Wednesday, January 19, 2005

Cablevision to Sell Satellite Unit to Echostar for $200 Million

EchoStar Communications agreed to acquire Cablevision's direct broadcast satellite and certain other related assets for $200 million. The deal includes the Rainbow 1 satellite, located at the 61.5 degree W.L. orbital position, as well as FCC licenses to construct, launch and operate DBS services over 11 frequency channels at the 61.5 degree W.L. orbital location. In addition, EchoStar will acquire the contents of Rainbow DBS's ground facility in Black Hawk, S.D. and related assets.

The EchoStar III satellite is also located at 61.5 degrees West Longitude and is currentlyu used to broadcast DISH Network TV programming using DBS spectrum controlled by EchoStar at that location. Echostar said it is assessing how the Rainbow satellite's flexibility can best be utilized to enhance DISH Network's existing service.

Cablevision said it will continue to explore strategic alternatives, including monetization, for its remaining Rainbow DBS related assets, including programming, equipment and spectrum.

VOOM will continue to provide service to its current customers during a transition period.
  • Rainbow DBS provides the VOOM HDTV service, currently featuring a lineup of 39 HD channels -- more HD programming than any other satellite or cable service provider in the U.S.. Starting in March VOOM satellite programming was expected to increase from its current total of 130 channels to 355 HD and SD channels. The HD lineup would grow from 39 channels to 71 channels. To facilitate the expansion, VOOM is leasing 16 transponders on the SES Americom AMC-6 satellite, which VOOM refers to as "Rainbow 2." VOOM uses MPEG-4-capable set-top receivers developed with Motorola.

  • In November 2004, Rainbow DBS Company LLC, a subsidiary of Cablevision Systems, selected Lockheed Martin (to build its next five geostationary telecommunications satellites. The five new satellites, designated Rainbow Ka-1 through Rainbow Ka-5, will provide direct broadcast services across the continental United States (CONUS), Alaska and Hawaii. Terms of the agreement were not disclosed.

  • EchoStar Communications' DISH Network satellite television service added approximately 350,000 net new subscribers during Q3, giving the company a total of 10.475 million subscribers.

Agilent to Acquire Wavics for Handset Power Amplifiers

Agilent Techonologies agreed to acquire Wavics, a Korean-based designer and manufacturer of power amplifier modules for the worldwide mobile handset market. The technology reduces battery power consumption and allows CDMA and W-CDMA handsets to run cooler. Agilent said it plans to combine this new power amplifier capability with its miniature FBAR (film bulk acoustic resonator) filters to create higher-performance CDMA and W-CDMA front-end modules. Financial terms were not disclosed.

China's ZTE Reports 2004 Sales of US$4.1 Billion, up 169%

ZTE Corporation reported 2004 contract sales of RMB34 billion (approximately US$4,111 million), of which RMB13.6 billion (approximately US$1,644 million) was attributable to international sales, representing a year-on-year increase of 169.5%. The company said sales of handsets for the year 2004 exceeded 10 million sets, up 100% over the previous year. In particular, ZTE cited strength in GSM and 3G wireless technology. The company is now supplying its GSM equipment in over 20 countries.

Lucent Supplies Optical Network for Jiangsu Telecom

Jiangsu Telecom has activated its next generation optical transmission network using Lucent Technologies' LambdaUnite Multi-Service Switch (MSS). Lucent also supplied the Navis Optical Management System, as well as technical support from Lucent Worldwide Services (LWS) to Jiangsu Telecom. LWS provided installation and testing services, and on-site support. The contract was first announced in May 2004.

Lucent said the network marks the first deployment of Automatic Switched Optical Network (ASON) technology in China. A distributed control plane in the ASON provides the optical network with the faster setup and release of connections and it can more quickly detect a problem and restore itself in the event of a failure.

Polaris Cites Gains for its Next-Generation DCS Solution

Polaris Networks, a start-up based in San Jose, California, announced a three year agreement to supply its Optical Multiservice Multiband Switch for deployment in McLeodUSA's metro networks. McLeodUSA plans to use the platform for wideband technology to support growth in its 25-state footprint by integrating its SONET transport network directly with cross-connect platforms in a cap-and-grow deployment. Financial terms were not disclosed.

Polaris also announced general availability of its Optical Multiservice Multiband Switch (OMX) -- a next generation DCS switch designed to combine the functions of a wideband, broadband and super-broadband digital crossconnect system (DCS) with SONET add/drop-based transport. It can be used to consolidates SONET rings and switch/groom multiband traffic. The platform provides 240Gbps to 2 Tbps of wideband (DS1/VT1.5), broadband (DS3/STS1), and superbroadband (STS-Nc) switching capability with DCS OAM&P functions. It also integrates SONET ADM functions and layer 2 protocol adaptation (MPLS, PPP, POS, GFP/X.86, FR, ATM) and packet/flow aggregation functions into a single, consolidated system.

In a multiservice transport network, the Polaris platform could also be used for Layer 2 protocol adaptation and packet aggregation for Ethernet over SONET (GFP, VCAT/LCAS).

Polaris uses a programmable hybrid switch fabric based on its own ASICs. Polaris is also developing a GMPLS-based control plane to automate end-to-end provisioning of services.
  • In April 2004, Polaris Networks raised $10 million in new funding. Investors include Redpoint Ventures, Venrock Associates, Advanced Technology Ventures, SToRM Ventures and strategic private investors.

  • Polaris Networks is headed by Surya Panditi, who previously served as CEO of Avici Systems and of Convergent Networks.

  • Polaris' technical team is led by Ray Kao, previously a founder of TransMedia Communications (acquired by Cisco in 1999 for its voice-data signaling technology). Prior to TransMedia, Kao was the chief architect of Stratacom/Cisco's multiservice switching products.

Scientific-Atlanta PVR Selected by Telewest

Telewest Broadband selected Scientific-Atlanta's Explorer 8300DVB PVR set-top for a new personal video recorder service to be launched in the UK in 2005. The current interactive platform is based on middleware provided by Liberate and the Conditional Access System provided by Nagravision. This vendor integration effort, currently underway and scheduled to be completed in the first half of 2005, will be followed by launch of Telewest Broadband's PVR service in the second half of 2005.

The new Explorer 8300DVB PVR will incorporate a DOCSIS tuner for high-speed data access, as well as three video tuners to allow Telewest Broadband's customers to record three separate programs simultaneously or record two programs while watching a third - a step forward from the popular dual tuner solution in other Scientific-Atlanta PVRs. The set-top also provides two video decoders, which enables the user to watch a channel while archiving a previously recorded program to a VCR tape. In addition, the 8300DVB PVR will decode HDTV signals, which will help Telewest Broadband to retain its leadership in the deployment of innovative products.

SingTel Launches 3.5 Mbps Unlimited DSL Service

SingTel launched a new BroadBand 3500kbps Unlimited Plan targeted at residential customers. The service comes bundled with music downloads, video-on-demand and games. In line with the launch of its new 3500kbps Unlimited, SingNet BroadBand has also upgraded the upload speed of its existing 1500kbps service, to be on par with that of its new plan. The new upload speed for both its 1500kbps and 3500kbps plans is 350kbps. Each new subscriber is also provided access to more than 260 SingTel Wi-Fi hotspots throughout Singapore.

BT Wholesale appoints Managing Director

Cameron Rejali has been appointed managing director for products and strategy for BT Wholesale. Rejali joins BT Wholesale from the Sprint Corporation where he was most recently vice president of product management and development.

Nortel Signs 3G Partner in China

Nortel announced a joint venture partnership with China Putian Corporation for research and development (R&D), manufacture and sale of third generation (3G) mobile telecommunications equipment and products to customers in China. China Putian, a state-owned enterprise, is one of the largest telecommunication equipment manufacturers in China.

When established, the new company - named Putian-Nortel Networks Telecommunications Equipment Co.- will likely be headquartered in Wuhan, capital of Hubei Province, and will focus on TD-SCDMA (Time Division-Synchronous Code Division Multiple Access) and WCDMA (Wideband CDMA) products and solutions, as well as related network engineering and optimization services. China Putian will own 51% of the joint venture; Nortel, the remaining 49%.

China's Premier Wen Jiabao and Canada's Prime Minister Paul Martin witnessed the signing ceremony.
  • In June 2004, China Putian and Nortel signed a Memorandum of Understanding (MoU) signed by for cooperation on R&D and manufacture of 3G equipment and products. The two companies have already cooperated on such projects as the recent 3G field trials sponsored by China's Ministry of Information Industry (MII).

Zhone Adds Voice Gateway Module to Access Concentrators

Zhone Technologies announced the availability of its new "VoiceFLEX" Voice Gateway module for its Multi-Access Line Concentrator (MALC) platform. With this new feature set, the MALC enables a full array of voice, data and video services over circuit or packet-based networks with TDM support for both GR-303 and V5.2, ATM support for AAL2 and ELCP, as well as VoIP support for both SIP and MGCP standards-based service implementations.

The MALC with VoiceFLEX can be configured to deliver a range of narrowband and broadband services for residential and business subscribers including: traditional TDM POTS, Specials, T1/E1, DSL, Ethernet, and PON.

Zhone's MALC can be deployed both as a remote loop carrier (RT) or Central Office Terminal (COT). As a COT, the MALC is able to aggregate traffic from multiple loop carriers and provide direct host connectivity using native GR-303 and V5.2 signaling. As a COT, the MALC with VoiceFLEX Gateway reduces the required number of interface groups on the switch, providing capacity for over 52,000 subscribers in a single 19 inch chassis.

The Zhone MALC can be deployed as a traditional DLC, enabling carriers to migrate their trunking and switching facilities to IP without impacting subscribers. Trunking options range from nxDS1 to OC-12/OC-48 to 10BaseT, Gigabit Ethernet and Resilient Packet Ring over Gigabit Ethernet.

The Zhone MALC also provides advanced data and video capabilities, including full IGMP v2 multicast switching for video, VLAN support, and IP termination at the RT, with a non-blocking backplane.

CableLabs Streamlines Testing in System Evaluation Group

CableLabs has established a new System Evaluation Group to handle certification, qualification and verification testing across all products in all projects. The new unit, which aggregates testing resources from across CableLabs, will help streamline testing for the growing number of products which are integrating functionality -- such as DOCSIS-enabled set-top boxes and residential gateways with CableHome, DOCSIS and PacketCable capabilities.

The new group is headed by Craig Chamberlain. The group will have six unit heads: Mark Meyer, Director of Interops; Maria Stachelek, Director of Program Management; Mark Guzinski, Director of Lab Facilities; Jesus Lopez, Program Director of Certification for Data; Robin Sam Ku, Manager of Certification for Multimedia; and Craig Richardson, Manager of Certification for Video.

Halo2 Drives Xbox Live Traffic

"Halo 2," which has sold more than 6.4 million copies worldwide since its launch in November 2004, is continuing to drive traffic on Microsoft's Xbox live service. The Xbox Live community has logged a record-breaking 91 million hours playing "Halo 2" since the title's launch -- more than any other Xbox Live game in the two-year history of the service. In addition, the gameplay has resulted in close to 61 million logged sessions on the game, with an average session lasting nearly 92 minutes, approximately the length of a major motion picture.

Microsoft's Xbox Live online gaming service currently has more than 1.4 million members. There are now more than 200 Xbox Live-enabled titles.

In addition, Xbox Live members now can enjoy Xbox Live Arcade, a new social experience that brings popular retro classics and broad-appeal games directly to the Xbox console over the Xbox Live service. Microsoft said it Xbox Live service continues to evolve with improved features such as downloadable content, voice messages and alerts coupled with new games.

MCI to Acquire NetSec for Managed Security Services

MCI agreed to acquire NetSec, a privately-held provider of managed security services, for approximately $105 million in cash.

NetSec provides managed and professional security services to top U.S. government agencies and some major corporate clients. It currently offers security monitoring and management capabilities in 32 countries.

MCI said the acquisition accelerates its strategy to deliver next generation IP-based security services to our business and government customers. MCI plans to combine its network-based intelligence with NetSec's premise-based intelligence to provide customers an expanded view of their security environment across multiple systems and devices. The company also intends to extend the strength of NetSec's Finium security services platform to global and government customers who want to bolster their security defenses.

While this acquisition positions MCI to focus additional resources on one of the fastest growing segments of the security market, it is complementary to its existing strategic security partnership.
  • Founded in 1998 by former government security experts, NetSec is a privately held company with headquarters in Herndon, Virginia and London.

AT&T Profit Rises, Revenue Falls in Challenging Market

AT&T reported Q4 consolidated revenue of $7.3 billion, which included $5.5 billion from AT&T Business and $1.8 billion from AT&T Consumer. Consolidated revenue declined 10.2% versus the fourth quarter of 2003, primarily due to continued declines in long-distance (LD) voice and data revenue, partially offset by an increase in bundled services revenue and solid growth in key services in the enterprise market, such as Internet Protocol & Enhanced services (IP&E-services).

Net income was $625 million, or earnings per diluted share of $0.78, for the fourth quarter of 2004. The company's current quarter net income included an after-tax depreciation benefit from its third-quarter 2004 asset impairment charges of $337 million, or $0.42 per diluted share. The company's current-quarter net income compares to net income of $340 million, or earnings per diluted share of $0.43, in the fourth quarter of 2003.

"While the pricing environment in our industry remains challenging, we're encouraged by the strengthening of AT&T's competitive position in the enterprise market in recent quarters," said AT&T Chairman and Chief Executive Officer David W. Dorman. He said he is not ready to call a bottom to the market, although he remains cautiously optimistic that pricing pressure in the company's core business is stabilizing.

Dorman said further job cuts at AT&T were likely, especially in customer care centers as its Consumer LD business continues to decline. He said AT&T plans to further enhance its CallVantage consumer VoIP service while extending the platform for SMBs. AT&T also plans to launch an enterprise wireless offering soon. With the Cingular/AT&T Wireless merger complete, AT&T now plans to reclaim its brand for wireless services.

Some highlights:

  • For the full year, AT&T reported a net loss of $6.1 billion, or loss per diluted share of $7.68.

  • AT&T reported full-year 2004 consolidated revenue of $30.5 billion, which included $22.6 billion from AT&T Business and $7.9 billion from AT&T Consumer. This represents a consolidated revenue decline of 11.6% versus 2003.

AT&T Business

  • Revenue was $5.5 billion, a decline of 7.4% from the prior-year fourth quarter. Pricing pressure and continued declines in retail volumes negatively affected revenue performance. Partially offsetting these declines was a reciprocal compensation settlement as well as strength in IP&E-services. Full-year revenue declined by 9.9% to $22.6 billion.

  • Long-distance voice revenue decreased 13.5% from the prior-year fourth quarter, driven by continued pricing pressure in both the retail and wholesale businesses, as well as a continued decline in retail volumes. Total volumes were down slightly versus the prior-year fourth quarter. Full-year LD voice revenue declined 15.0% compared to 2003, while volumes were essentially flat.

  • Local voice revenue grew 26.6% for the fourth quarter and 12.7% for the full year versus the same prior-year periods. Revenue was positively impacted by a reciprocal compensation settlement that increased revenue by approximately $97 million. Local access lines totaled nearly 4.7 million at the end of the current period, representing an increase of approximately 11,000 lines compared with the third quarter of 2004.

  • Data revenue declined 13.7% from the prior-year fourth quarter. Revenue was negatively affected by pricing pressure and technology migration. On a full-year basis, data revenue decreased by 12.2% from the prior year.

  • IP&E-services revenue grew 13.0% over the prior-year fourth quarter. The year-over-year growth was primarily driven by strength in Enhanced Virtual Private Network and IP-enabled frame. Full-year revenue grew by 11.0% over the prior year.

  • Outsourcing, professional services and other revenue declined 3.1% from the prior-year fourth quarter due to terminating outsourcing contracts and customers reducing scope, partially offset by strength in equipment sales. Full-year revenue declined by 11.6% from the prior year.

AT&T Consumer

  • Revenue was $1.8 billion for the fourth quarter of 2004 and $7.9 billion for the full year, representing declines of 17.9% and 15.9 percent, respectively, versus the same prior-year periods.

  • At the end of the fourth quarter, AT&T Consumer had over 24 million standalone LD and bundled customers.


  • Consolidated revenue between $25 billion and $26 billion

  • Year-over-year decline of several hundred million dollars in small business revenue, primarily reflected within AT&T Business local voice, as a result of changes in the regulatory environment

  • Consolidated operating income margin in the low double-digits, excluding any net restructuring and other charges

  • Total capital expenditures of approximately $1.5 billion

See also