Wednesday, April 20, 2005

Thomson Acquires Cirpack for its Softswitches

Thomson has acquired Cirpack, a privately-held developer of class-5 softswitching solutions based near Paris. Financial terms were not disclosed.

Cirpack claims 45 telco and ISP customers in 15 countries. The customer list includes Free, a subsidiary of the Iliad Group and the second largest French ISP, which is using a joint solution from IBM and Cirpack to deliver a consumer VoIP service over unbundled DSL lines. The residential VoIP is provided as an add-on to the company's ADSL service in the areas where Free has deployed its own DSL infrastructure.

Cirpack's softswitch platform can host a range of high-density network interfaces (IP, ATM, TDM) and supports multiple local signaling protocol variants simultaneously (ISDN, SS7, VoIP, VoATM). It can be configured to manage voice transit services (Class-4) as well as subscriber services (Class- 5). The company partners with IBM Global Services.

Cirpack was established in 1998 and funded by Siparex Ventures, Iris Capital and Endeavour L.P. It has approximately 60 employees.

Thomson said the acquisition would complement its existing offerings in IP telephony, remote management and access products and gateways for triple play services. Just last month, Thomson acquired Inventel, a European supplier of home gateways for fixed broadband operators and wireless operators. Cirpack will be part of Thomson's Access Platforms & Gateways Business Unit within the Systems & Equipment Division.

Among its broadband activities, Thomson is a leading supplier of DSL customer premise equipment (CPE) and set-top boxes.
  • In February 2005, CIRPACK released software enhancements for its Class-5 telephony platform enabling wireline telecom operators to deploy TISPAN-compliant architectures. This allows migration of legacy PSTN to global VoIP networks capable of delivering new voice services such as fixed-mobile convergence according to 3GPP's IP Multimedia Subsystem (IMS). The TISPAN committee is the ETSI core competence centre for migration of fixed networks from circuit-switched to packet-based networks with an architecture that can serve in both. In a TISPAN architecture, Cirpack switches control IMAP (Integrated Multiservice Access Platforms) using H.248/Megaco to deliver POTS and ISDN telephony from the same access platforms as DSL services.

  • In November 2004, Thomson acquired EADS DCS' Video Over IP integration business. Based in Lyon, France, the EADS DCS team has expertise in the design, systems integration and management of IT infrastructure above the IP layer (system administration, messaging, portals and web services), with an emphasis on TV and Video On Demand (VOD) over xDSL solutions.

Verizon Online Partners with Movielink on Downloads

Movielink and Verizon launched a co-branded movie downloading service providing Verizon Online's consumer DSL and FiOS Internet Service customers access to Movielink's extensive film library.

Movielink is a joint venture of Metro-Goldwyn-Mayer Studios, Paramount Pictures, Sony Pictures Entertainment, Universal Studios and Warner Bros. Studios. Movielink content offerings are drawn from the current releases and vast libraries of those studios as well as from those of Walt Disney Pictures, Miramax, Artisan and others, on a non-exclusive basis.

The new service offers a full library of titles, including a special selection of hit films for 99 cents or less from Movielink. Verizon customers can purchase and download licensed movies offered by Movielink and store them on their hard drives for up to 30 days. The movies may be watched on a PC, a television connected to the PC, or a laptop computer during a 24-hour viewing period.

Alcatel Selects Motive for Triple Play Digital Home Management

Alcatel signed a joint marketing and development agreement with Motive focused on the remote management of home networking devices that deliver Triple Play services. Motive's software is widely used by Internet service providers for installation and customer support. As part of this relationship, the companies will enhance their existing products by jointly developing, marketing and selling a single software solution for automating the deployment, configuration and support of advanced home networking devices called residential gateways, regardless of vendor, platform or operating system.

Financial terms were not disclosed.

"Effective home network management is a must-have for service providers to profitably deliver Triple Play services. Our agreement with Motive is a further step in making these services a reality for our customers and their end-users." said Michel Rahier, who is in charge of Alcatel's fixed communications activities.

University of Tokyo Establishes 7.2 Gbps Transcontinental Download Rate

The University of Tokyo, Chelsio Communications, a supplier of 10-Gigabit Ethernet server adapters and protocol acceleration technology, and an international team of engineers established the world's longest 10 Gigabit per second link ever recorded for the transmission of Internet data by connecting two AMD Opteron processor-based servers over three continents, spanning 17 time zones and reaching more than half way around the world. Each server was equipped with a Chelsio 10 Gigabit Ethernet Protocol Engine with TCP/IP offload technology. A transfer rate of 7.21 Gbps was sustained using a single TCP stream and standard 1500-byte Ethernet frames over trans-continental link, breaking the world record. At this transfer rate and distance, a full-length DVD can theoretically be transferred anywhere on the earth in under 5 seconds.

At 10 Gbps rates, it's widely accepted that CPU throughput limits performance. Chelsio said its TCP/IP offload engine (TOE) technology enables higher CPU throughput. The company also described AMD's Direct Connect Architecture as the best approach of directly connecting CPU, memory, and I/O resources.

Fujitsu Unveils WiMax Chipset

Fujitsu Microelectronics America (FMA) unveiled its highly integrated WiMAX system-on-chip that complies with the IEEE802.16-2004 standard. and is designed for both base station and subscriber station implementation in licensed or license-exempt bands below 11GHz.

Fujitsu's chipset uses an OFDM 256 (Orthogonal Frequency Division Multiplexing) PHY that supports channels from 1.75MHz up to 20MHz, and can operate in TDD or FDD modes, with support for all available channel bandwidths. A programmable frequency selection generates the sample clock for any desired bandwidth. When applying 64QAM modulation in a 20MHz channel and using all 192 sub-carriers, the SoC's data rate can go up to 75Mbps. Uplink sub-channelization is also supported.

The Fujitsu WiMAX SoC incorporates sophisticated processing power, including a main RISC engine that implements the 802.16 upper-layer MAC, scheduler, drivers, protocol stacks, and user application software. Also on board is a secondary RISC/DSP that functions as a co-processor, which executes lower-layer MAC functions, offloading processing from the upper-layer MAC and enhancing total performance. A multi-channel DMA controller handles high-speed transactions among agents on a high-performance bus.

Fujitsu said its WiMAX SoC also incorporates radio control and all required analog circuits, along with a comprehensive set of integrated peripheral functions. To ensure security, the chipset uses DES/AES/CCM encryption/decryption engines for the 802.16 MAC privacy sub-layer. The chip also includes a memory controller, an Ethernet engine for interfacing to the network, and high-performance DAC/ADC for flexible baseband interface.

Pricing for the WiMax chipset begins at $45 each in 1,000-unit volumes. A complete reference design, including all required software and hardware for a cost-effective system solution, is also available.

ZTE and Fujitsu Collaborate on WiMAX

China's ZTE Corp. has selected Fujitsu's WiMAX SoC solution for its WiMAX-certifiable equipment. The two companies have been collaborating to develop base station and subscriber station equipment that complies with the 802.16-2004 fixed WiMAX specifications. Fujitsu and ZTE will complete the full bring-up and implementation of ZTE's WiMAX compliant systems.

Netflix Tops 3 Million DVD-by-mail Subscribers

Netflix ended the first quarter of 2005 with approximately 3,018,000 total subscribers to its DVD-by-mail service, representing 56 percent year-over-year growth from 1,932,000 total subscribers at the end of the first quarter of 2004 and 16 percent sequential growth from 2,610,000 subscribers at the end of the fourth quarter of 2004.

Of the 3,018,000 total subscribers at quarter end, 96 percent or 2,887,000 were paid subscribers. The other 4 percent, or 131,000, were free subscribers. Paid subscribers represented 95 percent of total subscribers at the ends of both the first quarter of 2004 and the fourth quarter of 2004.

Household penetration in the San Francisco Bay Area rose to 9.8 percent of households at the end of the first quarter of 2005, up from 7.2 percent at the end of the first quarter of 2004 and 9.0 percent at the end of the fourth quarter of 2004. Overall household penetration outside the Bay Area reached 2.6 percent at the end of the first quarter of 2005, up from 1.7 percent at the end of the first quarter of 2004 and 2.3 percent at the end of the fourth quarter of 2004.

Subscriber acquisition cost for Q1 was $37.89 per gross subscriber addition compared to $35.12 for the same period of 2004 and $36.18 for Q4 2004.

Churn for the first quarter of 2005 was 5.0 percent, compared to 4.7 percent for the first quarter of 2004 and 4.4 percent for the fourth quarter of 2004.

Revenue for Q1 2005 was $154.1 million. GAAP net loss was $8.8 million, or $0.17 per share.

Broadcom Posts Revenue of $550 Million

Broadcom reported Q1 net revenue of $550.3 million, an increase of 2.0% from the $539.4 million reported for the fourth quarter of 2004 and a decrease of 4.0% from the $573.4 million reported for the first quarter of 2004. Net income (GAAP) for Q1 2005 was $69.2 million, or $.19 per share (diluted), compared with GAAP net income of $71.1 million, or $.20 per share (diluted), for the fourth quarter of 2004, and GAAP net income of $39.9 million, or $.12 per share (diluted), for the first quarter of 2004.

"We were pleased with our progress in the first quarter as revenue increased over the fourth quarter of 2004 and the company again generated strong cash flow from operations, leading to record levels of cash and marketable securities," said Scott McGregor, Broadcom's President and CEO.

Qwest Increases its Acquisition Offer for MCI

Qwest Communications issued a new bid to acquire MCI, offering $16.00 in cash (excluding MCI's March 15 dividend payment of $0.40 per share) and 3.373 Qwest shares (subject to adjustment under a collar which fixes the value of the Qwest shares at $14.00 provided Qwest's share price is between $3.32 and $4.15) per MCI share.

MCI's Board of Directors said it would review the revised proposal.

Qwest's previous proposal contained $13.50 in cash (excluding MCI's March 15 dividend payment of $0.40 per share) and 3.373 Qwest shares (subject to adjustment under a collar which fixes the value of the Qwest shares at $14.00 provided Qwest's share price is between $3.32 and $4.15) per MCI share.

MCI also said that under its March 29th merger agreement with Verizon, each MCI share would receive cash and stock worth at least $23.10, comprising $8.35 (excluding MCI's March 15 dividend payment of $0.40 per share) as well as the greater of 0.4062 Verizon shares for every share of MCI Common Stock or Verizon shares valued at $14.75.

Time Warner and Comcast to Acquire Adelphia

Time Warner and Comcast finalized a deal to acquire Adelphia Communications for $12.7 billion in cash and 16 percent of the common stock of Time Warner's cable subsidiary, Time Warner Cable Inc. The transaction is subject to approval by the U.S. Bankruptcy Court where Adelphia bankruptcy proceeding is pending.

Adelphia, which ranks as the fifth largest MSO in the U.S., serves approximately 5.2 million basic subscribers in 31 states.

Under the deal, Adelphia's stakeholders will receive $9.2 billion in cash and 16 percent of Time Warner Cable's common equity from Time Warner. In addition, Comcast will pay Adelphia $3.5 billion in cash.

Under proposed transactions between Time Warner and Comcast, the two companies will swap cable systems to enhance their respective geographic clusters and unwind Comcast's investments in Time Warner Cable and Time Warner Entertainment Company.

Bill Schleyer, chairman and CEO of Adelphia, said, "After extensive review of all options for the company, Adelphia's Board of Directors has determined that this transaction delivers the maximum value to its bankruptcy constituents. We believe that this option is superior to Adelphia emerging as a standalone company."

AT&T's Q1 Revenue Declines 12% on Pricing Pressure, Lower Traffic

Citing continued pricing pressure and decreases in LD traffic, AT&T reported consolidated Q1 revenue of $7.0 billion, which included $5.3 billion from AT&T Business and $1.7 billion from AT&T Consumer. Consolidated revenue declined 12.2 percent versus the first quarter of 2004, primarily due to continued declines in LD voice and data revenue. Net income was $529 million, or earnings per diluted share of $0.66.

"AT&T continues to take targeted, strategic actions to elevate our operational and financial strength in advance of our pending merger with SBC Communications," said AT&T Chairman and Chief Executive Officer David W. Dorman.

Some highlights of the quarterly report:

AT&T Business

Revenue was $5.3 billion, a decline of 9.4 percent from the prior-year first quarter, primarily due to ongoing pricing pressure in traditional voice and data services, and declines in retail volumes. Revenue was positively impacted by approximately 1.0 percentage point due to a customer disconnect of prepaid network capacity and higher equipment sales.

Long distance voice revenue decreased 17.0 percent from the prior-year
first quarter, driven by continued pricing pressure and a decline in overall volumes, primarily reflecting a decline in retail minutes.

Local voice revenue declined 4.6 percent from the prior-year first quarter reflecting declines in reciprocal compensation revenue and the company's "All-In-One" bundled offer. As previously announced, AT&T has adjusted its strategy to be more selective in approaching the small business market, placing a greater focus on profitability over overall market share. This quarter, AT&T began to see the impact of this strategic change as the number of local access lines declined.

Data revenue declined 7.6 percent from the prior-year first quarter,
reflecting the impact of pricing pressure. Data revenue was positively impacted by approximately 2.0 percentage points due to a customer disconnect of prepaid network capacity.

IP&E-services revenue grew 6.6 percent over the prior-year first
quarter, reflecting AT&T's ongoing transformation to next-generation
networking services such as Enhanced Virtual Private Network (E-VPN)
and IP-enabled frame relay services, though declined sequentially.
Approximately half of the sequential decline was attributable to a
contract renewal at current market rates for a significant customer in
one of the more mature products within the IP&E-services portfolio.

Outsourcing, professional services and other revenue grew 0.4 percent
from the prior-year first quarter, reflecting continued strength in
government professional services and increased equipment sales. There
was an approximate 2.0 percentage point benefit to the total growth
rate associated with equipment sales.

CAPEX was $332 million as AT&T Business continues to upgrade its network and integrate its systems to further rationalize the company's cost structure, improve the customer experience and support growth in next-generation products and services.

AT&T Consumer

Revenue was $1.7 billion, a decline of 20.0 percent versus the prior-
year first quarter, driven by lower standalone LD voice revenue
resulting from the continued impact of competition as well as wireless
and Internet substitution, partially offset by targeted price

Operating income totaled $575 million, yielding an operating margin of
34.1 percent, compared with operating income of $371 million and an
operating margin of 17.6 percent in the prior-year first quarter.
Current-quarter operating income was positively impacted by a $31
million net benefit from lower depreciation as a result of the asset
impairment charges taken during the third quarter of 2004.

The year-over-year margin increase reflects a dramatic reduction in
sales and marketing expenses, primarily attributable to our change in
strategic focus, as well as reduced bad debt and customer care
expenses. In addition, targeted pricing actions contributed to the
margin improvement.

At the end of the first quarter, AT&T Consumer had approximately 22.7
million standalone LD and bundled customers.

BellSouth Reports Lower Earnings

For the first quarter of 2005, BellSouth's consolidated reported revenue from continuing operations totaled $5.09 billion, an increase of 2.3 percent compared to the same quarter in 2004. First quarter 2005 earnings per share (EPS) from continuing operations were 37 cents compared to 63 cents in first quarter 2004. First quarter 2004 results included 16 cents from the gain on the sale of operations in Denmark. Some highlights of the quarterly report:

  • BellSouth reported 253,000 DSL net customer additions and 455,000 long distance net customer additions for Q1. This brings its DSL customer count to 2.3 million and LD customer count to 6.5 million (more than 50% penetration of its mass-market base). Cingular Wireless added more than 1.4 million customers in the first quarter of 2005, bringing its nationwide customer base to 50.4 million customers. Cingular's gross customer additions in the first quarter totaled 4.8 million. Churn improved sequentially to 2.2 percent in the first quarter of 2005.

  • Normalized results from continuing operations include BellSouth's 40 percent proportionate share of Cingular's revenues and expenses.
    Normalized revenue was $8.31 billion for the first quarter of 2005 compared to $6.57 billion for the first quarter in 2004. Normalized net income was $718 million compared to $888 million for the first quarter in 2004.

  • In the first quarter of 2005, Communications Group revenue was $4.62 billion, an increase of 1.2 percent compared to the same quarter of 2004. First quarter operating margin was 24.2 percent compared to 25.0 percent for the full year of 2004 and up 260 basis points over the previous quarter.

  • Driven by DSL, network data revenue for the first quarter was $1.16 billion, an increase of 6.3 percent compared to the same quarter of 2004.

  • More than 113,000 customers added DIRECTV to their communications service package bringing the total number of customers with this package to 314,000.

  • As of March 31, 2005, total access lines were 21.2 million, down 3.9 percent compared to a year earlier and down 137,000 compared to year-end 2004. During first quarter, retail access lines declined by 61,000, which included positive business line growth of 6,000. UNE-P access lines resold by BellSouth competitors were down 95,000 compared to year-end 2004.

  • Cingular's service ARPU in the first quarter was $49.59, a decline of 3.3 percent from the prior year (pro forma) and a slight sequential decline of 38 cents (pro forma). ARPU from data services continued its strong growth in the first quarter, increasing to $3.70, up $0.81 from the previous quarter.

Congress Considers IP-Enabled Video Services

As part of an on-going series of public hearings about how to update the Telecommunications Act of 1996, the U.S. House Energy and Commerce Committee's Subcommittee on Telecommunications heard testimony on how IP-enabled video services could transform the market. Some highlights of the testimony.

Verizon Communications

Verizon could be delayed in bringing FiOS TV to market by outmoded laws and a cumbersome, redundant local franchising process, said Verizon Retail Markets President Robert Ingalls. He argued in favor of a national broadband policy to "promote broadband deployment, new technologies and increased investment."

"As a local telephone company, Verizon has a franchise to operate networks," Ingalls said. "Yet we're being asked to obtain a second franchise to use that same network to offer consumers a choice in video. We believe this redundant franchise process is unnecessary and will delay effective video competition for years unless a federal solution is enacted soon."

Ingalls also said Verizon would be sensitive to the needs and concerns of local communities regarding such matters as franchise fees, local access and public interest content.

SBC Communications

Lea Ann Champion, senior executive vice president of IP Operations and Services for SBC urged legislators and regulators to take a "light-touch" approach to regulating new IP-based services.

"The FCC and Congress have so far employed a light-touch approach to regulating the Internet and IP-based services. We need to extend this minimal regulation approach that has been applied to VoIP -- only now the "V" stands for video," said Champion. "Only then will consumers benefit from the innovation and choice that is just around the corner."

"In short, we are not building a cable network, nor do we have any interest in being a cable company offering traditional cable service. Instead, we intend to offer customers a new total communications experience, one that they can customize to suit their families' needs and tastes," said Champion.

Champion also showcased an upcoming service called HomeZone, which integrates satellite TV programming with high-speed Internet access to provide digital video recording, video on demand, and Internet content including photos and music via a new set-top box. The offering will be available later this year to customers who have access to both SBC | DISH Network and SBC Yahoo! DSL services.


"What matters to consumers, and what should matter to this Congress, is not the technology used to provide the services, but the services themselves. If the consumer views the video service provided by a phone company to be essentially the same as what they got from a cable company, there is no basis for the law to treat them differently based on whether they use a lot of IP, a little IP, or no IP. Like services should be treated alike, and everyone should play by the same rules...

"Instead of having a debate about IP technology, we believe Congress should consider how all multichannel video services should be regulated in the future. Congress should consider the current state of competition and the additional competition that IP video could bring -- and, if the rules are to be changed, they should be changed for all providers", testified David Cohen, Executive VP of Comcast.


"Internet services, that is, those services and products that ride atop or connect to the underlying broadband transport services, should remain largely unregulated and not be subject to the Communications Act. The success of the Internet as a tool for consumers and business has been remarkable, and Congress should proceed carefully so as to inadvertently disturb this accomplishment.

"Consumers should be able to access any site and use any lawful application or device with a broadband connection -- just as they have been able to do in the narrowband world.

"If policy makers act, they should maintain a 'light touch' and act only with respect to those services that give rise to present day policy questions."

"Where subject to regulation, Internet services should be subject exclusive to Federal jurisdiction and Congress should protect IP services from conflicting and overlapping State regulation, testified Paul Mitchell, Senior Director and General Manager of Microsoft's TV Division.

National Association of Broadcasters

"If new technologies can override program exclusivity rights of local (TV) stations by offering the same programs on stations imported from other markets, or effectively block their subscribers access to local signals, the viability of local TV stations -- and their ability to serve their communities with the highest-quality programming -- is put at risk. To preserve this public access to free-over-the-air television, policy-makers must continue to support the principles of localism and local station program exclusivity," testified Gregory Schmidt, speaking on behalf of the National Association of Broadcasters.

American Cable Association

"As you analyze what rules should be in place in an IP-based market place, I believe you must review whether the current analog rules are really providing consumers with the 'best television money can buy.' Now is the time to discard the rules that 1) force consumers to take programming they do not want; 2) allow media consortiums to raise prices with no regard to what consumers value; 3) hide the reasons for higher rates from the Congress, the FCC, the local franchising authorities and consumers alike; and 4) fail to harness the greatest of American tools, a free market to spur diverse and new programming," testified James M. Gleason, Chairman of the American Cable Association

An archived webcast of the hearing is online.