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22-April-2004    Volume 11 Issue 076

   Message from our Premier Sponsor:

FCC Rules AT&T's Internet Telephony is Subject to Access Charges
The FCC ruled against AT&T in a case over whether telephone calls placed over the PSTN, converted to IP, transmitted over an IP backbone, and then terminated on the PSTN should be subject to access charges.

The FCC found this type of phone-to-phone IP telephony "lacks the characteristics of an information service and bears the characteristics of a telecommunications service." Specifically, the FCC noted that the AT&T phone-to-phone Internet telephony (1) holds itself out as providing voice telephony or facsimile transmission service; (2) does not require the customer to use CPE different from that CPE necessary to place an ordinary touch-tone call (or facsimile transmission) over the public switched telephone network; (3) allows the customer to call telephone numbers assigned in accordance with the North American Numbering Plan, and associated international agreements; and (4) transmits customer information without net change in form or content.

The FCC ruling determined that to the extent that any Internet telephony provider obtains the same circuit-switched access as obtained by other interexchange carriers, they impose the same burdens on the local exchange as do other interexchange carriers, and therefore should pay similar access charges. Hence, AT&T’s specific service is subject to interstate access charges, pending resolution of related access issues in the FCC's upcoming Intercarrier Compensation and IP-Enabled Services rulemaking proceedings.

The FCC restated its commitment to "foster the growth of IP services through a hands off regulatory approach in a manner that is nonetheless consistent with our other statutory obligations, pending the resolution of intercarrier compensation issues in the rulemaking proceedings."

In the ruling, the FCC also noted that it sees "no benefit in promoting one party’s use of a specific technology to engage in arbitrage at the cost of what other parties are entitled to under the statute and our rules, particularly where, based on the record before us, end users have received no benefit in terms of additional functionality or reduced prices."

The FCC also found that "although AT&T asserts that conversion to IP can produce enormous efficiencies by allowing the integrated provision of voice, data, and enhanced services, exempting from interstate access charges a service such as AT&T’s that provides no enhanced functionality would create artificial incentives for carriers to convert to IP networks. Rather than converting at a pace commensurate with the capability to provide enhanced functionality, carriers would convert to IP networks merely to take advantage of the cost advantage afforded to voice traffic that is converted, no matter how briefly, to IP and exempted from access charges. IP technology should be deployed based on its potential to create new services and network efficiencies, not solely as a means to avoid paying access charges. "
http://www.fcc.gov
21-Apr-04

SBC Applauds FCC Ruling on Internet Telephony Charges
SBC Communications applauded the FCC's ruling on access charges for calls carried over AT&T's IP backbone. SBC described AT&T's decision two years ago to stop paying access charges for calls that traveled -- if only for a brief distance -- over its IP backbone as an " illegal self-help scheme." SBC said it would begin the process of collecting access charges from AT&T and others who owe them.
http://www.sbc.com
21-Apr-04

Verizon Announces New Framework for Wholesale Customers
Verizon Communications unveiled a new framework for commercial agreements with its wholesale customers, offering customized, three-year agreements, restructured pricing and a number of high-value services not required under existing, government-mandated UNE-p requirements.

Verizon said its "Wholesale Advantage" plan offers a framework for reaching agreements on negotiated, commercially reasonable terms and ensures the continued availability of end-to-end wholesale services after a federal court order becomes effective this summer. The company is seeking one-on-one negotiations with its competitors.

Final terms and rates in any commercial agreement will be based on where the wholesale customer operates, the volumes purchased and other factors. Verizon expects the new monthly recurring charge for Wholesale Advantage service in the first year of an agreement to range from $20 to $24 in the urban and suburban markets where today the substantial majority of lines are purchased at regulated rates. In each of the two subsequent years, average monthly charges would increase by $1 to $2.

In addition, under Wholesale Advantage, wholesale customers can negotiate for additional services to sell, such as DSL and voice mail. Furthermore, Verizon's current business-to-business ordering processes will continue unchanged under Wholesale Advantage. Verizon will continue to provide the same on-line electronic order processing and other features and functionality that it provides today.
http://www.verizon.com
21-Apr-04

Northrop Grumman Selected for $337M Homeland Security Network
Northrop Grumman was awarded a seven-year, $337 million task order in support of the U.S. Department of Homeland Security to design, operate and maintain the department's classified network infrastructure for its headquarters and directorates nationwide. The network will streamline and modernize the classified data capabilities to facilitate collaboration within the Department of Homeland Security and with other federal agencies and organizations.

As part of the task order award by General Services Administration Federal Technology Service under the Millennia Government Wide Acquisition Contract, Northrop Grumman's Information Technology (IT) sector will provide secure network services for a pre-defined number of Department of Homeland Security and directorate locations including approximately 600 federal, state and local sites, such as the Department of Homeland Security, other federal agencies, state and local governments, and law enforcement organizations.

"This high-speed data network is a vital backbone for enabling intelligence data to flow between federal, state and local law enforcement," said Dave Zolet, Northrop Grumman's vice president of Homeland Security. "This data interoperability across many jurisdictions is critical to our nation's war on terrorism."

Northrop Grumman expects to add 60 new jobs in Fairfax, Virginia, with expansion up to 150 positions in 2005.

Other participants win Northrop Grumman in the project are: Lockheed Martin, Raytheon, SRA International, BearingPoint, CHM, ITS Services, Level 3 Communications, Telos Corp., Touchstone Consulting Group, and Omen Inc..
http://www.northropgrumman.com/
21-Apr-04

Lucent Selected by DARPA for Advanced Networking Projects
The U.S. Department of Defense has awarded Lucent Technologies two contracts valued at $26 million -- a contract worth $13.4 million for the second phase of the Coherent Communications Imaging and Targeting (CCIT) program, as well as a $12.5 million contract for the Integrated Router Interconnected Spectrally (IRIS) program.

Under the CCIT contract awarded by DARPA, Lucent Technologies' Bell Labs and the New Jersey Nanotechnology Consortium (NJNC) will lead a team to research and develop new secure, high-speed and long-range laser-based communication technologies. The CCIT program addresses the critical need for secure high-data-rate communications and imaging from land, sea and airborne platforms to space. The resulting system will offer communication up-link speeds in the multi-gigabit per-second range as well as provide aberration- free three-dimensional imaging at distances of more than 1,000 kilometers. One of the key enabling technologies for the CCIT project are Micro Electric Mechanical System (MEMS) Spatial Light Modulators.

The four-year IRIS award, administered by the US Air Force Research Laboratory in Rome, N.Y., will be used to develop the architecture, components and prototype systems for all-optical packet routing in high-speed telecommunications systems. This includes the development of an optical packet router that can send and receive up to 100 terabits of data per second. The project involves the development of dense, highly integrated photonic circuits that allow traffic in the network to be switched at speeds below a nano-second. The Bell Labs team's goal is to integrate more than 100 active components in an optical communications system onto a single chip. Other members of the Bell Labs-led IRIS team are: the University of California at Santa Cruz, Lehigh University, and Agility Communications.
http://www.lucent.com
21-Apr-04

• In February, Lucent was awarded a one-year, $11.5 million award to research, develop and demonstrate an ultra-high capacity, highly secure ad-hoc wireless communications system for the Defense Advanced Research Projects Agency's (DARPA) Mobile Networked Multiple-Input, Multiple-Output (MIMO) program.

Evolving the Next Generation VoIP Network by Sam Shiffman Executive Vice President, Engineering PointOne With the market for VoIP and other real-time, packet-based services maturing, the model for the next-generation network is evolving. The original telecom model placed the softswitch as the nerve center. Today, session controllers also play a critical role: enabling cost-efficient VoIP peering and delivering advanced traffic-management capabilities end to end across the network. No longer simply an edge play, today’s leading session-control technologies must also offer critical telephony functions such as VoIP call routing and billing.  This synergistic approach – leveraging both softswitch and session-control technologies – is eliminating traditional scalability and manageability limitations and spurring accelerated adoption of VoIP and other advanced services. Border elements of the future will also have to take on new critical functions that not only allow Advanced IP Communications networks to interconnect but also share network information with one another. See the full article on our  Blueprint: Circuit to Packet Web site More from the Blueprints: Circuit to Packet series: Steps to Convergence – From Thought to Acceptance Escaping the Network vs. Services Catch-22 Unstoppable Circuit-to-Packet Migration Driven by Functionality, Lower Costs > See all Circuit to Packet coverage presented by

SBC Adds 446,000 DSL Lines in Q1, Loss of Local Lines
SBC Communications added 446,000 DSL lines and 2.6 million long distance lines in Q1, while consumer retail access lines declined by 305,000.

Financially, SBC reported consolidated revenues for Q1 of $10.1 billion, compared with $10.1 billion in Q4 2003 and $10.4 billion Q1 2003. (SBC's consolidated revenues do not include revenues from Cingular Wireless. Earnings were $1.9 billion, or $0.59 per diluted share. This compares with earnings of $2.5 billion, or $0.74 per share, including a $0.32 per-share gain on the sale of SBC's stake in Cegetel in the year-earlier first quarter. Excluding these gains, earnings per share in the first quarter of 2004 were $0.37, compared with $0.42 in the first quarter of 2003. Some highlights for Q1 2004:

• DSL: with the net gain of 446,000 DSL lines in Q1, SBC now has nearly 4 million DSL lines in service. This marked SBC's ninth consecutive quarter of sequential DSL line growth.
• Long distance: SBC now has 17 million long distance lines in service, up 125% over a year ago. The company cited robust growth in the Midwest, where it launched long distance service in late 2003. Over the past four quarters, SBC has added 9.4 million long distance lines.
• Bundles: Penetration of consumer retail lines with at least one key service — long distance, DSL, Cingular Wireless or SBC | DISH Network video — increased to 50% at the end of the quarter, up from 44% three months earlier and 23% at the end of the year-earlier first quarter.
• Data revenues: SBC's data revenues totaled $2.6 billion in the quarter, up 6.8% versus the year-ago first quarter, reflecting growth in DSL revenues.
• Consumer lines: SBC's consumer retail access line base declined by 305,000 in the first quarter, versus declines of 748,000 in the year-ago first quarter and 424,000 in the fourth quarter of 2003. One factor in access line declines is consumer disconnects of additional lines when purchasing broadband services such as DSL. Combining DSL and access lines, SBC's total consumer lines increased by 205,000 during the first quarter.
• Cingular Wireless: Cingular Wireless posted a net subscriber gain of 554,000 in the first quarter — 2.5 million over the last four quarters — to reach 24.6 million in service. Gross customer additions in the quarter totaled 2.5 million, marking Cingular's third consecutive quarter with gross adds of 2.5 million or more. Cingular revenues totaled $3.9 billion in the quarter, up 8.4% from $3.6 billion in the year-earlier first quarter. Operating expenses totaled $3.4 billion, versus $2.9 billion in the first quarter of 2003, reflecting strong gross customer additions and accelerated GSM/GPRS network conversion.
• CAPEX: $936 million
• Debt: $10.5 billion (net of cash), down from $12.8 billion at the end of Q4 2003

Qwest Offers Jitter Service Level Agreement (SLA)
Qwest Communications has begun offering a service level agreement (SLA) covering jitter across its network. Jitter measures the delay in streaming media and VoIP transmission over a broadband network. The less jitter the network has, the better the network performance and the customer’s experience. Qwest guarantees that jitter levels will never exceed two milliseconds. Qwest is posting data online covering the real-time jitter levels on its network.
http://stat.qwest.net/
21-Apr-04

Nortel Enhances its Optical Switching Portfolio
Nortel Networks unveiled key enhancements across its Optical Cross Connect HDX optical switching platform, including network intelligence capabilities at the transport layer that facilitate automated set-up of end-to-end service paths across an optical switching network. Specifically, the HDX platform supports flexible protection and restoration options – including ring and mesh – that are fully aligned with current SONET and SDH operational processes for Class of Service (CoS) differentiation that balances bandwidth efficiency and restoration speeds.

Additional new features include an Optical Cross Connect HDX extension shelf – HDXc – that supports an expanded set of configuration options to deliver optical switching solutions ranging from 200 Gbps to 5 Tbps of switching capacity per node. HDXc leverages the same architecture, hardware modules, software, intelligent networking and network management technology as Nortel Networks HDX. It can be deployed in standalone applications to support the requirements of smaller core offices, or installed in conjunction with HDX to provide a scalable path to support the multi-terabit capacity needs of larger offices.
http://www.nortelnetworks.com
21-Apr-04

Nortel Receives PacketCable Media Gateway Controller Qualification Status
Nortel Networks' Succession Communication Server (CS) 2000 has received CableLabs' PacketCable Media Gateway Controller (MGC) qualification status. The softswitch was tested for compliance against the latest PacketCable Trunking Gateway Control Protocol (TGCP) and security specifications which define the core functional requirements of PacketCable 1.0 Media Gateway Controllers. This enables cable operators (MSOs) to use Trunk Gateway Control Protocol (TGCP) between Nortel Networks softswitches and PacketCable qualified media gateways.
http://www.nortelnetworks.com
21-Apr-04

Juniper Posts Revenues of $224.1M, up 43% Year-over-Year
Juniper Networks reported Q1 revenues of $224.1 million, compared with $157.2 million for the same period last year, an increase of 43%. GAAP net income for the first quarter was $33.5 million or $0.08 per share, compared with a GAAP net income of $3.7 million or $0.01 per share in the first quarter of 2003.

NetScreen Technologies, which was acquired by Juniper Networks on 16-April-2004, had net revenues for the quarter of $93.5 million, compared with $58.3 million for the same period last year, an increase of 60%. GAAP net loss for the quarter was $3.0 million or $0.03 per share, compared with a GAAP net income of $5.9 million or $0.07 per share in the same quarter of 2003.
http://www.juniper.net
21-Apr-04

Tellabs Reports First Profit in Two Years
Tellabs reported quarterly revenue of $264 million, up 19% from $223 million in the first quarter of 2003. Tellabs earned 3 cents per share or $13 million in the first quarter of 2004. Excluding restructuring charges of $7 million, Tellabs' non-GAAP earnings were 5 cents per share or $20 million. Tellabs said stronger revenues, improved margins and lower expenses contributed to its first profitable quarter in two years.

"Looking forward, we see continued strength in our core products while making significant progress with our broadband data products, with nearly 30 customer trials in the works worldwide," said Krish A. Prabhu, Tellabs president and CEO. Some highlights from Q1:

• Transport -- Sales of transport systems, the company's core North American products, totaled $134 million, up 28% from $105 million in Q1 2003.
• Managed Access -- Sales of managed access systems were $69 million, down 6% from $74 million in the first quarter of 2003.
• Broadband Data -- Sales of broadband data products were $4 million.
• Voice Quality Enhancement -- Revenue from voice-quality enhancement and other systems amounted to $25 million, up 186% from $9 million in Q1 2003, driven by demand for wireless as well as higher quality VoIP telephony.
• Services and Solutions -- Services and solutions revenue was $32 million, down 11% from $36 million in the first quarter of 2003, due to timing of hardware shipments.

Salira Introduces Standards-based EPON
Salira Optical Network Systems announced a partnership with Teknovus to develop EPON systems that comply with the IEEE 802.3ah EPON standard. The EPON standard being developed by the IEEE 802.3ah task force is expected to be ratified by June 2004. The standard encompasses key technical elements needed to deploy broadband Ethernet services to business and residential users.

Standards-based chipsets from Teknovus will be used for new Optical Line Cards (OLCs) and Optical Network Units (ONUs) that can be installed in the existing Salira 2000 Platform. In future product releases, Salira will introduce a standards-only system. The new standards-based system, known as the Salira 3000 Platform. Salira expects to begin shipping standards-based products in volume by the fourth quarter of 2004.
http://www.salira.com
21-Apr-04

Intel Digital Home Fund Invests in Four Companies
Intel announced strategic investments in four start-ups developing technologies for the digital home:

• Digital 5 Inc., a provider of consumer electronics networking technology. The Lawrenceville, New Jersey-based company offers software that enables wireless and wired sharing of music and video content among networked consumer electronics devices.
• Staccato Communications Inc., an ultra-wideband (UWB) wireless solutions developer. The San Diego-based company is developing all-CMOS, single-chip UWB silicon to enable low-cost, high data rate wireless connectivity for emerging wireless USB and wireless 1394 applications.
• Trymedia Systems Inc., a secure distribution technology and services provider. The San Francisco company, with an engineering team based in Spain, also operates the world's largest business-to-business marketplace for downloadable games and software, through which major portals and other high-traffic destinations make a catalog of Trymedia Systems' ActiveMARK-enabled games and software available to consumers around the world.
• Wisair Ltd., a UWB wireless chipset and solutions company. The Tel Aviv, Israel based company recently announced the industry's first multi-band OFDM-compliant UWB radio frequency transceiver chip.

Digital 5 Secures $8.4 Million for Home Networking
Digital 5, a start-up based in Lawrenceville, New Jersey, raised $8.4 million in new funding for its software technologies for connected consumer electronic devices. D5's software aims to enable new products for existing CE categories, such as DVD Players, televisions, and stereo systems, that allow consumers to enjoy their music, digital pictures, video, or premium content in the comfort of their various home entertainment locations. Digital 5's software powers a digital media adapter marketed by Netgear and current connected DVD players on the market by Gateway, GOVideo, and Oritron. The company also recently announced a partnership with Apex Digital to deliver a connected DVD player, and agreements with America Online, Inc., Rhapsody, and Napster to extend the streaming of content beyond the PC, to next generation connected consumer electronics devices.

The new funding was led by Blue Chip Venture Company and included participation from existing investors 3i, Philips Venture Capital Fund BV, and SpaceVest. Existing investors include Texas Instruments and AVC Technologies.
http://www.digital5.com/
21-Apr-04

 A Daily Report For Broadband Networking
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About this Report Converge! Network Digest is a daily market research report providing concise, edited and information-enhanced insight into next generation networking technology, products and services.  We cover the full stack of network layers with the belief that innovation and market dynamics at any one layer ripples across the whole industry. The publication is distributed globally to leading telecom service providers, cable network operators, network research labs, network equipment manufacturers, silicon developers, research analysts and members of the media. Subscriptions are available at an annual rate of $500 for 240 issues.  Corporate licenses are also available.  A limited number of complementary VIP subscriptions are available to senior executives of telecom service providers. For editorial comments or to submit news for consideration, please contact James Carroll For marketing opportunities via our newsletter and website, contact info@convergedigest.com Subscriptions Cut through the industry noise by getting your own copy of this report Sponsorships Gain visibility and market presence with our audience of key networking executives Directory Listings Make your company stand out by featuring it in our Web directories. White Papers Offer your white papers to our audience, starting at just $495. Seminars Announce your networking seminar or webcast to the world, starting at only $495.