Sunday, October 30, 2005

Telefónica Bids $31.5 Billion to Acquire O2

Telefónica announced plans to acquire O2 Plc, the largest mobile-phone operator in the UK, for GBP 17.7 billion ($31.5 billion). The bid represented a 22% premium over Friday's closing prices.

O2 plc has 100% ownership of mobile network operators in three countries - the UK, Germany and Ireland - as well as a leading mobile Internet portal business.

O2 UK has over 15 million mobile subscribers; O2 Germany has 8.38 million mobile subscribers; and O2 Ireland has 1.53 million mobile subscribers.

In addition, O2is a founding member of Starmap Mobile Alliance, has operations on the Isle of Man (Manx Telecom) and owns O2 Airwave - an advanced, digital emergency communications service. In addition, O2 has established the Tesco Mobile and Tchibo Mobilfunk joint venture businesses in the UK and Germany respectively.

Sprint Launches EVDO "Power Vision" Network

Sprint announced the official launch of its EV-DO (Evolution Data Optimized) "Power Vision" nationwide network, featuring wireless data speeds averaging 400 to 700 Kbps with peak rates up to 2.0 Mbps. Sprint now offers Mobile Broadband in more than 75 markets nationwide. By year-end Sprint will be in over 100 major markets encompassing more than 200 strategic urban and suburban markets--covering over 150 million customers. The service is also available in major airports across the U.S.

Sprint is offering a free EV-DO capable Sprint PCS Connection Card and unlimited data access for $59.99/month.

In addition, the launch includes:

The new Sprint Music Store -- the first service in the United States that allows wireless customers to purchase and download full-length songs over-the-air for use on their phone or PC. Customers can browse, preview, purchase and listen to hundreds of thousands of full-length songs in stereo sound from virtually every genre from all the major music labels while on the go. Customers receive two copies of the song -- one formatted for their phone and another for their PC -- and can organize their music and create playlists from the phone.

On Demand is a new service that allows customers to set and then receive customized, up-to-date information based on zip code such as news, sports, weather, money and movies, on demand the way they want it. These five info-channels are included at no additional cost for customers with a Sprint Power Vision Pack. Info-channels including the Oxford American dictionary, TV Guide, unlimited directory search, and maps and driving directions are available for an additional monthly charge. The application is pre-loaded on Sprint Power Vision Phones and can be accessed from the On Demand icon on the main menu.

Sprint TV is an Emmy Award-winning service that allows customers to watch live TV on the go with full-motion video and high-quality audio on their Sprint Power Vision Phone. Customers who subscribe to the enhanced service can choose from 30 channels of live and exclusive on demand programming. Customers can choose from news, sports, weather, movie trailers and entertainment channels from major broadcasting brands including NFL Network and Fox News Channel LIVE, CNN To Go, NBC Mobile, ABC News Now, E! and Cartoon Network. The service also includes a streaming radio channel from SIRIUS.

Sprint PCS Picture Mail -- a service that makes it easier and more convenient to take, send and print high-resolution digital pictures using a Sprint Power Vision Phone equipped with a megapixel camera.

Siemens' IPTV Deployed by 75 U.S. Regional Operators

Siemens Communications provided an update on its SURPASS Home Entertainment portfolio of broadcast server provider solutions, which has now been deployed by more than 75 U.S. regional operators as well as many more worldwide. Siemens claims the most IPTV deployments in the United States to date, with two-thirds of its customers making IP television solutions commercially available to subscribers. Globally, Siemens IPTV contracts now cover more than 38 million broadband lines.

Siemens said its initial goal has been to quickly enable service providers to get up and running with IPTV home entertainment and home network communication offerings. Siemens is now working to develop broader smart home networks that can be managed by users from anywhere and from any device. The company plans to leverage relationships in the health care and security industries to help operators launch home-based health care services, including video conferencing between patients and doctors as well as remote home control and surveillance capabilities. For example, Siemens' smart home vision includes the use of a mobile device, from a remote location, to activate and set a DVR to record a show or even to turn off a stove or operate other home appliances.
  • Earlier this year, Siemens Communications has acquired Myrio, a supplier of IPTV middleware, for an undisclosed sum. Siemens Venture Capital made a strategic investment in the Seattle-based start-up in late 2003.

    Myrio specializes in middleware and applications for home entertainment solutions, which includes components to create a compelling consumer experience and provide network operators with the management systems for pricing, packaging and applications development. The Myrio IP Video Platform consists of two core products, Myrio TotalManage, the back-office subscriber and content-management application, and Myrio Interactive, the full-featured end-user application. The Java-based platform enables the carrier to add new features, such as multiple language support, client Personal Video Recorder (cPVR), and web browser enhancements.

SkyStream Report 10 New Telco Customers for its IP Video Delivery

Privately-held SkyStream announced that more than 10 telephone companies in the U.S., Europe and mainland China selected its Mediaplex and iPlex video headend systems for MPEG-2 and MPEG-4 AVC deployments in the third quarter, and existing telco customers purchased additional headend equipment. Shipments of zBand software in July also exceeded the company's expectations--more than 30 customers have now purchased SkyStream's content delivery platform for offering PUSH video on demand services, movies-on-demand, distance learning, distributed storage, and business TV. The company also noted strong demand from the federal government through a reseller for satellite equipment for military and disaster relief purposes.

Freescale's Communications Processor Shipments Top 200 Million

Freescale Semiconductor has reached the milestone of more than 200 million integrated communications processors shipped to date, a semiconductor device category the company pioneered 16 years ago.

In June during the annual Freescale Technology Forum, Freescale marked the 10-year anniversary of the PowerQUICC processor family based on PowerPC cores. Freescale's PowerQUICC processor family has more than 5,000 communications and networking system designs. PowerQUICC processors are used in such applications as voice-enabled VPN routers, residential gateways, home media servers, IPTV set-top boxes and network storage.

SBC Trims Introductory Price of its 3.0 Mbps DSL Service

SBC Communications trimmed the price of its SBC Yahoo! DSL Pro (1.5 -3.0 Mbps) service to $21.99 a month for six months (other monthly charges apply) for new residential subscribers. Following the six-month term, the ongoing price will be $34.99 a month for month-to-month service - a 41% decrease from the previous month-to-month pricing for SBC Yahoo! DSL Pro service.

The lower speed tier, SBC Yahoo! DSL Express (384 Kbps - 1.5 Mbps), is available for $16.99 a month (other monthly charges apply) with a six-month term for new residential subscribers who order online or through select retailers or through any SBC sales channel when ordered as part of a qualifying bundle. Following the six-month term, the ongoing price will be $29.99 a month.

Taiwan's Seednet Selects Redback SmartEdge Service Gateway

Seednet, Taiwan's second largest Internet service provider, has deployed Redback Networks' SmartEdge Service Gateway platform for its next generation converged broadband service network, which will provide video, voice and advanced data services throughout Taiwan. Financial terms were not disclosed.

Seednet will offer IPTV, VoIP, and high speed Internet services for both consumers and businesses. The IPTV service, Digital Family Center (DFC), includes over 200 channels and combines both analog and digital video programming. In addition to traditional broadcast entertainment, DFC also includes personalized, on-demand video for feature length films and television shows.

Level 3 To Acquire WilTel for $680 Million

Level 3 Communications agreed to acquire WilTel Communications in a cash and stock deal valued at $680 million. Both companies own major fiber routes across the United States. The companies expect to close the deal in Q1 2006, pending state and federal regulatory approvals.

WilTel, which is based in Tulsa, Oklahoma, is currently owned by Leucadia National Corporation. WilTel's fiber network extends coast-to-coast and has direct access in more than 700 locations.

The Level 3 network spans 23,000 route miles in the U.S. and Europe.

The deal also includes Vyvx, a WilTel subsidiary that specializes in gathering and distributing broadcast quality live and non-live video for the media and entertainment industry. The company delivers nearly 250,000 fiber and satellite video feeds, and more than 5 million ads and promotional media content around the world each year.

The companies cited a number of expected synergies, including the improved efficiency of migrating all IP, optical and voice transport traffic to a common network. The merged network will reach 50 new markets and include 3000 new route miles compared with Level 3's pre-acquisition facilities.

The acquisition includes all of WilTel's communications business, including a multi-year contract with SBC. The acquisition does not include WilTel's headquarters building or the assumption of any of WilTel's outstanding debt or mortgage obligations.

Level 3 will pay 115 million shares of Level 3 common stock and $370 million in cash subject to certain adjustments.

"There is a unique and compelling fit between WilTel and Level 3," said James Q. Crowe, chief executive officer of Level 3. "We believe this transaction brings together the two premier providers of communications backbone services and that our customers will benefit significantly from that shared institutional excellence. We also believe the combined technical and service capabilities will help support and advance our customers' transition to IP technology and Voice over IP," said Crowe.
  • In January 2005, SBC announced its pending merger with AT&T and its intention to migrate the services provided by WilTel to the merged SBC and AT&T network. In anticipation of the successful completion of the SBC and AT&T merger, the contract between WilTel and SBC was amended. The amended SBC agreement runs through 2009 and provides for a purchase commitment of $600 million from January 2005 through the end of 2007, and $75 million from January 2008 through the end of 2009. Only purchases of on-net services count toward satisfaction of this purchase commitment. Originating and terminating access charges paid to local phone companies are passed through to SBC in accordance with a formula that approximates cost. Additionally, the SBC agreement provides for the payment of $50 million from SBC if certain performance criteria are met.

  • In February 2005, WilTel Communications confirmed that it is providing Vonage with a bundled voice and data transport solution. Vonage's service area encompasses more than 2,000 active rate centers in more than 150 global markets.

  • In October 2002, Williams Communications emerged from Chapter 11 proceedings and changed its name to WilTel Communications.

  • In 1985, the Williams Companies made the revolutionary decision to place fiber in decommissioned petroleum pipelines from Kansas City to Des Moines and Omaha to Chicago. The company subsequently formed the Williams Telecommunications as a wholesale capacity provider.

Lucent Supplies VoIP for KT

Lucent will supply its "Accelerate" VoIP products to KT to support IP-based services for enterprise customers. The contract follows September's announcement of Lucent's VoIP agreement with Hanaro Telecom, the second largest wireline and broadband service provider in Korea.

The solution for KT includes the Lucent Feature Server, the platform delivering applications such as Hosted PBX, IP Centrex and Voice VPN. In addition, the call recording server, presence server, proxy server, and location-based server developed by Lucent's local business partners in Korea are included in the total solution.

During the more than 25-year relationship with KT, Lucent has provided broadband access, optical networking, switching and software solutions. The two companies recently signed a "memorandum of understanding" to collaborate on the development of a fixed/mobile convergence architecture for KT.

Motorola and Nortel Settle Zafirovski Lawsuit

Motorola and Nortel reached a settlement in the case of Mike Zafirovskim Motorola's former president and chief operating officer, who recently was named Nortel president and CEO. In a lawsuit, Motorola alleged that Zafirovski's move to Nortel threatened an unlawful misappropriation of Motorola trade secrets and a breach of multiple non-compete, confidentiality and no solicitation agreements Zafirovski signed with Motorola.

The terms of the settlement reaffirms Zafirovski's obligations to protect Motorola's trade secrets and confidential information and restricts him from internal and customer activities that could lead to his use of and sharing of such information to Nortel's unfair advantage. The settlement also restricts certain recruiting activities by Nortel and Zafirovski. The settlement includes an $11.5 million cash payment to Motorola and requires Zafirovski to regularly certify compliance to Motorola and Nortel's board of directors.http:/

FCC Sets Conditions for SBC/AT&T and Verizon/MCI Mergers

The FCC voted to approve the acquisition of AT&T by SBC Communications and of MCI by Verizon Communications, concluding that consumers will benefit and that these mergers will create stable, reliable U.S.-owned companies that will provide improved service to government customers and benefit national defense and homeland security.

Significantly, the FCC imposed a set of conditions aimed at alleviating anticompetitive concerns. These include the following:

  • The applicants committed not to seek an increase in state-approved rates for unbundled network elements (UNEs) for two years (except for rates that are subject to current appeals in specific states).

  • The applicants committed to a one-time recalculation to exclude fiber-based collocation arrangements established by AT&T in SBC's region and MCI in Verizon's region in identifying wire centers in which SBC or Verizon claims there is no impairment pursuant to the UNE triggers in the Triennial Review Remand Order so that dedicated transport and/or high-capacity loops need not be unbundled.

  • The applicants committed to implement a "Service Quality Measurement Plan," which will provide the Commission with quarterly performance results for interstate special access services. This commitment will terminate the earlier of 30 months and 45 days after the beginning of the first full quarter following the closing of the mergers, or the effective date of a Commission order adopting general special access performance measurement requirements.

  • The applicants committed, for 30 months, not to increase the rates paid by existing in-region customers of AT&T in SBC's region or MCI in Verizon's region for wholesale DS1 and DS3 local private line services.
    SBC/AT&T and Verizon/MCI committed, for a period of 30 months, not to provide special access services to themselves, their interexchange affiliates, or each other or their affiliates, that are not generally available to other similarly situated customers.

  • The applicants committed that for a period of 30 months, before they provide new or modified contract tariffed service to their own section 272(a) affiliate(s), they will certify to the Commission that they provide service pursuant to those contract tariffs to unaffiliated customers other than each other or their wireline affiliates.

  • The applicants committed for a period of 30 months not to increase rates set forth in SBC's and Verizon's interstate tariffs for special access services, including contract tariffs, that they provide in their in-region territory that are on file with the Commission on the Merger Closing Dates.

  • The applicants committed, for a period of three years, to maintain settlement-free peering arrangements with at least as many providers of Internet backbone services as they did in combination on the Merger Closing Dates.

  • The applicants committed for a period of two years to post their peering policies on publicly accessible websites. During this two-year period, the applicants will post any revisions to their peering policies on a timely basis as they occur.

  • SBC/AT&T acknowledged: (1) that the merger does not change carrier of last resort obligations imposed by the State of Alaska on interexchange services provided by Alascom; (2) that the merger will not alter statutory and regulatory geographic rate averaging and rate integration rules that apply on the merger closing date to Alascom; and (3) after the merger closing date, they will operate Alascom as a distinct, though not structurally separate, corporate entity.

  • The applicants committed to provide, within 12 months of the Merger Closing Dates, DSL service to in-region customers without requiring them to also purchase circuit-switched voice telephone service. The companies will make the offering for two years from the time it is made available in a particular state.

  • The applicants committed for a period of two years to conduct business in a way that comports with the Commission's Internet policy statement issued in September.

Some industry commentary:

FCC Chairman Kevin Martin: "It is my expectation that these mergers will only increase the incentive and ability of the merged entities to invest in broadband infrastructure and spread the deployment of advanced services to all Americans."

FCC Commissioner Michael Copps: "These mergers can also be seen as an epitaph for the competition that many of us thought we would enjoy as a result of the Telecommunications Act of 1996. That legislation, I am convinced, envisioned a vastly different communications landscape than the one we find ourselves living in today.

SBC chairman and CEO Edward E. Whitacre Jr. "The commission vote demonstrates a recognition that the merger of SBC and AT&T will enhance competition, help bring new technologies to market faster, and provide real benefits to consumers and businesses."

AT&T chairman and CEO David W. Dorman: "Today's decision brings us one step closer to a new era in communications, information services and entertainment. Combined, SBC and AT&T will deliver superior network services and a portfolio of solutions that will help both businesses and consumers."

Verizon VP of Public Affairs Tom Tauke: "After two federal reviews and strong approvals by shareholders and the international community, it is clear that this combination is undeniably in the public interest."

Qwest: "Today, the FCC stood with millions of telecommunications users against two mega-firms trying to turn back the clock. By imposing meaningful conditions on the plans of SBC and Verizon to acquire their largest competitors, the FCC has reaffirmed its commitment to open and competitive telecommunications markets.

XO Senior Vice President, Government Relations, Heather Gold: "By helping safeguard competition in the wholesale market, today's decision by the FCC is an important victory for the competitive local telecom industry - and for millions of business customers... We thank the Commissioners and staff for their efforts to forge meaningful conditions designed to ensure ongoing customer choice and price competition for millions of small to medium business customers, and we hope that the FCC will vigorously enforce its actions so that these conditions are not hollow promises."

EarthLink's Chris Putala, executive vice president for public policy: "We applaud today's Federal Communications Commission decision that requires SBC and Verizon to offer Stand-Alone DSL as a condition for their separate merger approvals. As a result of this decision, more than 80 million consumers will now be able to take advantage of emerging Internet voice and data applications without also having to buy legacy wire-line local telephone service from their phone company. Today's FCC decision in favor of mandatory 'net neutrality' provisions helps guarantee the rights of all consumers to access the Internet content and applications they choose."

Global Crossing CEO John Legere: "The FCC's decisions reflect the concerns expressed by many telecommunication companies, including Global Crossing, that these mergers might alter the competitive balance in the special access and Internet backbone market. The fact that the FCC was willing to freeze special access prices for 30 months and require continued Internet peering for three years (among other important safeguards) gives Global Crossing confidence in our ability to compete on a level playing field in years ahead."

Apple's iTunes Store Sells One Millionth Video

Apple's iTunes Music Store has sold more than one million videos since the service debuted on October 12. Customers can choose from over 2,000 music videos, Pixar short films and hit TV shows for just $1.99. Top downloads include music videos from Michael Jackson, Fatboy Slim and Kanye West; Pixar's "For the Birds" and "Boundin'"; and episodes of ABC's hit TV shows "Lost" and "Desperate Housewives."

"Selling one million videos in less than 20 days strongly suggests there is a market for legal video downloads," said Steve Jobs, Apple's CEO. "Our next challenge is to broaden our content offerings, so that customers can enjoy watching more videos on their computers and new iPods."