ING DIRECT Selects Sprint's "Peerless IP" Network

ING DIRECT, a large bank with more than 1.8 million customers, has selected the Sprint "peerless IP" network architecture for its highly secure communications network services. The service provides an IP-VPN without any connections to the public global Internet. Sprint said its government-grade "peerless IP" network was originally aimed at meeting the security and performance demands of many federal and state government agencies. The FBI, National Guard and other key agencies have implemented the Sprint peerless IP solution. Since announcing government availability in April 2003 and the commercial availability of the service in January 2004, Sprint has signed contracts with more than 25 commercial customers to connect more than 3,000 sites on the peerless network. http://www.sprint.com

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U.S. Senate Committee Amends Proposed VoIP Legislation

The Senate Commerce, Science, and Transportation Committee approved an ammended version of the proposed "VOIP Regulatory Freedom Act of 2004," which was introduced earlier this year by Senator Sununu (R-NH). This legislation is aimed at encouraging the growth of VoIP by definitively classifying it as an information service and limiting potential state regulations.


Two new ammendments to the bill would preserve the ability of states to require VOIP applications to provide 911 and E911 services; and would allow states to continue to require VOIP providers to contribute to state universal programs and to pay intrastate access charges. http://commerce.senate.gov/newsroom/printable.cfm?id=224501

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Broadcom Grows Revenues 12% Sequentially and 70% Year-over-Year

Broadcom reported record Q2 revenue of $641.3 million, an increase of 11.8% from the $573.4 million reported for the first quarter of 2004 and an increase of 69.7% from the $377.9 million reported for the second quarter of 2003. Net income (GAAP) was $63.8 million, or $.18 per share (diluted), compared with GAAP net income of $39.9 million, or $.12 per share (diluted), for the first quarter of 2004.


Q2 marked the company's twelfth consecutive quarter of revenue increases. The strongest revenue growth on a sequential basis was experienced in the company's broadband communications and enterprise networking businesses. http://www.broadcom.com

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Telstra Selects 3G Solution from Nortel Networks

Telstra will deploy CDMA2000 1xEV-DO (evolution-data optimized) equipment from Nortel Networks. Deployment of CDMA2000 1xEV-DO is underway in major capital cities and selected regional areas across Australia. The network will provide speeds bursting up to 153 kbps nationally and bursting in excess of 1 Mbps in 1xEV-DO coverage areas. 1xEV-DO users can expect 300 to 600 kbps average throughput.


The upgrade builds on an existing CDMA network supplied by Nortel Networks to Telstra in 2000 and a subsequent CDMA2000 1X upgrade in 2002. Financial terms were not disclosed. http://www.nortelnetworks.com

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AT&T to Withdraw from Consumer Circuit-Switched Services

AT&T announced an historic decision to shift its focus away from traditional consumer wireline telephony. Going forward, the company will concentrate its efforts on business customers and emerging IP services, including consumer VoIP.



David W. Dorman, AT&T's Chairman and CEO, said the recent changes in regulatory policy governing local telephone service, meant that AT&T could no longer compete in residential local and standalone long distance (LD) consumer markets.



AT&T also reported its Q2 financial results. Some highlights:

• consolidated revenue of $7.6 billion, declined 13.2 percent versus the second quarter of 2003, primarily due to continued declines in LD voice revenue.



• operating income totaled $348 million, resulting in a consolidated operating margin of 4.6 percent. Operating income included $54 million of net restructuring and other charges taken during the quarter primarily related to employee separations.



• $1.1 billion in cash from operations while spending $0.5 billion on capital expenditures.



• net debt of $7.9 billion, a $0.5 billion decrease from the end of Q1 2004.

AT&T Business

• Revenue was $5.6 billion, a decline of 12.7 percent from the prior-year. Pricing pressure and mix shift from retail to wholesale negatively affected the unit's revenue performance.



• Long distance voice revenue decreased 17.6 percent from the prior-year second quarter, driven by continued pricing pressure as well as a continued mix shift in volume from retail to wholesale. Volumes were flat on a quarter-over-quarter basis, with growth in wholesale volumes offset by a decline in retail volumes.



• Local voice revenue grew 5.0 percent from the prior-year second quarter. Local access lines totaled more than 4.6 million at the end of the current period, representing an increase of over 85,000 lines from the end of the first quarter of 2004.



• Data revenue declined 10.4 percent from Q2 2003 Revenue was negatively affected by pricing pressure, weak demand and technology migration.



• IP& Enhanced Services (IP&E-services) revenue grew 2.3 percent over the prior-year second quarter. The quarter-over-quarter growth was primarily driven by strength in advanced services, including Enhanced Virtual Private Network and IP-enabled Frame Relay.



• Outsourcing, professional services and other revenue declined 18.9 percent from the prior-year second quarter, due to customers reducing scope and terminating outsourcing contracts.

AT&T Consumer

• Revenue was $2.0 billion, a decline of 14.6 percent versus the prior-year second quarter, driven by lower standalone LD voice revenue as a result of the continued impact of competition, wireless and Internet substitution and customer migration to lower-priced products and calling plans, partially offset by targeted price increases.

http://www.att.comIndustry Reactions to AT&T's Withdrawal


PACE: "AT&T's withdrawal from consumer markets is a blow to residential and small business consumers across the nation. The goal of the Telecom Act was robust local competition, with more choices, greater innovation and lower prices. If not soon moderated, the same ideological zeal that brought the nation the California energy crisis will have a similarly devastating impact on the telecommunications industry." Peter Karoczkai, Chairman of the Promoting Active Competition Everywhere (“PACE�?) Coalition, which does not include AT&T or MCI.


SBC: "Today's announcement underscores the fact AT&T left the traditional consumer business years ago when they decided against investing in their own local facilities and networks in order to compete. It also underscores the reality of today's competitive marketplace. Vigorous competition is flourishing and will only intensify as wireline, cable, wireless, satellite and VoIP companies slug it out. Consumers today have more choices than ever before and that will not change, especially if AT&T is serious about pursuing new technologies like voice over IP."

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Earthlink Adds 47,000 Broadband Subscribers in Q2

EarthLink added 31,000 net subscribers during the second quarter and ended the quarter with 5.3 million paying subscribers, an increase of 296,000 subscribers, or 5.9 percent, from a year ago. During the quarter, EarthLink added 47,000 net broadband subscribers and ended the quarter with 1.2 million broadband customers, an increase of 21.5 percent from a year ago. In the second quarter, the company also added 102,000 net subscribers through PeoplePC Online, EarthLink's value-priced narrowband service, while it lost 113,000 net subscribers in its more mature premium narrowband service. The company ended the quarter with 4.0 million total narrowband subscribers, an increase of 2.4 percent from the second quarter of 2003. Total narrowband subscribers included 625,000 PeoplePC Online subscribers as of June 30, 2004, compared to 197,000 subscribers as of June 30, 2003.


Monthly subscriber churn was 4.4 percent in the quarter, an increase from 3.9 percent in the second quarter of 2003, but declining slightly from the prior quarter. The higher churn rate was primarily due to the continued migration of premium narrowband subscribers to broadband access services, including those of competing providers, and the effect of early life churn associated with the higher level of gross subscriber additions.


Looking ahead, EarthLink expects to add 50,000 to 100,000 subscribers in Q3, driven by continued growth in broadband and value-priced narrowband offerings, partially offset by a decline in premium narrowband subscribers. http://www.earthlink.net

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Juniper Hires Ex Cisco and 3Com Execs to Build Sales Channel

Juniper Networks announced the appointment of three new executives: Tushar Kothari, vice president of worldwide channels, Bob Bruce, vice president of America's channels and Neal Oristano, vice president of America's sales.


Tushar Kothari joins Juniper Networks from Cisco Systems, where he served most recently as vice president/General Manager of Linksys, a division of Cisco Systems. From 1997 to 2002, he was vice president of worldwide channels for Cisco. Kothari has previously held positions in sales and marketing with National Semiconductor and View Engineering.


Bob Bruce, vice president of America's channels -- formerly vice president of U.S. channels, including service provider partners, at Cisco Systems -- will oversee all Juniper Networks service provider and corporate channels throughout the United States, Canada and Latin America. In his previous role at Cisco, Bruce was instrumental in building the U.S. enterprise channel sales and operations as well as service provider channels.


Neal Oristano, who formerly served as vice president of America's sales at 3Com Corporation, will oversee all service provider and corporate sales throughout the United States, Canada and Latin America. While at 3Com, Oristano led a two-tier distribution channel supported by a "direct touch" sales force. http://www.juniper.net

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Tekelec Report Growing Sales for its Next-Gen Switching Gear

Tekelec reported Q2 sales of $95.6 million, compared to $62.9 million in the second quarter of 2003. Orders received in the second quarter for Tekelec products and services were $123.6 million, compared to $68.0 million in the second quarter in 2003. The $123.6 million of total orders booked during the quarter is the second highest order total in the history of the company, surpassed only by the order level achieved in Q4 2003. Tekelec credited its next-generation switching business unit (Santera) for contributing significantly to this order total. The company cited new deployments at two Tier 1 operators:


Sprint has deployed Tekelec's next-gen equipment in both its commercial network carrying live traffic, and in its lab for testing purposes.


Through the Company's relationship with Spatial Wireless, the Tekelec 8000 Wireless Multimedia Gateway has been deployed at a Tier 1 wireless operator.


Meanwhile, Tekelec's Network Signaling business unit generated $72.3 million of revenue, up 35% year-over-year, its highest revenue total in the history of the company.


On a GAAP basis, Tekelec's Q2 net loss was $304,000, or $0.00 per diluted share, compared to net income of $1.2 million, or $0.02 per diluted share, in the second quarter of 2003. Second quarter 2004 net income includes an $8.0 million one-time, non-cash charge for the write-off of in-process research and development related to the Taqua acquisition. http://www.telelec.com

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Global Crossing and TELMEX Sign Bilateral Voice Agreement

Global Crossing and Telefonos de Mexico have signed a commercial agreement for bilateral voice interconnection. The agreement allows Global Crossing to send traffic to Mexico and TELMEX to transport long distance voice traffic to the U.S.


Voice traffic exchange has commenced in Los Angeles, where Global Crossing and TELMEX have collocated points of presence (POPs).


The agreement expands an existing business relationship between the two companies: TELMEX has been Global Crossing's primary local access provider for data services in Mexico since 2001, and Global Crossing also has interconnection and renders services in Latin America to a number of TELMEX affiliates. http://www.globalcrossing.comhttp://www.telmex.com

• Separately, TELMEX owner Carlos Slim has recently received state regulatory approvals that would enable him to increase his ownership stake in Global Crossing to between 10 and 20%.

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Sprint Canada Launches Broadband VoIP

Sprint Canada, a subsidiary of Call-Net Enterprises, launched a nationwide VoIP service aimed at households and small/home offices. Sprint Canada Internet Phone Service (IPS), which rides over any DSL or cable modem connection, is supported on the company's own back office systems.


The service is available as a standalone product and includes all standard home phone features such as operator services, 911, 411, and 711. Call waiting, call display and voice mail are also available. IPS is also available as part of bundled package with local home phone service and Fido wireless service. Introductory pricing starts at $19.95 per monthhttp://www.sprint.ca

• In May 2004, Call-Net Enterprises, a Canadian integrated communications provider known primarily by its wholly-owned subsidiary Sprint Canada, entered into an agreement with Bell Canada to acquire certain assets of 360networks. This deal includes significant portions of 360networks' business customer base and specific network facilities in Ontario, Quebec and Atlantic Canada. Call-Net will enter into a two-year transitional services agreement with Bell to provide technical and operational services to the newly acquired customer base and in exchange be paid approximately 70 per cent of the total retail revenue.

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SBC Cites Growth in Data, LD, DSL

SBC Communications reported a return to positve wireline revenue growth, following nearly three years of declines. During Q2, traditional wireline revenue growth was 1.1%, compared to -6.7% for Q2 2003. However, DSL activations were below expectations, which the company attributed to seasonality (end of the school year) and the labor strike at the end of May.


Some highlights for Q2 2004:

• Data revenues - SBC's data revenues increased 9.5 percent to $2.7 billion in the quarter, SBC's best-ever quarterly data revenue total and its strongest year-over-year growth in data revenues in more than two years. Data growth was driven by gains in DSL Internet services and expansion in the large-business market.
  
  
• Bundles - SBC's penetration of consumer retail lines with at least one key service - long distance, DSL, Cingular Wireless or SBC / DISH Network video - increased to 54 percent at the end of the quarter, up from 31 percent at the end of the year-earlier second quarter.
  
  
• Long distance - SBC's long distance revenues grew 33.2 percent in the second quarter, driven by strong line growth over the past year. SBC ended the quarter with 18.4 million long distance lines in service, up from 9.8 million a year earlier. In the second quarter, SBC's total long distance lines increased by 1.4 million, including an upward adjustment of approximately 100,000 lines to align long distance counting methodology with that used for other products.
  
  
• DSL - SBC's net gain in DSL lines totaled 315,000. giving the company a total of 4.3 million DSL lines in service, up 54 percent over the past year. SBC's DSL penetration is about 11%
  
  
• Retail access lines - SBC's retail consumer line base declined by 558,000 in the second quarter, reflecting typical seasonality due to the end of the school year. This compares with declines of 721,000 in the year-earlier second quarter and 305,000 in the first quarter of this year. SBC's retail business access line base declined by 228,000 in the quarter, compared with declines of 401,000 in the second quarter of 2003 and 242,000 in the first quarter of this year.
  
  
• Video - At the end of June, SBC had 121,000 SBC / DISH Network subscribers in service, 100,000 of them added in Q2. SBC began marketing its integrated SBC / DISH Network satellite TV service in March, expanding from a soft launch to full sales-channel coverage in April.
  
  
• Cingular Wireless - Cingular Wireless' net subscriber additions in the second quarter totaled 428,000, bringing its nationwide cellular/PCS customer base to 25 million, an increase of 2.4 million over the past four quarters.

http://www.sbc.com

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deltathree Provides Back Office Support for Verizon's VoiceWing

deltathree announced an agreement with Verizon Communications to provide VoIP consulting, management and integration services for Verizon's new VoiceWing consumer service. Specifically, deltathree is providing a suite of back office integration and management services including: account sign-up, billing, account management, credit card processing and fraud management, as well as VoIP telephony features as they relate to the end user experience. deltathree will also provide its Customer Service Interface (CSI) for utilization in supporting the customer service function.


The agreement has a two-year initial term with an annual renewal after the initial term. Financial details were not disclosed. http://corp.deltathree.com/

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Verizon Launches is VoiceWing Consumer VoIP in 139 Markets

Verizon Communications launched its "VoiceWing" consumer VoIP service. The initial rollout allows broadband users to choose area codes in 139 markets in 33 states and the District of Columbia. Verizon's VoiceWing offers features such as unlimited local and domestic long distance calls, call waiting, caller ID, call logs, enhanced call-forwarding and online voice mail.


VoiceWing does not support traditional 911 or E911 access to emergency services. The company recommends that users maintain an alternate means of requesting emergency services, such as a mobile phone or traditional land line. Verizon said it was confident in the voice quality and reliability of the new service, but that it should be seen as a complement to regular phone line service rather than a replacement.


VoiceWing is priced at $39.95 per month; however, subscribers to Verizon Online DSL can get VoiceWing for $34.95 a month. Those subscribers can also benefit from an introductory price of $29.95 a month for the first six months if they order VoiceWing by Oct. 31. Users of other broadband services will get an introductory price of $34.95 for the first six months of service if they order VoiceWing by Oct. 31. Verizon is supplying the VoIP adapter with a one-time set-up fee of $39.95.


By early 2005, Verizon plans to launch a premium VoIP service aimed at small businesses and home workers. The premium service would run over Verizon's own last mile facilities, enabling it to support QoS on the VoIP calls. http://www.verizon.com/voicewing

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