Saturday, April 1, 2006

Alcatel and Lucent Merger Seeks Global Scale

Alcatel and Lucent Technologies confirmed their plans to merge, creating a global communications solutions provider with US$25 billion in annual sales and a broad product portfolio in wireless and wireline and networking. The companies said the merger was driven by the opportunity to create a truly global company with deep relationships with every major service provider. They also pointed to the ongoing consolidations amongst global service providers.

Key points of the deal include:

  • Alcatel shareholders will own approximately 60 percent of the combined company and Lucent shareholders will own approximately 40 percent of the combined company.

  • Lucent shareowners will receive 0.1952 of an ADS (American Depositary Share) representing ordinary shares of Alcatel (as the combined company) for every common share of Lucent that they currently hold.

  • The combined company will be incorporated in France and based in Paris

  • The name of the combined company will be determined at a later date

  • The merger is expected to yield operational cost savings of US$1.7 billion within 3 years by consolidating support functions, optimizing the supply chain and procurement structure, leveraging R&D and services across a larger base, and reducing the combined worldwide workforce by approximately 10 percent.

  • As of December 31, 2005, the combined companies had about 88,000 employees.

  • The merger also will result in approximately EUR 1.4 billion (USD1.7 billion) in new cash restructuring charges, with the charges to be recorded primarily in the first year.

  • The major growth areas for the combined company include 3G Mobility, Triple Play and IPTV, Global Services and Support, the IMS Network Transformation.

  • Based on calendar 2005 sales, the combined company will have revenues of approximately EUR 21 billion (USD25 billion), divided almost evenly among North America, Europe and the rest of the world.

  • The R&D of the company would include 26,100 employees (15,600 from Alcatel and 10,500 from Lucent) and encompass approximately 25,000 patents.

  • The combined company intends to form a separate, independent U.S. subsidiary holding certain contracts with U.S. government agencies. This subsidiary would be separately managed by a board, to be composed of three independent U.S. citizens acceptable to the U.S. government.

  • Management structure: Serge Tchuruk will be non-Executive Chairman. The combined company will be headed by Patricia Russo, CEO, and will also consist of Mike Quigley, COO; Frank D'Amelio, Senior EVP, who will oversee the integration and the operations; Jean-Pascal Beaufret, CFO; Etienne Fouques, EVP, who will supervise the emerging countries strategy; and Claire Pedini, Senior VP, Human Resources.

  • The merger is subject to customary regulatory and governmental reviews in the United States, Europe and elsewhere, as well as the approval by shareholders of both companies and other customary conditions.

Prior Acquisitions

Optical Ethernet

$55 million in cash

Mar 05
Internet appliances that provide Internet access, email and Web
applications, as well as security and simplified management

not disclosed

Nov 04
multi-standard mobile softswitch
million in stock

Sep 04
eDial SIP-based
platform and applications for conferencing of voice, data and video
million in stock and cash

Sep 04
Gateway Support Node

not disclosed

Jan 04
edge routers

$150 million in stock

May 03


VoiceXML platform
for making Web content accessible via telephone

$136 million
in stock

May 02
iMagicTV Multi-channel
digital television over broadband

Feb 03

Astral Point

10 Gbps-capable
SONET metro networking platform

Euro 153
million (US$136 million) in stock

Jan 02


technology for high-end passive optical components,

Euro 134
million (US$117 million) in stock

Jul 01
filters, including Fiber Bragg Gratings, a passive optical component
used in DWDM systems
IP and LMDS data networking platforms
billion in stock
Telecommunications Laboratories
center solutions
billion in stock
Devices Inc.
VPN solutions
million in cash
$2 billion
in cash
Mar 99
access concentrators
million in cash
Mar 99
Layer 3
Gigabit Ethernet switches
million in cash
Oct 98
loop carriers and transmission systems,
billion in stock
Jun 98


list of Past Lucent Acquisitions
Riverstone Ethernet
Telica softswitches $295
Services switch supporting VPNs, managed firewalls, voice and
multimedia services
Chromatis Networks Metropolis system that multiplexes
TDM, ATM, and
IP services over a single wavelength
$4.5 billion May
class IP core switch/router
$900 million in stock Jun
switching and access
billion in stock
software systems
billion in stock
access equipment
billion in cash
Fixed Wireless Broadband Unit
LMDS undisclosed Feb
Prominet Gigabit
million in stock
access equipment
million in stock
mail systems
billion in cash
undisclosed Oct

Thursday, March 30, 2006

Kentrox Enhances its QoS Access Routers

Kentrox released enhancements for its Q-Series QoS Access Routers, which provide protect and prioritize applications from small and medium offices. The router combines QoS, VPN, firewall, WAN access, and a QoS appliance to protect and prioritize VoIP and other critical applications. New features include:

  • Load balancing -- enables load sharing over multiple WAN interfaces to efficiently utilize WAN bandwidth

  • VPN enhancements -- VPN client supports Microsoft Windows XP to eliminate the need for an additional Windows client

Nortel and QUALCOMM Test 7.2 Mbps HSDPA Call

Nortel and QUALCOMM successfully achieved the industry's first 7.2 Mbps HSDPA mobile data calls. The initial series of pre-commercial category 8 HSDPA data calls used test terminals based on QUALCOMM's Mobile Station Modem MSM6280 solution and HSDPA network equipment from Nortel.

The calls covered frequencies in all commercially available UMTS spectrum currently used by mobile operators throughout the world. The 2100MHz spectrum is the basis for most European 3G networks and the 850MHz spectrum is now in use for new UMTS networks in North America, the Caribbean and Latin America. As spectrum at 900MHz is expanded for UMTS services, Nortel believes this can also become an important part of European HSDPA roll out.


BigBand Names Doug Jones Chief Architect Cable

BigBand Networks announced the appointment of Doug Jones to chief architect cable. He most recently served as chief architect for YAS Broadband, a leading broadband consulting firm, and previously worked on advanced video and broadband initiatives of major telecom and cable operators.

Wednesday, March 29, 2006

Birch Telecom Exits Chapter 11 with Lower Debt

Birch Telecom, which serves 130,000 customers in mid-sized markets in 12 states, emerged from Chapter 11 bankruptcy protection. As part of the reorganization, Birch issued 100% of its post-emergence equity to its secured lenders. In addition, Birch's pre-petition secured debt of $108 million has been reduced to $35 million in reinstated debt held by the secured lenders. Other creditors will receive distributions as provided under the bankruptcy plan.

Canada's Inukshuk Launches National Wireless Broadband Network

Inukshuk Wireless, an equally owned joint venture between Bell Canada and Rogers Communications, announced the completion of the initial phase of its new wireless broadband network, with service available in 20 metro regions across Canada.

Th IP wireless network is based on pre-WiMAX standards and leverages existing cellular towers of both Bell and Rogers.

The initial phase of the network covers over 5 million households and 40% of the population and is now available in 20 areas across Canada including Greater Vancouver Area, Victoria, Red Deer, Calgary, Edmonton, Whitehorse, Greater Toronto Area, Barrie, London, Windsor, Kitchener-Waterloo, Hamilton, Ottawa, Gatineau-Hull, Quebec City, Greater Montreal Area, Charlottetown, Halifax, Fredericton, and St. John's.

  • In September 2005, Rogers Communications and Bell Canada agreed to jointly build and manage a Canada-wide wireless broadband network expected to initially reach more than two-thirds of Canadians in less than three years. The companies will jointly and equally fund the initial network deployment costs estimated at $200 million over a three-year period, completing a network footprint that will cover over 40 cities and approximately 50 unserved rural and remote communities across Canada.

  • The companies are pooling their wireless broadband spectrum holdings into a joint venture, Inukshuk Internet Inc., which will build and operate the network. Specifically, Rogers currently controls and will contribute to the joint venture its entire broadband wireless spectrum in the 2.3 GHz, 2.5 GHz and 3.5 GHz frequency ranges. Bell controls and will contribute to the joint venture all of its broadband wireless spectrum in the 2.3 GHz and 3.5 GHz frequency ranges.

  • Inukshuk will be the network services provider to Rogers and Bell and their subsidiaries, and will operate on a cost recovery basis.

  • Inukshuk expects to negotiate a roaming agreement with Clearwire Corporation, a U.S.-based company building a similar wireless broadband network, allowing Rogers and Bell to offer customers access to an extensive Canada-U.S. wireless broadband footprint.

  • Inukshuk plans to continue to use network equipment manufactured by NextNet, a wholly-owned subsidiary of Clearwire Corporation.

  • Rogers Wireless is Canada's largest wireless voice and data communications services provider and the country's only carrier operating on GSM/GPRS. Rogers Cable is Canada's largest cable television provider offering cable television, Internet access, voice-over-cable telephony services, and video retailing. Rogers Media Inc. is a premier collection of Canadian media assets with businesses in radio and television broadcasting, televised shopping, publishing and sports entertainment.

Lucent Retirees Organization Demands Protections

The Lucent Retirees Organization, which represents the interests of 235,000 retirees and dependents from Lucent, Bell Labs, Western Electric and/or the old AT&T Network Systems and subsidiaries, expressed its concern on the potential merger of Alcatel and Lucent.

"No one should want a foreign company to own a $34 billion pension fund -- worth more than twice Lucent's market value--unless safeguards are in place to protect the pension and benefits of 235,000 retirees and their dependents," said Ken Raschke, LRO president.

The LRO believes that the U.S. Government should not approve the merger unless the pension plan has fiduciaries that are independent of both Lucent and Alcatel.

"We call upon Lucent and Alcatel to commit to publishing financial and actuarial data on the pension plan that shows the basis for current levels of funding. We also request their prompt action to bring the funding level to 100 percent on the management pension plan that is underfunded by more than $1 billion based on Financial Accounting Standards Board rules. This must be done prior to a merger closure date."

U.S. Ranked 15th in Broadband Penetration

The number of U.S. households with broadband access has topped the 43 million mark, according to a new study from the Consumer Electronics Association (CEA). This compares with just two million in 1999.

However, the U.S. now ranks 15th in the world in high-speed Internet penetration. Asian countries top the list, with South Korea, Hong Kong, Singapore and Taiwan all having higher than 50 percent penetration, and Japan coming close to the half-way mark with 49 percent. Many Northern and Western European countries also outpace the U.S. in broadband adoption, including the Netherlands, France, Denmark and Sweden. In addition, Canada has broadband penetration that is higher the U.S.

The CEA study found that dial-up Internet access is on a notable decline in the U.S. In 2000, dial-up Internet connections accounted for 74 percent of all U.S. residential Internet connections. This figure dropped to 60 percent by 2003, and currently stands at 36 percent. Additionally, the new research shows that cable Internet access has lost ground when it comes to customer value and popularity. In October 2000, cable broadband accounted for 15 percent of all Internet connections, compared to four percent for DSL. By March 2006, cable and DSL were head to head, each with 29 percent of the residential Internet market.

In addition, 33% of non-owning high-definition television (HDTV) households are interested in having a professional install an HDTV in the next two years. This translates into 20.5 million households. Large numbers of households are also interested in having digital video recorders (DVR) and distributed audio systems installed.

BellSouth Awards Multiyear OSS Contract to Cramer

BellSouth awarded a multiyear contract to Cramer for its operational support system (OSS) software. The first domain targeted for migration to Cramer is BellSouth's IP Domain, which today provides IP-VPN and direct Internet access services to enterprise customers. Cramer will replace a series of legacy systems and databases, maximizing data accuracy between the inventory and the network. When the Cramer solution becomes operational, BellSouth will have an automated solution to order, design and assign, and fulfill a range of IP

Sprint Targets First-to-Market EVDO Rev A for 2007

Sprint outlined its plans for the expansion and evolution of its "Power Vision" network, which now covers over half of the U.S. population with mobile broadband data services. By year end 2006, the high-speed network is expected to reach an estimated 190 million people nationwide.

Sprint will concurrently implement EV-DO Revision A this year, with the goal of launching this enhanced service in Q1 2007. Sprint plans to reach about 220 million people in the U.S. with the advanced network by the end of Q3 2007.

Sprint's current EVDO service delivers average download speeds equivalent to DSL (400-700 kbps and peak speeds up to 2 Mbps). With Revision A, peak download data rates increase to 3.1 Mbps and peak upload data rates increase to 1.8 Mbps (from 144 kbps). Average download speeds improve to 450-800 kbps (from 400 -700) and average uplink speeds become 300 - 400 kpbs (versus 70 - 144 kpbs).

At next week's CTIA Wireless Show in Las Vegas, Sprint will demonstrate EV-DO Revision A connection card technology with Nortel, Novatel Wireless and Sierra Wireless.

Sprint will market EV-DO Revision A compatible connection cards in the third quarter of 2006, which work on the current Revision O network until next-generation service is broadly available in the first quarter 2007 to about 214 million people.

TANDBERG Launches Multiformat MPEG-2/MPEG-4 AVC Decoder

TANDBERG Television introduced a professional multiformat MPEG-2/MPEG-4 AVC SD/HD decoder that will enable network operators and broadcasters to deliver both SD and HD content from studio to studio and across networks to regional head-ends and affiliates.

The new RX1290 professional receiver is also suitable for use in digital satellite newsgathering and digital electronic newsgathering applications.

The receiver is capable of decoding both MPEG-2 and MPEG-4 AVC, HD or SD. It comes with a standard ASI interface and can in addition be fitted with an integrated high performance DVB-S2 demodulator giving an additional potential 30% bandwidth savings. Future interfaces will include IP and COFDM as well.

Amdocs and Cramer Announce Collaboration

Amdocs and Cramer signed a letter of intent to deliver an operations support systems (OSS) solution to service providers that integrates the Cramer6 OSS Suite with the Amdocs ordering and service management solutions.

The combined offering will deliver the crucial automated link between front-office customer management and back-office network and service management, unifying service ordering, provisioning, activation and assurance across all products and lines of business.

By linking front- and back-office systems as well as service assurance and fulfillment processes, SPs are able to eliminate product and technology silos. The resulting single automated system fully manages the customer and product lifecycles and helps providers create a superior, intentional customer experience.


Singapore's StarHub Begins DOCSIS-3.0 Upgrade for 100 Mbps Cable Modem Service

Singapore's StarHub is launching an upgrade of its broadband hybrid fiber coaxial (HFC) cable network to a DOCSIS 3.0-compatible architecture. The upgrade will enable StarHub to offer cable modem downlink speeds of up to 100 Mbps.

StarHub is using Motorola's channel-bonding solutions for HFC networks.

Singapore will be the first country in Asia-Pacific to have a nation-wide DOCSIS 3.0-compatible broadband network commercially available.

Motorola has been a leader in contributing to the current channel-bonding specification, which is part of the proposed DOCSIS 3.0 standard currently in development by CableLabs.

In addition to the current upgrade, StarHub is already looking at future plans to continue to enhance the broadband cable network to 1 Gbps in two to three years' time, as the channel-bonding platform is able to scale even further. The enhancements are expected to be implemented gradually and cost-effectively over the next few years.

Currently, StarHub's MaxOnline service provides service tiers with download speeds of up to 2Mbps, 6.5 Mbps and 30 Mbps.

As at 31 December 2005, StarHub has 277,000 MaxOnline subscribers.

Keep USF Fair Coalition Criticizes Martin Plan

The Keep USF Fair Coalition released a study criticizing a plan by Federal Communications Commission (FCC) Chairman Kevin Martin to reform the federal "Universal Service Fund" (USF) fee on long-distance phone bills. Under the plan, the USF fee would shift from a "pay as you go" charge on long-distance calls to a flat $1 fee per phone line.

The Keep USF Fair Coalition said consumers in California, Florida, Illinois, Maryland, Massachusetts, Michigan, Minnesota, New York, Ohio, Pennsylvania, Texas and Virginia would be the biggest losers because more money would flow out of their states.

The Coalition also noted that $1 line charge would only cover about $6.5 billion of the $7.1 billion currently being spent out of the Universal Service Fund. At the more likely $1.50 per-line charge level, all 50 states would end up paying in more than they are getting back.
  • In February 2005, a group of consumer organizations called the "Keep USF Fair Coalition" filed a "Fair Share Plan" for Universal Service Fund (USF) collection with the FCC. The coalition argued that under the current revenue system, high volume long distance users pay the most, while those who use less pay less. It believes the new system under consideration would shift the burden of paying for Universal Service to those who use the system the least. The "Fair Share Plan" proposes to expand the USF contribution base to include all revenues derived from telecommunications, including services using VoIP. It proposes to establish a contribution factor cap to be applied to the revenue-based approach; carriers would still be assessed based on revenues up to that cap amount, and would still have the right to charge their end users a USF recovery charge not to exceed the percentage they are charged. The balance of the funds needed to support USF would come from a numbers-based charge.

Comcast Adds Top TV Show to VOD Service

Comcast announced agreements to begin adding more than a dozen of NBC Universal's most-watched broadcast and cable programs to its ON DEMAND video-on-demand (VOD) service beginning in May. NBC Network primetime programs will be available to Comcast Digital Cable customers as early as midnight following their broadcast for 99 cents each. Late-night and daytime shows will be available at no additional charge. Viewers can play, fast-forward, rewind, pause and restart the programs.

The new NBC Universal programs will join Comcast's growing library of more than 7,000 ON DEMAND programs per month, including more than 800 movies, music videos and specials, kids' shows, sports highlights, news and informational programs.

Nokia Predicts 15% Growth in Global Mobile Device Market in 2006

Nokia raised its estimate for mobile device market volume growth in 2006, saying it now predicts a 15% growth from its estimate of 795 million units in 2005. Previously, Nokia estimated that the global mobile device market volume would grow 10% or more this year from last year's estimate.

Nokia Chairman and CEO Jorma Ollila said "There is huge diversity between geographic areas and markets in terms of consumer preferences and behavior," he said. "In addition to continuous growth in voice communication, other industries like music and digital imaging are quickly becoming more integral to mobility."

Nokia expects approximately 80% of the next billion subscribers to come from the emerging markets, and Nokia expects the global mobile subscriber base to reach three billion during 2008.

Chile's Telsur Implements UTStarcom's iPAS

Chile's Telefónica del Sur (Telsur) will deploy UTStarcom's IP-based PAS (iPAS) solution for fixed-wireless telephony services. Financial terms were not disclosed.

"The launch of Telsur's iPAS network is a big step in the expansion strategy of our Latin-American network. Since the Chilean market has been deregulated, it has become one of the most sophisticated telecommunication markets in Latin-America," said Rene Mendez, vice president for Latin America and Caribbean for UTStarcom.

GSM Adds more than 400 Million Subscribers in 2005

GSM grew by more than 400 million subscribers in 2005, reaching an estimated 1.8 billion customers in 213 countries using various evolutions of the GSM technology.

  • UMTS is commercially deployed by 103 operators in 47 countries with an additional 93 operators in 23 other countries that have made significant UMTS announcements (including 4 pre-commercial, 61 planned/in deployment, 8 licenses awarded and 20 in-trial).

  • There are more than 250 UMTS devices provided to the market to date, with an increasing number of devices earmarked for North American customers.

  • HSDPA has been deployed by ten operators in the past four months, since Cingular Wireless first deployed HSDPA in the United States in December 2005, and there are 71 additional operators publicly committed to deployment. HSDPA has gained considerable momentum and it is expected that all UMTS operators will deploy HSDPA.

"There is early evidence of our prediction that nearly all UMTS operators will evolve their networks to HSDPA. In the past 30 days, we have seen six HSDPA launches, and I expect this trend to continue in 2006 and 2007," Chris Pearson, President of 3G Americas.

See also