedings. The Bush Administration should appeal to the Supreme Court for a clear and unambiguous interpretation of the law," said Tom Schatz, president of Citizens Against Government Waste, a non-partisan group.

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FCC's Michael Powell Calls for 30-day Negotiations on UNE-p

CLECs and ILECs should enter a 30-day negotiation period beginning now to arrive at commercially negotiated rates for local access, said FCC Chairman Michael K. Powell, speaking at the National Association of Regulatory Commissioners (NARUC) General Assembly. If such negotiations fail, Powell said he intends to propose an interim set of rules to protect against precipitous disruptions in services currently delivered by CLECs using ILEC facilities. The interim rules would provide an 18 month moratorium and transition period for existing UNE-P customers. The FCC would also create "new rules to advance local competition" and Powell expressed a willingness to work with state commissioners in developing such rules.



No matter what one's view of the FCC's Triennial Review Order on UNE-p, the recent court ruling overturning those rules, or the likely Supreme Court challenge to that ruling, Powell said "we are confronting an unfortunate period of continued, and perhaps prolonged, uncertainty." The current situation "creates the real possibility that local telecommunications markets will operate in a vacuum of vacated rules and changing interconnection agreements."



Powell urged the industry to move past their entrenched positions and to compromise during the 30 day negotiation period.



He also called on state and federal regulators to work together on four other issues: consumer protection, Universal Service, Disabilities Access, and Homeland Security. http://www.fcc.gov

• Earlier this month, A three-judge panel in the D.C. Circuit Court of Appeals overturned the FCC's Triennial Review Order with regard to network unbundling rules. The FCC rules, which were announced in February 2003 but actually issued in August 2003, empowered state public utility commissions as the decision makers on issues regarding UNE-P unbundling and local competition. The Court of Appeals said the FCC erred by not providing unified, federal guidelines and by pushing many FCC decisions to the states. The court also upheld the Triennial Review Order's exemption provided to incumbent carriers from unbundling for certain fiber-fed loops and for line sharing. The ruling was applauded by ILECs but condemned at CLECs.



• One day after the D.C. Circuit Court of Appeals overturned the FCC's Triennial Review Order with regard to network unbundling rules, SBC Communications issued a public offer to AT&T, MCI and other competitors, inviting the companies "to negotiate commercially reasonable UNE-P wholesale rates ." SBC Chairman and CEO Edward Whitacre said, "It is time for those of us who believe in free markets to put those commitments to the test in telecommunications." Whitacre pledged to keep in place the public utility commission approved UNE-P wholesale rules and pricing for 90 days, while offering to immediately begin negotiating commercial UNE-P wholesale rates that all parties can accept.

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Intel's New R&D Center in Korea Focuses on Home Networking

Intel has established a new R&D center in Seoul, Korea to focus on advanced wireless communications, high-quality media coding, and next generation platforms for content distribution and consumption. Intel also signed a memorandum of understanding Electronics and Telecommunications Research Institute (ETRI) to jointly develop new technologies related to multi-stream media distribution over home networks, home automation, and next generation home servers.



Intel appointed KS Lee as the first director of the Intel Korea R&D Center. Before joining Intel, Lee worked at Samsung Electronics in the Digital Media Network businesses. http://www.intel.com

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Global Crossing Reports Financials for Q4

Global Crossing reported Q4 total revenue of $719 million compared to $765 million for the same period in 2002. The decrease in total revenue was primarily attributed to the company's delayed emergence from Chapter 11 and continued pricing pressures resulting from a competitive market, partially offset by growth in the company's carrier business segment. Total revenue consisted of telecom services revenue of $679 million and Global Marine revenue of $40 million.
EBITDA for Q4 2003 improved to $13 million as compared to a loss of $62 million for the same period in 2002. Global Marine EBITDA was $13 million for the fourth quarter of 2003 compared to a loss of $5 million for the same period in 2002. Telecom EBITDA was break-even in the fourth quarter of 2003 compared to a loss of $57 million for the same period in 2002.



For 2004, Global Crossing said it is reformulating its marketing strategy to promote aggressive customer acquisition for an advanced suite of IP and data services, such as high performance IP data networking, VoIP, IP Video and other mission-critical business applications for both enterprise and carrier customers.



Global Crossing said its carrier business is an important part of its heritage would remain key to its business going forward. The company anticipates that the carrier market will enhance its revenues and margins as a result of increased network utilization, which leads to greater economies of scale.



In addition, Global Crossing said it is reviewing its lines of business in volatile and low margin services, particularly in the international long distance reseller market. The company is tightening the terms for pricing and payment and expects that these initiatives will improve cash flow, but will reduce revenue for these services by approximately $75 to $125 million annually. http://www.globalcrossing.com

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Pactolus Supplies SIP from PointOne's IP Calling Cards

PointOne Telecommunications is using Pactolus Communications' SIPware Prepaid Calling Card service and RapidFLEX Application Server in its nationwide, converged network. http://www.pactolus.com

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SAVVIS Teams with Telefonica to Expand in Latin America

SAVVIS Communications announced an agreement with Telefonica that enables it to expand its presence in eight Latin American nations, including more than 40 major cities, as well as Puerto Rico. With the interconnection, SAVVIS will deliver its "Intelligent IP Networking" and managed hosting services in Argentina, Brazil, Chile, Colombia, El Salvador, Guatemala, Mexico, Peru and Puerto Ricohttp://www.savvis.net

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Telenor Group Chooses Nokia for DSL Expansion

Telenor Group awarded an international frame agreement to Nokia for DSL solutions and related services for networks in Norway, Sweden and other relevant markets. Under the two-year deal, which also includes options for a further two years, Nokia will supply its latest generation D500 IP DSLAM. Deployments are expected to cover around 200,000 lines during 2004. http://www.nokia.com

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Seabridge Licenses Data Connection's MPLS, OSPF and ATM

Seabridge Ltd., a developer of multi-service packet switches, has licensed Data Connection Limited's (DCL's) DC-MPLS, DC-OSPF and DC-ATM software for use in their SURPASS hiD and next generation multi-service packet switch product lines. http://www.dataconnection.com

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Axerra Introduces Multiservice Access Device

Axerra Networks, a start-up based in Boca Raton, Florida, introduced a multiservice access device that enables extensive Ethernet capabilities such as Transparent LAN Service and Virtual Private LAN Service (VPLS), T1/E1 Circuit Emulation Service over Packet (CESoP) and dynamic bandwidth CES (DB-CESoP) for voice services, and Frame Relay over Packet (FRoP) for legacy data applications. Axerra's AXN1 Multiservice Access Device supports a variety of QoS and policing mechanisms and is available in several configuration options with both 10/100 BaseT and 100 Base Tx/Fx Ethernet interfaces, as well as the T1, E1, V.35, RS-530, and X.21 ports. It can be deployed with Multiservice over Packet (MSoP) gateways, including Axerra's own AXN800 and AXN1600. http://www.axerra.com

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Major ISPs File Anti-Spam Lawsuits

America Online, EarthLink, Microsoft and Yahoo! jointly filed six lawsuits under the new U.S. anti-spam law, the Controlling the Assault of Non-Solicited Pornography and Marketing (CAN-SPAM) Act of 2003. The companies allege that the defendants sent a combined total of hundreds of millions of bulk spam e-mail messages to customers of the four networks. http://www.aol.comhttp://www.earthlink.net

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Turk Telekom Selects Alcatel for DSL Expansion

Turk Telekom, the incumbent telecommunications fixed- network operator, selected Alcatel to supply an additional 200,000 lines for its broadband network. The deployment, which will occur in two equal phases, will extend the DSL network coverage to 2000 remote sites throughout the country. The rollout, which should be completed in 2004, will use the Alcatel 7300 Advanced Services Access Manager and the Alcatel 5523 DSL Work Station Element Management system. Financial terms were not disclosed.



Alcatel has supplied the majority of Turk Telekom's core Internet infrastructure network TTnet, 100 percent of its narrowband communications access network, as well as its initial DSL network deployment. http://www.alcatel.com

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Occam Completes Additional Funding

Occam Networks raised an additional $4.2 million in an additional closing of its previously announced private placement of Series A-2 Preferred Stock. Investments funds affiliated with Alta Partners invested $4.0 million at the closing. In connection with the financing, Occam agreed to permit Alta, at its election, to designate a member of Occam's board of directors.



Since November 2003, Occam has raised $20.7 million through private placements of its Preferred Stock. http://www.occamnetworks.com

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