Alcatel and FastWeb to Develop Broadband Net for Italian Armed Forces

The Italian Ministry of Defence selected Alcatel and FastWeb to develop integrated joint-forces communications network. The initial phase will entail the deployment of an optical ring of approximately 1500 Km linking the military district headquarters along the two trunk lines of Florence-Ferrara-Padua-Milan and Rome-Grosseto-Leghorn-La Spezia. The project will be completed by the end of 2004. The contract, which was awarded on the basis of a European Union Design Contest, was valued at EUR 25 million.


FastWeb is Italy's main alternative fixed broadband telecommunications operator. As of 31-Dec-003 FastWeb had 330,000 customers. http://www.alcatel.com

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Deutsche Telekom Launches Mass Market Broadband Initiative

One day after announcing that it had topped the 4 million DSL subscriber milestone, Deutsche Telekom launched a new initiative to drive the technology as a mass-market phenomenon in Germany by attracting at least ten million T-DSL customers by 2007. The company will offer T-DSL service tiers at 1, 2, and 3 Mbps. It will also expand T-DSL infrastructure coverage in rural areas.


A key part of the initiative is to kick-start an "innovation drive," which will include pooling a considerable proportion of its research and development activities with the Technische Universität (TU) Berlin and its partner universities. To this end, Deutsche Telekom will build its own R&D institute on the campus of TU Berlin. The institute will host around 25 top Deutsche Telekom researchers as well as approximately 50 scientists from leading universities worldwide.


Deutsche Telekom is also examining the possibility of establishing joint research and development projects with France Telecom. The carriers are contemplating new collaborative efforts on both a national and European level.


Kai-Uwe Ricke, Deutsche Telekom's Chairman, said "I am very pleased that we have renewed the dialog between France Télécom and Deutsche Telekom."


Deutsche Telekom also said it welcomes greater commitment to the broadband market by other companies, such as cable network operators. Deutsche Telekom is currently reviewing its terms and conditions for line sharing and, with its new "Bitstream Access" offer, will be introducing further upstream products to stimulate the broadband market and give competitors direct and risk-free access to customers on the basis of T-DSL lines. http://www.telekom.de

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FCC Raises $118 Million in Spectrum Auction for Video Services

The FCC raised $118 million in its auction of spectrum for Multichannel Video Distribution and Data Service (MVDDS), which ended on 27-Jan-2004 after 49 rounds of bidding.


The auction included 214 geographic area licenses, of which 192 received winning bids. Each license consists of one 500 MHz block of unpaired spectrum in the 12.2 -- 12.7 GHz band. Permissible operations include any digital fixed non-broadcast service including one-way direct-to-home/office wireless service. Licensees are permitted to provide one-way video programming and data services on a non-common carrier and/or common carrier basis. Mobile and aeronautical services are not authorized. Two-way services may be provided by using other spectrum or media for the return or upstream path. Licensees are subject to a construction requirement that they provide "substantial service" in the license area within five years of receiving the license. http://www.fcc.gov/wtb/auctions/

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FCC Report: DBS Remains Cables Top Competitor

Due to competition from direct broadcast satellite (DBS), cable operators have seen their share of the U.S. market for multichannel video programming distribution ("MVPD") services decline from 100% a decade ago to about 75% today, according to the FCC's newly released "Tenth Annual Report on Competition in Video Markets." A decade ago, federal regulators expected local exchange telephone companies ("LECs") to launch video systems and become the primary competitors to cable systems. Significant LEC entry into the video marketplace has failed to materialize. The most notable exception is BellSouth, which currently operates overbuild cable systems in 14 franchise areas, passing 1.4 million homes. Nevertheless, a number of incumbent LECs are planning to offer video services over their existing phone lines. Over 100 municipal utilities have also entered the market for multichannel video. However, these competitors, along with others using more diverse delivery technologies (i.e., overbuilders, wireless cable systems, private cable systems), only serve a proportionately small number of subscribers and only in limited geographic areas. The FCC report also finds that Internet video is still not seen as a direct competitor to traditional video services. The predominant challengers to the cable operators remain the two DBS providers. Some highlights of the report:

• As of June 2003, 94.1 million households subscribed to MVPDs, an increase of more than 56% over the last ten years.



• Between June 2002 and June 2003 alone, the number of DBS subscribers grew from about 18.2 million households to more than 20.4 million households.



• The number of cable subscribers continues to grow, reaching almost 70.5 million subscribers as of June 2003, up from the 57.2 million cable subscribers at year-end 1993. In the last several years, however, cable subscribership has declined such that as of June 2003, there was approximately the same number of cable subscribers as there were at year-end 1999.



• The total number of non-cable MVPD subscribers grew from 3.1 million as of year-end 1993, to 11.23 million as of June 1998, to 23.7 million as of June .



• Between June 2002 and June 2003, cable prices rose 5.1% compared to a 2.1% increase in the overall Consumer Price Index (CPI). Concurrently with these rate increases, however, the number of video and non-video services offered increased, including a substantial increase in the number of video channels, increased use of cable (as measured by a substantial increase in cable viewership), and the addition of advanced service offerings.



• The rapid consolidation of cable operators slowed somewhat in 2003. For example, the four largest operators served about 51.7% of all U.S. cable subscribers in June 2002, and in June 2003, that number was down to about 50.5% of all U.S. cable subscribers.

http://www.fcc.gov

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Time Warner Serves 3.2 Million Cable Modems

Time Warner Cable added 182,000 cable modem customers in Q4 2003, ending the year with 3.2 million, a rise of 802,000 customers. Its cable modem penetration rate rate currently stands at 17% of eligible homes passed.


Basic cable subscribers increased at an annual rate of 0.1%. Time Warner Cable added 602,000 net digital video subscribers during 2003 (an increase of 136,000 during Q4 2003) to reach a total of 4.3 million, representing 40% of basic cable subscribers.


Meanwhile, the company's America Online division continued to lose subscribers and advertising revenue. As of 31-Dec-2004, the AOL service had 24.3 million members in the U.S., a decrease of 2.2 million for the year (a decline of 399,000 during Q4). The quarter's decline represents a decrease of 830,000 billed subscribers that was offset partially by an increase of 431,000 members in retention programs. The AOL service in Europe had nearly 6.4 million members, essentially flat with a year ago (an increase of 91,000 from September 30, 2003). Subscription revenues in the U.S. were essentially flat, reflecting a year-over-year increase in broadband subscribers, offset by a decline in US narrowband membership. http://www.timewarner.com/

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Infineon Acquires Taiwan's ADMtek for Home Gateway Silicon

Infineon Technologies agreed to acquire ADMtek Inc., a fabless, integrated circuit (IC) design company based in Hsinchu, Taiwan, for around EUR 80 million in cash. The deal enables Infineon to enter the home gateway market. Infineon will establish a new company, Infineon-ADMtek Co. Ltd, headquartered in Hsinchu, which will focus on developing broadband customer premise equipment (CPE) Ics. Infineon said it intends to offer a complete IC solution package for feature-rich, multimedia home gateways that support high-speed wireline and wireless advanced services. The deal represents Infineon's first acquisition of a controlling stake in an Asian semiconductor company.


As part of the transaction, Infineon has also signed a supply agreement to provide products to Accton Technology Corporation and its affiliate companies for broadband CPE solutions. http://www.infineon.com

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Net Insight Delivers 14-Cities Media Network in Germany

Germany's largest broadcaster, Westdeutscher Rundfunk (WDR), has chosen Net Insight's platform to carry all of its broadcast TV, data and telephony traffic between 14 cities. The project is described as the largest of its kind in Europe.


WDR's network will carry bursty IP traffic, telephony and mission critical TV contribution and distribution streams. A total of 13 services, each with strict QoS requirements, were specified for the network. The equipment will be delivered during 2004.


Net Insight said its video and data networking equipment is being used by other major broadcasters, including MSNBC, FOX, CBS, ABC, Savvis, KPN and UPC.
Thttp://www.netinsight.net

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VOOM Chooses NDS to protect HD content

VOOM, the new HDTV satellite service, and NDS, a News Corporation company, have launched a first-of-its-kind Electronic Programming Guide (EPG) built specifically for high-definition programming. VOOM is also transitioning its conditional access over to NDS's VideoGuard protection system. Using NDS's Digital Video Recorder content protection and storage technology, VOOM will also be able to offer its subscribers a secure networked DVR product that supports the safe distribution of content throughout the home. Financial terms were not disclosed.


Additionally, the collaboration will bring to market the first HDTV solution using a Motorola set-top box integrated with NDS conditional access technology.


The new agreement also builds upon an existing relationship with Cablevision whereby NDS provides conditional access solutions to many of its digital cable customers. http://www.nds.com

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Akamai Teams with Equinix on Content Delivery

Akamai Technologies is teaming with Equinix to expand its content and applications delivery platform in the U.S. and Asia. Akamai's "intelligent edge" platform for content, streaming media and applications delivery currently comprises more than 14,000 servers in more than 1,100 networks in over 70 countries. Akamai will now directly connect to networks within Equinix's Internet hubs via private cross-connects. Akamai will also utilize Equinix's GigE Exchange service in the Washington, D.C. and Silicon Valley area centers. Financial terms were not disclosed.ttp://www.equinix.comhttp://www.akamai.com

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Covad and Speakeasy offer 3.0 Mbps Consumer DSL

Speakeasy, a national broadband provider, introduced a consumer DSL service featuring maximum downstream speeds of 3.0 Mbps and upstream speeds of 768 kbps. The service is delivered over Covad Communications' national DSL network.


Speakeasy's Basic 3.0/768 residential service is offered for $69.95 per month for the first three months, $99.95 thereafter. Unlike some competitors, Speakeasy does not port block or limit bandwidth usage. Subscribers have the flexibility to run their own servers (including Linux and Macintosh); and have no restrictions on, or charges for, in-home wireless connections.


Speakeasy is also offering a "Gamers 3.0/768" package that includes at least two static IPs, 10mb of web space, eight email accounts and a year's free subscription to the Mercury FileShack gaming site. http://www.speakeasy.nethttp://www.covad.com

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Sprint Introduces Enterprise MPLS VPN

Sprint augmented its enterprise IP Virtual Private Network (VPN) services portfolio with several new offerings:

• the addition of an MPLS VPN solution to provide secure, any-to-any intranet connectivity. The Sprint MPLS VPN is a network-based solution that is compliant with the RFC 2547bis technical standard. It includes a suite of value-added features and services such as end-to-end Class of Service, VPN Multicast and Managed Network Services (MNS). Sprint provides a SLA with 100% credits for standard monthly recurring charges.



• the commercial availability of its peerless IP network, a native-IP backbone with no connectivity to the public Internet, which was previously available only to government customers.



• the availability of a Secure Socket Layer (SSL) remote access VPN to provide secure access to corporate data and applications for remote employees, business partners and customers.

Sprint said its MPLS service launch represents the initial step of a broader MPLS VPN strategy. Later this year Sprint will extend the MPLS VPN offering globally and integrate it with a full complement of value-added services, including network-based firewall and filtering, secure Internet access, integrated remote access and seamless Layer 2 internetworking. The MPLS services are implemented over Sprint's 100% Cisco Systems infrastructure. http://www.sprint.com

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Mindspeed Delivers 15% Revenue Growth

Mindspeed Technologies, a supplier of semiconductor solutions for network infrastructure applications, reported quarterly revenues of $26.7 million, up 15% from the preceding quarter and at the high end of the company's expectations set at the beginning of the quarter. There was a pro forma operating loss of $13.7 million, or $0.15 per share.


Mindspeed said revenue growth from T/E carrier transmission products, particularly DS3/E3, was primarily driven by increasing deployment of next-generation metro optical platforms. Revenue growth from multiservice access products was driven by increasing demand for VoIP, particularly from customers in the Asia-Pacific region, for use in telecommunications carrier equipment as well as for converged voice/data enterprise networks.


Mindspeed expects revenues from the current quarter to be up 10-15% sequentially yielding a revenue range of between $29.4 million and $30.8 million, the company's highest revenue level in ten quarters. The company expects overall gross margin to be roughly 68%.\http://www.mindspeed.com

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Conexant Grows Revenues 23 Percent Year over Year

Conexant Systems announced quarterly revenues of $177.3 million, up 23% over the same period last year and up 8% over the preceding quarter. Pro forma operating profit was $17.2 million, or 9.7 percent of revenues, compared to $0.5 million in the year-ago quarter. The company credited the growth to record unit shipments in its client-side ADSL, satellite set-top box and PC video businesses.


Gross margin for the first fiscal quarter was 44.6%, up approximately one percent from the previous quarter. http://www.conexant.comIn November 2003, Conexant and GlobespanVirata announced plans to merge.

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Alcatel Signs Multimillion Euro Optical Contract with Belgacom

Alcatel was awarded a multi-million EUR four year frame agreement by Belgacom to upgrade and expand its existing core and metro optical transport networks. Under the contract, Alcatel will supply its multi-service gateways and multi-service provisioning platform for delivering Ethernet and Gigabit Ethernet services. Alcatel will also supply its WDM equipment and its multi-service network element management platform. http://www.alcatel.com

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Focal Deploys General Bandwidth's G6 Platform

Focal Communications, a CLEC serving 23 U.S. metro markets, is deploying General Bandwidth's G6 platform to launch an enhanced Integrated Voice and Data (IVAD) service that delivers up to 32 voice channels while allowing up to 1.5 Mbps of data over a single T1 access line. Financial terms were not disclosed.



General Bandwidth's G6 Packet Telephony Migration Platform supports VoIP and Voice over ATM over a variety of packet architectures, including T1, DSL, hybrid fiber coax (HFC) and fiber-to-the-premises (FTTP). It supports voice services from existing Class 5 switches as well as next generation packet switches. http://www.genband.com/http://www.focal.com

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Quebec's Videotron to Boost Cable Modem Speeds

Videotron, which serves 1,423,000 million cable customers in Quebec, plans to boost its cable modem speeds as of 01-Apr-2004. For the basic residential Internet service, the speed of downloads will increase more than 32%, from 3.1 mbps to 4.1 mbps, and upload speeds will more than double, from 350 kbps to 820 kbps. For the "Extreme High-Speed Internet service," download speeds will be boosted more than 12%, from 4 mbps to 4.5 mbps, and upload speeds will increase more than 40%, from 640 kbps to 900 kbps.



Videotron plans to invest nearly $40 million (Canadian) in its broadband network and Internet infrastructure this year. The monthly download limit will be increased from 15 to 20 gigabytes and the upload limit from 5 to 10 gigabytes, for a total of 30 gigabytes.



Videotron currently serves some 430,000 Internet customers by cable modem and dial-up modem. http://www.videotron.com

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SBC Reports Improved Retail Access Line Trends

Growth in long distance and DSL, as well as improving retail access line trends, were the top positive trends reported by SBC Communications for Q4 2003. However, SBC's revenues and net income fell during the quarter and during the full 2003 overall. Revenues for Q4 totaled $10.1 billion, compared with $11.2 billion in the year-earlier period. For the full year 2003, revenues were $40.8 billion, compared with $43.1 billion in 2002. Net income for Q4 was $905 million, or $0.27 per diluted share, compared with $2.4 billion, or $0.71 per diluted share in Q4 of 2002.



Some highlights of the quarterly report:

• a gain of 2.9 million long distance lines companywide, including 1.7 million from Midwest launch, giving SBC a total of 14.4 million LD customers at year end.



• a gain of 377,000 DSL lines, marking the 8th consecutive quarter of accelerated DSL growth, giving the company a total of 3.5 million DSL customers, up 60% from fourth-quarter 2002 levels. For comparison, in Q3 2003 the company added 365,000 net DSL customers. SBC hopes to have 5 million DSL customers by year-end 2004. The DSL network currently reaches 75% of SBC customers and the company expects to reach 80% by year end 2004.



• a loss of 243,00 consumer primary access lines, marking the smallest sequential decline in nine quarters. SBC attributed the trend to its entrance in the LD market in the Midwest. For comparison, SBC lost 671,000 consumer primary access lines in Q4 2002.



• a gain of 120,000 wholesale lines (resale and UNE-P), down 63% from the increase in wholesale lines last quarter. SBC said its expects to benefit from a ruling early this year by Indiana regulators that increases by $3.57 per line the wholesale rate that competitor resellers in that state must pay SBC to lease its network.



• a 9.3% rise in quarterly data revenues by 9.3% to $2.6 billion, SBC's best year-over-year growth in more than two years. Data revenues represented 29% of SBC's total wireline revenues in the quarter. For the full year, SBC's data revenues totaled $10.2 billion, up 5.3% from 2002.



• a gain of 642,000 Cingular Wireless lines, ending the year with a total of 24 million. In addition to its ongoing GSM network conversion and the pending acquisition of additional spectrum, Cingular is launching a major construction and engineering effort to add cell sites, further strengthening its nationwide network. The company also launched a major customer service initiative during the quarter.



• Retail penetration of consumer bundles that combine local voice access with at least one other service grew to 44%, roughly double the penetration rate at the beginning of the year.



• For 2004, SBC's capital expenditures are expected to be $5.0 billion to $5.5 billion, excluding Cingular Wireless capital outlays - in line with 2003 spending. Cingular Wireless' capital spending is expected to be consistent with its 2003 total of $3.4 billion.

http://www.sbc.com

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Deutsche Telekom Reaches 4 Million DSL Subscribers

Deutsche Telekom surpassed the 4.0 million subscriber milestone for DSL, up 40% for 2003. In Q4 alone, Deutsche Telekom's T-Com division added more than 300,000 net DSL customers. The company also serves an additional 110,000 DSL customers in Eastern Europe.



Despite the strong uptake for DSL, demand for the Deutsche Telekom's T-ISDN service continues to grow. The number of ISDN channels operated by T-Com in Germany increased year-on-year from 20.7 to 21.5 million. However, Deutsche Telekom posted a slight decline in the number of standard analog lines it serves, which now stands at 27.2 million, down from 28.6 million a year earlier. The company attributed this loss to the migration from analog to T-Com's more advanced lines as well as to growing competition and regulatory action.



Some additional 2003 operational statistics for Deutsche Telekom:

• the number of mobile customers in the Group increased by 13% to 66.2 million



• T-Mobile USA added a record number of new subscribers in Q4 with 1.02 million. It now has more than 13.1 million subscribers



• T-Mobile Deutschland remains Germany's mobile market leader with 26.3 million subscribers



• T-Mobile UK added 1.2 million new subscribers in Q4



• T-Online increased its European customer base to 13.1 million

http://www.telekom.de

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Marconi's Group Sales Rise 5%

Marconi reported its fifth consecutive quarter of positive operating cash flow (before special charges). For the three months ending 31-December-2003, Marconi's Group sales rose 5% to £408 million compared to £389 million in the previous quarter.



Marconi said sales in Europe/Rest of World were driven by growth in Fixed Wireless Access and Value-Added Services. It also noted strong growth in Outside Plant & Power and North American Access sales, which were offset by an expected reduction in sales by the U.S. federal government.



Excluding the North American Access (NAA) division (which is being sold to AFC), Marconi's top ten customers for the quarter were (alphabetical order): AT&T, BT, E-plus (Germany), Metro City Carriers (Germany), O2, Telecom Italia, U.S. federal government, Verizon, Vodafone and Wind (Italy). These customer represented 47% of sales.



Group headcount was reduced to 13,025 at year's end, compared with 14,100 at 30-Sept-2003.



Marconi said it is maintaining a cautious market outlook and expects the current quarter's sales to be flat to slightly up. http://www.marconi.com

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AFC Reports Q4 Revenues of $84.8 million

AFC reported Q4 revenues of $84.8 million, compared to $85.2 million in Q3 2003 and $85.7 million in Q4 2002. Net income for the fourth quarter of 2003 was $5.7 million, or $0.06 per share, compared with $9.3 million, or $0.11 per share, in Q3 2003. Net income for Q4 2002 was $17.6 million, or $0.21 per share.



"In spite of the modest decline in annual revenues due to a challenging industry environment, we increased core business net income by 39% to $34.0 million in 2003 from $24.4 million in 2002," said John Schofield, chairman, president and chief executive officer at AFC. "Over the year we experienced growing demand for our broadband solutions. Our shipments of DSL lines in the fourth quarter were the largest ever, with 105,000 lines shipped. This gives us approximately 250,000 DSL lines shipped in 2003, another record for AFC."http://www.afc.com

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