Telia and Telenor Decide to Abandon US$47 Billion Merger
Bereft with several problems that came to a head last week when the Norwegians refused to accept a board decision to locate the combined Nordic carrier’s mobile phone unit in Stockholm, Telia AB and Telenor ASA decided to abandon their US$47 billion merger. The merger, which was set to close on January 1, 2000, would have created Europe’s sixth-largest telecommunications company.
Last week, the combined company, made a bid to acquire Ireland’s Esat Telecom Group, which had been rejected. On Tuesday, Esat advised its shareholders to reject Telia-Telenor’s hostile bid for the company, which is currently valued at US$1.59 billion. Telia President Stig-Arne Larsson said he could not confirm if the split meant the Esat bid would not be withdrawn.

GTE to Sell Additional Phone Lines to Citizens Utilities for $303 Million
GTE Corp. has reached an agreement to sell additional 106,850 phone lines in Illinois to Citizens Utilities for $303 million as it sheds slower-growing businesses. As part of the agreement, 89 GTE employees will be offered a chance to join Citizens Utilities. This deal follows a previous deal in which Citizens agreed to purchase 245,562 GTE lines in Arizona, California, Neford, CN and Minnesota. This deal completes GTE’s plan to sell 1.6 million telephone lines in 13 states to pay for investments in new businesses such as data, Internet and wireless.

ADSL

Log on America Steps up DSL Deployment Plans with Nortel Networks Equipment
To carry out its plans to meet the needs of the increasing demand for DSL service across New England, Log On America will deploy Nortel Networks’ 1-Meg Modem, which allows subscribers to access the Internet at up to 1.3 megabits per second while using telephone or fax service simultaneously. The 1-Meg Modem's plug and play DSL technology eases consumer installation by eliminating complex voice/data splitters and costly truck rolls.
Log On America will initially offer DSL and advanced communications services throughout the six New England states and projects a first quarter 2000 service launch. Log On America expects to complete a high-speed network build-out in at least 123 collocation sites across the Northeast by the end of 2001.
Nortel Networks will provide Log On America an end-to-end network including Nortel Networks' Shasta Broadband Service Node (BSN) for IP Core services, Passport 15000-VSS ATM-based multi service edge switches, DMS-500 voice switches, and the Star Hub to carry voice and data traffic from the edge of the network.
As part of the agreement, Log On America will purchase approximately US$47 million in equipment and services from Nortel Networks. Nortel Networks will be providing US$45 million in senior secured debt.

ASIA PACIFIC

Telstra Begins to Feel Effects of Competition
Telstra Corp. reported that its profits and sales were under pressure, disappointing analysts who had throughout the company was easily handling competition. A number of analysts said they might cut their profit forecasts in response to forecasts in response to comments made by chief executive, Ziggy Switowski.

BRAZIL

Lucent and Inepar to Jointly Construct and Market Power Systems
Lucent Technologies have formed a joint venture to supply the fast-growing power equipment sector of Brazil's telecommunications market. Headquarters for the joint venture will be in Curitiba, Brazil.
The new joint venture, known as Lucent-Inepar Sitemas de Energia Ltda. (Lucent-Inepar Power Systems Limited), will bring together the quality and technology leadership of Lucent with the manufacturing and marketing experience of Inepar. The joint venture will manufacture power systems for telecommunications including wireline switching, wireless platforms, and wireless local loop systems.
In addition to manufacturing power systems for the telecommunications industry, the joint venture will also provide power systems for cable TV operators and Internet service providers. It also plans to establish a professional services division to provide engineering and installation services, technical support and training.
The joint venture will manufacture and market Lucent's GALAXY Power Systems (GPS) and Cabinet Power Systems (CPS). These systems are used in communications networks to provide 24- and 48-volt capacities with 4,800 maximum amperage with high reliability, even during power outages.

EUROPE

UK Government Decision Regarding France Telecom's Proposed Investment in NTL
NTL Inc. announced that the UK Secretary of State for Trade and Industry has issued an announcement that he would clear France Telecom's proposed investment in NTL provided that France Telecom were to undertake to divest its interests in Crown Castle UK Holdings Limited, Crown Castle UK Limited and Crown Castle International Corporation.
France Telecom is cooperating fully with the Office of Fair Trading.
NTL believes that agreeing these undertakings should not impact the timing of NTL's proposed acquisition of certain assets of Cable and Wireless Communications plc (CWC Consumer Co) in the Spring of 2000. The completion of the CWC Consumer Co transaction is subject to certain other conditions, which remain to be satisfied.

Mannesmann Steps up Shareholder Campaign
As part of its ongoing campaign to ward off the hostile takeover bid by Vodafone AirTouch, Mannesmann is continuing its strategy of persuasion based on providing information.
In addition to the Internet offer on Mannesmann's homepage http://www.mannesmann.com and the special page http://www.future.mannesmann.com Mannesmann has set up a call center for retail investors. Furthermore, a letter to all shareholders has been sent, explaining to them the company's excellent growth prospects and strong positioning to face the challenges of the next century.
The letter to shareholders refers in particular to the further surge in growth anticipated in both mobile and fixed-network data communications. With its integrated telecommunications strategy, combining mobile telephony, fixed-line telecommunications, internet and tele-commerce, Mannesmann is the first company in Europe to adopt this approach. Accordingly, Mannesmann will continue to expand at a faster rate than its main competitors. Over the next three years Mannesmann foresees an annual increase in EBITDA of at least 30 percent.

ISPCON Europe 2000 to Showcase Emerging ISP Market
With Western Europe being the second largest ISP market in the world (next to the US), the European ISP market has become one of the industry's most intense and dynamic. Barely in its infancy last year, the market has grown exponentially and now demands a prominent place in debates about the future of the Internet, E-commerce, and even stock markets.
Mutual ISPs, Virtual ISPs and Free ISPs, like Freeserve, emerged in the UK with a bang, re-shaping the market and sending residual shudders across the Atlantic to worry established American ISP giants. Now everyone wants a piece of the ISP pie, from the corner grocery to telecom suppliers to the expected IT industry stalwarts.
The following is a brief listing of both the keynote speakers and exhibitors who will showcase their wares at ISPCON Europe 2000.
Keynote Speakers
On hand at ISPCON Europe 2000 will be several keynote speakers from several of Europe’s major Internet players, including:

Stefan Westman, Director of Global Networks, Telia AB
Mike Aymar, President, Intel Online Services, Inc.
Malcolm Collins, Vice President, Internet Solutions, Nortel Europe
Duncan Mitchell, Director, Service Provider Operations, Cisco Systems UK
Val Rahmani, Vice President Communications Sector, IBM EMEA
Randy Meyer, Vice President, IQ Center, Silicon Valley, Compaq
Charles Clarke MP, Minister of State
Derek Wyatt MP, Labour MP Sittingbourne and Sheppey
Diana Wallis, Brussels Convention, MEP Coordinator of the committee on legal affairs and the internal market
Dr Margot Frohlinger, European Commission, Head of Unit E4 the Internal Market Directorate
Nicholas Argyris, The Internet Society Directorate of the European Commission, Director of Unit A

Exhibitors
The cream of the of the ISP world will be in attendance at ISPCON Europe 2000. Major players will be demonstrating their expertise, current technology and vision across all sectors of the field. Some of the key exhibitors include:

Intel
Cisco Systems
Compaq
IBM
Nortel Networks
Telia AB
BT
KPN Qwest
Ciscom Ltd
Globix Corporation
Autonomy
Level 3 Communications
MCI Worldcom
Nokia
Trend Micro

Lucent Technologies and Tele1Europe sign a strategic and preferred supplier agreement for broadband access network spanning the Nordic region
Lucent Technologies has signed a strategic and preferred supplier agreement with Tele 1 Europe, the Nordic region's first competitive local exchange carrier (CLEC), for the deployment of a pan-Nordic, high speed, broadband access network. The frame agreement is worth between US$ 29.2 - 70 million over the next three years.
This strategic alliance will enable Tele1 to deliver high-speed broadband services to thousands of its business customers throughout Sweden, Norway, Denmark and Finland. In addition, Tele1's customers will be able to benefit from increased network transmission speeds, high reliability and multiple new services. The network construction starts in January 2000 and is expected to be completed in three years.
"This strategic partnership combines Lucent's leadership in designing carrier grade optical networks with Tele1 Europe's strength in business services. We look forward to our continued relationship with Tele1," said Christer Andersson, CEO of Lucent Technologies in Sweden. "Tele1 Europe is keen to extend high speed, broadband access across the Nordics - which cover some of the world's most Internet-connected countries."
"Tele1 Europe selected Lucent for its strong reputation in designing large scale, sophisticated broadband networks," said Ivar Stromberg, CEO of Tele1 Europe. "With this investment our business customers will benefit from high speed voice and data access."
For Tele1 Europe's backbone transport network, Lucent will supply its WaveStar DWDM products. Tele1 Europe is focused on developing facilities-based fiber optic access networks Stockholm, Gothenburg, Malmo, Copenhagen, Afhus, Alborg, Oslo, Bergen, Helsinki. In total, Tele1 Europe will invest SEK 1.4 billion (US$150 million) in the expansion of broadband technology.

FIBER OPTICS

Marconi Awarded Contract to Provide the Broadband Fiber in the Loop Deployment for BellSouth
Marconi has won a major contract from BellSouth to deploy voice, video, and ATM based high speed data technology throughout the BellSouth network using Marconi's newly introduced ATM based DISC*S MX access platform. Marconi projects that BellSouth's planned deployment will generate over US$1.0 billion in sales revenue for the company over the next three years. This announcement follows the June, 1999 commitment to Marconi for Integrated Fiber in the Loop (IFITL) and represents a strong next step in BellSouth's broadband deployment strategy. It builds upon BellSouth's commitment to fiber
This contract is a landmark for Marconi, clearly demonstrating the synergies of acquiring and integrating RELTEC Corporation and FORE Systems. The contract covers deployment of a solution comprised of the robust DISC*S platform and ADSL and ATM technologies gained from the considerable strengths of the combined Marconi companies. In addition, the use of technology and engineering resources from Europe was instrumental in accelerating this development and bringing this product to market in time to meet BellSouth's needs.
Beginning in early 2000, BellSouth will deploy Marconi's next generation DISC*S MX products. DISC*S MX delivers enhanced, ATM-based, broadband services in the framework of the "field proven" first generation DISC*S equipment.

INDIA

Department of Telecommunications Establishes Panel to Process Telecom Regulatory Authority of India Recommendations for Long Distance Services
The Department of telecommunications (DOT) has set up a special committee to process the recommendations of the Telecom Regulatory Authority of India (TRAI) on the modalities to open up long distance communications in the country.
Telecom Commission chairman, Anil Kumar, said the committee set up would try to process the matter in an expeditious manner. DoT has not made commitments regarding the deadline for opening up the sector. Observers believe that it will make at least two months to finalize the norms to open up the sector as DoT and TRAI have different views on many issues.

Bharti Enterprises Wraps up Skycell Deal for INR$1.25 Billion
The Sunil Mittal-promoted Bharti Enterprises has wrapped up the acquisition of a 51 per cent stake in Chennai cellular operator - Skycell - for around INR 1.25 billion. The deal was concluded with Crompton Greaves and DSS Enterprises. While Crompton Greaves will sell 40.5 per cent stake, DSS 10.5 percent.
The position of the foreign shareholders, Milicom and Bell South, which hold 24.5 percent each, is yet to be clarified. Sources said that the deal would be signed once all the formal approvals have been obtained.

Financial Institutions Agree to fund Telecom Projects
Industrial Development Bank of India (IDBI) and ICICI have agreed to fund telecom projects following a recent court directive that the New Telecom Policy is in place. Both, financial institutions and banks had refrained from funding telecom projects due to lack of policy initiatives.
The decision took place at a meeting between the heads of institutions, operators and to p government officials including Ram Vilas Paswan and Cabinet minister.

MTNL to Enter into Long Distance Service Market
Mahanagar Telephone Nigam Ltd. (MTNL) has decided to enter into the long-distance telephony, with an initial investment of INR 10 billion, which will cover 7 cities, including four metros. MTNL will meet 50 percent of the required funds from internal sources and the rest through debt.

ICICI Bank and Satyam in Net Banking Venture
ICICI Bank and Satyam Infoway have entered into a joint alliance to offer retail banking products and services over the Internet. The new joint venture will be called icicisify.com and is likely to be operational in three weeks time. The two companies will also explore the possibility of e-commerce business.

Net4India to Invest INR 1 Billion in India
Sawhney group plans to invest up to INR 1 billion in Internet business in India. The group kicked off its Internet foray through Net4India's Internet services in New Delhi. The company plans to offer unlimited e-mail access for INR 100 a month. Unlimited Internet access can be availed for INR 12,500 annually. The service is expected to hit other cities like Mumbai, Bangalore and Chennai early next year. Net4India has already invested INR 50 million and would be looking for partnerships in India to expand its reach.

Tamil Nadu Telecommunications Plans Aggressive Marketing for Optical Fiber Cables
Tamil Nadu Telecommunications Ltd. (TTL), a joint venture between state-owned Telecommunications Consultants India (TCIL) and Tamilnadu Industrial Development Corporation Ltd (TIDCO), has diversified into optical fiber cables.
For this new INR 3000 million project, TTL has roped in Fujikura of Japan for technical and equity participation. The company is now planning to go in for aggressive marketing of fiber optic cables with private players in various segments. The venture with the Japanese firm will open the gates for export possibilities.

MEXICO

Leap Wireless International Welcomes Sprint PCS as a Strategic Partner in PEGASO
Wireless communications carrier Leap Wireless International, Inc. confirmed that Sprint and PEGASO have signed a non-binding memorandum of understanding. If the transaction contemplated by the MOU is consummated, Sprint PCS will acquire 30.5 percent of the Mexican wireless carrier through an investment of up to US$250 million, which includes purchasing primary shares issued by PEGASO and buying shares from certain shareholders other than Leap and PEGASO's Mexican shareholders.
PEGASO expects to reach a definitive agreement with Sprint PCS as early as the first calendar quarter of 2000. Leap, one of the co-founders and a major shareholder that currently owns 28.6 percent of PEGASO, will retain its shares in PEGASO and remain active on the company's board. PEGASO and Sprint PCS both offer the superior voice quality and security of CDMA technology.
The founding shareholders of PEGASO, which include Leap, have assembled investors, acquired a nationwide license for PEGASO, built a strong local management team and launched Mexico's first 100 percent digital wireless service in the country's four largest cities.

"Today in Telecom" is a publication of Information Gatekeepers Inc. ©1999. 214 Harvard Ave, Boston, MA 02134; Tel: 617-232-3111; Fax: 617-734-8562

Headline - December 16, 1999

TOP STORIES

BellSouth and Qwest Communications Awarded $250 Million Broadband Service Contracts
Telewest Communications to Acquire Flextech for US$3.06 Billion in Stock
Vodafone Makes Move into Spain’s Telecommunications Market with Bid for Stake in Airtel

CABLE OPTICS

Cox Communications and Excite@Home to Jointly Develop Advanced TV Services

EUROPE

TP S.A. Reports Further Gains in Revenues and Operating Profits for the First 9 Months Ended September 30
France Telecom Offers Fixed/Mobile Service For Corporate Customers Using Nortel Networks’ Piconode In-Building GSM Solution
AOL UK in Strategic Alliance to Offer Dresdner Kleinwort Benson Real-Time Share Prices
RealNetworks and Loral Cyberstar to Deliver Streaming Multimedia Solution to European ISPs

FIBER OPTICS

Williams Communications Wins $26.5 Million Fiber Capacity Contract from Worldwide Fiber Inc.

INDIA

Government Establishes IT and Telecom Industry Group
Mahanagar Telephone Nigam Ltd. Will Have to Pay Corporate Tax on License Fees
Telecom Regulatory Authority of India to Release Recommendations on License and Revenue-Sharing for Cellular Operators by February
Lockheed Martin and Shyam Asia Cellular Satellite to Build Satellite Service Gateway
Ministry May Impose Anti-Dumping Duty on Optical Fiber

INTERNET/E-COMMERCE

Telenesius Enhances E-Commerce Strategy with Acquisition of The Design Room

JAPAN

KDD Corp.’s Merger to Create Japan’s Second Largest Telecom Company

SOUTH AMERICA

Telefonica to Build Ariba-Powered B2B Digital Exchange in Europe and Latin America
Argentina Authorizes 19.5 Percent Reduction in Telecommunications Charges

WIRELESS

Leap Wireless International Signs Memorandum of Understanding to Acquire Three Operating Licenses in Georgia

TOP STORIES

BellSouth and Qwest Communications Awarded $250 Million Broadband Contracts
BellSouth Corporation and Qwest Communications International Inc. have been awarded a $250 million in multi-year contract to provide broadband information networks that will carry Internet, image, data and voice communications services for business throughout the southeast and United States. The companies said they have won 27 contracts for communications services and have over 250 proposals pending with business customers in the government, retail, financial, and health care industries.
Qwest and BellSouth have closed contracts for data and Internet services with large customers such as the State of Tennessee and other organizations in the public and private sectors. The State of Tennessee contract calls for the two companies to provide a converged information network to carry the state's Internet, image, data and voice communications.
This new broadband information network will connect the entire Tennessee government system, including Tennessee Board of Regents, the University of Tennessee System, and other eligible entities including libraries, city and county governments and non-profits. The network provides a seamless, scalable solution for future Internet and communications services. BellSouth and Qwest are providing these services in a manner consistent with other teaming arrangements that they each have with other carriers.

Telewest Communications to Acquire Flextech for US$3.06 Billion in Stock
Telewest Communications, an UK-based cable television provider, reach a deal to acquire Flextech for US$3.06 billion in stock. Despite the fact that Telewest is the biggest company out of the two, the head of the newly merged company will be Adam Singer, who has significant experience in the cable television business. This shift in management is signified by the clout of Liberty Media Group, which owns 37 percent of Flextech and 22 percent of Telewest has also played a major role in bringing the two companies together.

Vodafone Makes Move into Spain’s Telecommunications Market with Bid for Stake in Airtel
Continuing in its aggressive mode to dominate the European telecommunications market, Vodafone AirTouch has offered to exchange 5.5 percent of its shares for Banco Santander’s 30.5 percent stake in Airtel SA to win control over Spain’s second largest mobile operator. If successful, the deal would give the UK-based wireless company a 51 stake in Airtel. Also, it would make BSCH the largest shareholder of Vodafone, which is in the midst of a hostile battle for Germany’s Mannesmann.
Airtel has become a major target of several international telecom players who have been looking for a way into Spain’s burgeoning wireless market. Some of the contenders for this stake include British Telecommunications, a main contender in the bid for Airtel, and both Deutsche Telekom and AT&T have expressed interest in acquiring a bid in the company. Those close to the situation say that BSCH will likely proceed with Vodafone’s offer, but it is not know if British Telecom will come back with a higher offer.
BT previously held talks with Airtel shareholders in an effort to increase its 17.8 percent in the Spanish mobile phone company. However, BSCH pushed BT away from acquiring a 16.3 percent of Airtel from two local electricity companies, bringing its total stake in the company to 30.5 percent.
The recent battle to enter this market segment is a reflection of the region’s stellar growth in wireless communications, with 26 percent of the population using cellular phones by the middle of this year. Leading the trend is Airtel, which has more than doubled its customer base to approximately 5 million and ending with a 35 percent market share. Airtel is expected to post a profit of more than US$150.9 million.

CABLE OPTICS

Cox Communications and Excite@Home to Jointly Develop Advanced TV Services
Cox Communications and Excite@Home have reached an agreement to jointly develop advanced digital television services. Excite@Home will participate with Cox to trial an integrated suite of interactive advanced TV services and solutions.
Under the terms of the agreement, Cox and Excite@Home will work together to define and develop the interactive TV services and applications which Cox will test in 2000 in one of its major cluster systems. These services and applications will include leveraging Excite@Home's high-speed backbone and distributed broadband platform, certain content and application services, and technologies related to client and user interface.

EUROPE

TP S.A. Reports Further Gains in Revenues and Operating Profits for the First 9 Months Ended September 30
Telekomunikacja Polska S.A reported continuing gains in revenues and operating profits for the nine months ended September 30. These results are based on International Accounting Standards and follow the publication of third quarter results according to Polish Accounting Standards. Nine months' revenues reached PLN 9.5 billion against PLN 6.2 billion for the six months ended June 30.
The operating profit rose to PLN 2.1 billion from PLN 1.4 billion for the first six months. The net profit for the reporting period was PLN 591 million against a net profit of PLN 346 million for the first six months.

France Telecom Offers Fixed/Mobile Service For Corporate Customers Using Nortel Networks’ Piconode In-Building GSM Solution
Having completed two highly successful trials and assisting in various co-development activities over the past two years, France Telecom Mobiles announced a new corporate GSM service based on the Nortel Networks PicoNode platform, an in-building solution targeted to increasing the productivity of corporate users.
Following a successful demonstration at the GSM World Congress in February, Nortel Networks and France Telecom Mobiles successfully completed two separate trials in Paris involving over 100 participants. These trials showed true fixed/mobile convergence and other end user benefits of the PicoNode platform.
The Nortel Networks PicoNode incorporates a base transceiver station, a base station controller and a mobile switching center into a single cabinet slightly larger than a personal computer. It provides GSM call switching, near landline-quality voice service and integrated PBX features in a compact package suitable for corporate environments. The PicoNode can switch traffic locally when deployed in a private network, reducing traffic on the public GSM network, and resulting in substantial cost savings and superior call quality.

AOL UK in Strategic Alliance to Offer Dresdner Kleinwort Benson Real-Time Share Prices
AOL UK, a division of AOL Europe, and a European investment bank Dresdner Kleinwort Benson today announced details of a new strategic alliance.
Under the terms of the agreement, AOL and CompuServe members in the UK will be able to view Dresdner Kleinwort Benson's real-time share prices through each service's respective Finance Channel. With the addition of real-time quotes, AOL and CompuServe UK continue to enhance their positions as the leading subscription services offering ease of use, convenience, and reliable access.
This new agreement, intended for information and educational purposes only, reflects the demand expressed by both AOL and CompuServe members for additional professional-caliber personal finance information and products that are simple to use as an integral part of each service's dedicated financial content area.

RealNetworks and Loral Cyberstar to Deliver Streaming Multimedia Solution to European ISPs
RealNetworks and Loral CyberStar a global provider of Internet and infomedia services, jointly announced today a trial offering of satellite-based audio and video streaming media service to customers of European Internet Service Providers (ISPs). Loral CyberStar will distribute continuous, high-speed media services directly to ISP customers through its global multicast satellite network, bypassing Internet congestion and enabling efficient and instantaneous delivery to the edge of the Internet. RealNetworks will provide streaming media content through its Real Broadcast Network using RealSystem G2, the foundation media delivery software technology to be deployed in each of the ISPs last-mile networks.
The new streaming service will initially be deployed to ISPs on a trial basis in the first quarter of 2000. The Real Broadcast Network will provide content from real.com™ partners. Loral CyberStar will then distribute content via its global multicast satellite network to its ISP customers, each of which will deploy RealSystem G2 RealNetworks streaming media software to stream the content to customers.

FIBER OPTICS

Williams Communications Receives $26.5 Million in Worldwide Fiber Inc. Transaction
Williams Communications Inc.’s network unit has completed a $26.5 million agreement to sell services and fiber capacity to Worldwide Fiber Inc. The fibers Williams Communications is providing in this transaction are located primarily in the northeastern United States and will be used by Worldwide Fiber to expand its national network. The 20-year agreement also includes Williams Communications' receipt of monthly recurring revenue from Worldwide Fiber for collocation and network maintenance services.
Williams Communications has been aggressively deploying its nationwide network. Already exceeding 25,000-miles, Williams' network is scheduled to comprise 33,000 miles connecting 125 cities by the end of 2000. Construction of the network is progressing a year ahead of its initial plan.
The two companies in this agreement have a long-standing relationship. Earlier this year, Williams Communications and Pacific Fiber Link, a subsidiary of Worldwide Fiber, jointly constructed a multi-conduit fiber optic backbone network between Sacramento, Calif. and Portland, Ore.

INDIA

Government Establishes IT and Telecom Industry Group
The government constituted a group on telecom and Information Technology (IT) convergence headed by the finance ministry Yashwant Sinha to resolve the problems in the sector and to implement the new telecom policy.
The group will comprise communications minister Ram Vilas Paswan, Information Technology Minister Pramod Mahajan and law minister Ram Jethmalani. The new telecom-IT convergence legislative framework will be drafted by the group recommending whether there should be separate legislation for telecom, broadcasting, cable TV, Internet and satellite communication.
The group has been asked to prepare a suitable draft amendments to the Telecom Regulatory Authority of India Act to strengthen the sector and will make suggestions to resolve pending issues between the TRAI and Department of Telecommunications, besides making recommendations on creation of level-playing field between public and private operators.

Mahanagar Telephone Nigam Ltd. Will Have to Pay Corporate Tax on License Fees
The Income Tax Department has upheld a substantial tax claim on the state owned Mahanagar Telephone Nigam Ltd. (MTNL), by ruling that the company should pay corporate tax on the license fees paid to the government.
Although MTNL had opposed the assessment made earlier, the Income Tax
Department has now asked it to cough up corporate tax of over INR$1 billion on the license fee of around INR 300 billion paid to the government in 1998-99. There is also a possibility that MTNL will have to pay tax on license fee payable for the last five years, since these can be revisited under the existing regulations.
MTNL has argued that this move constituted double taxation. Also, since institutional lenders had allowed private telecom companies to capitalize its license fees, it should be extended the same concession.

Telecom Regulatory Authority of India to Release Recommendations on License and Revenue-Sharing for Cellular Operators by February
The Telecom Regulatory Authority of India is likely to release recommendations on new license fee and revenue-sharing terms for private cellular operators by February 2000.
The regulator, which released its consultation paper on the issue, is scheduled to hold open house discussions during January 2000. The consultation paper on basic service licenses is scheduled for release by February 2000.
In the consultation paper for cellular operators, TRAI has proposed that revenue passed on by cellular service providers such as inter-connect charges should not be included for the purpose of calculating the revenue-sharing percentage. The regulator has also proposed that the portion of revenue accruing to franchisees and other sister concerns, who may conduct either a part of the business or collect advertisements at higher rates for display on cell phones at lower rates, should also be included in the gross revenue, as otherwise it may deflate revenues.

Lockheed Martin and Shyam Asia Cellular Satellite to Build Satellite Service Gateway
Lockheed Marti Global Telecommunications and Shyam ACeS reached an agreement to build a gateway in India that will deliver Asia Cellular Satellite (ACeS) services to consumers throughout India.
The contract is valued at more than US$17 million, with the total project cost reaching approximately $30 million. Lockheed will provide a satellite gateway connecting Shyam ACeS subscribers to the public switched telephone network and cellular networks in India.
The ACeS system will deliver mobile voice and data communications services and the ACeS providers will offer retail services for less than US$1 per-minute throughout the ACeS coverage area.
Service providers in Bangladesh, Indonesia, Pakistan, Philippines, Sri Lanka and Thailand have also agreed to market the ACeS services in their national territories.

Ministry May Impose Anti-Dumping Duty on Optical Fiber
The commerce ministry has proposed imposition of anti-dumping duty on optical fiber, the raw material for manufacture of optical fiber cables used in the telecom sector. The finance minister is expected to take a decision soon. At present, there is no custom duty on optical fiber.
This move is aimed at protecting the domestic industry, and the biggest beneficiary would be Sterlite Industries, which has over 80 percent market share in India. Due to decrease in the raw material cost and also due to surplus global supply in the fiber market, the prices of optical fiber came down from around US$60 to less than US$25 in 1999.

INTERNET/E-COMMERCE

Telenesius Enhances E-Commerce Strategy with Acquisition of the Design Room
Telenisus Corporation, a complete e-business Internet solutions provider, has acquired The Design Room, an interactive design company based in the San Francisco-area. The Design Room will produce innovative, high-level designs for Web-based applications such as hosting and e-commerce.
Telenisus, considered among the first ESPs (e-business service providers), is solely dedicated to providing single-source, business-to-business Internet solutions that consist of four service families: virtual private networks (VPNs), managed firewall/security services, Web site and application hosting, and e-commerce. The acquisition of The Design Room advances this comprehensive strategy.
The Design Room is noted for its proven reputation in designing truly creative Web sites that are sophisticated, secure and scaleable.
Through its proprietary operations support system (OSS), developed with Andersen Consulting and 24x7 network operations center, Telenisus will ensure customers maximum security because Telenisus will monitor and manage the e-business solution end-to-end. This allows Telenisus to foresee and pre-empt potential problem areas across all service families.

JAPAN

KDD Corp.’s Merger to Create Japan’s Second Largest Telecom Company
KDD Corp. has reached an agreement to merge with smaller carriers DDI Corp. and IDO Corp. to create the country’s largest telecommunications company. A recent report in the Japanese business daily Nihon Keizai Shimbun said the merged company will begin operations next October, with combined annual revenue of $19.3 billion.

SOUTH AMERICA

Telefonica to Build Ariba-Powered B2B Digital Exchange in Europe and Latin America
Telefonica SA and Ariba have joined forces to build series of business-to-business (B2B) corporate exchanges in Europe and Latin America. Using the Ariba B2B e-commerce platform, Telefonica would deploy a series of localized corporate exchanges for business buyers and suppliers in Latin America, all made interoperable through the Ariba Network services.
This is the latest in a series of moves by Telefonica, a global communications provider based in Madrid, Spain, to aggressively a major player in both Spain and Latin America’s e-commerce markets. In November, Telefonica's wholly owned subsidiary Terra Networks went public and is currently the largest Internet company listed in European markets. Terra Networks provides a wide range of Internet services to residential and business users.
Telefonica will create a series of corporate exchanges leveraging Telefonica's major presence throughout Portuguese and Spanish speaking countries, beginning with Argentina, Brazil, Chile, Peru, Mexico and Spain. The company intends on working with Ariba to create localized value-added network commerce services to be delivered to corporate exchange participants through Ariba Network.

Argentina Authorizes 19.5 Percent Reduction in Telecommunications Charges
As of March 1, fixed monthly telephone charges for commercial and government clients will be cut by 19.5 percent. For residential customers, rates for local calls will go down by 5.5 percent, although Telefonica de Argentina and Telecom Argentina Stet-France Telecom can decide how to implement the reductions. In addition, the government plans to extend indefinitely previously announced special rates for Internet connections. Luis Machinea, Argentina’s finance minister, said that basic service reductions will bost the companies about 110 million a year in lost revenue, while the Internet rates will cut revenue by 28 million pesos.

WIRELESS

Leap Wireless International Signs Memorandum of Understanding to Acquire Three Operating Licenses in Georgia
Leap Wireless International Inc. has entered into a memorandum of understanding to purchase PCS operating licenses in Macon, Columbus and Albany, Georgia for an undisclosed amount. Leap and the seller expect to finalize a binding agreement by Feb. 28, 2000. The agreement, if executed, will give Leap the right to add approximately 1.3 million POPs (potential subscribers) to the Company's holdings for use by its domestic subsidiary, Cricket Communications, Inc. The acquisition will be subject to certain conditions and approval from the Federal Communications Commission (FCC).

"Today in Telecom" is a publication of Information Gatekeepers Inc. ©1999. 214 Harvard Ave, Boston, MA 02134; Tel: 617-232-3111; Fax: 617-734-8562

Headline - December 15, 1999

TOP STORIES

Nortel Networks Extends Optical Internet Capabilities with Acquisition of Qtera for US$3.25 Billion

ADSL

RC Networks Raises $20 Million in Second Round of Financing

BRAZIL

Brazil to Realign Satellite Launches
Ericsson Wins US$200 Million Contract from Diginet
Brazil's Globo Cabo Plans to Triple Investment to US$150 Million

CABLE OPTICS

Com21 and Tdsoft Sign Agreement for Cable-Based V5.2 Telephony Solution

EUROPE

Sweden and Norway Struggle to Find Resolution on Telia-Telenor Merger

FIBER OPTICS

CIENA Targets Metropolitan Optical Market with New 10 Gigabit Solution
Lucent Technologies and Tellium Jointly Develop Optical Switching Products for Advanced Data Networks

EMERGING TELECOM MARKETS – ISRAEL

Government to Sell Shares of Bezeq to Private Investor

INDIA

Telecom Regulatory Authority of India Recommends Unlimited Competition at National Level
Department of Telecommunications Opposes Regulator's Recommendations on Long Distance Telephone Service
TRAI Proposes Another Tariff Revision in Basic Telephony Call Charges
Telecom Regulatory Authority of India Comptroller Says Auditor General Cannot Question the Regulator on Tariffs
Globalstar to Launch India-Based Operations by End of 2000
Dr Reddy's Holdings and IQI Launch Portal for Medical Community

SPOTLIGHT – EMERGING TELECOM STARTUPS

Extreme Packet Devices Chooses NEC Electronics as its Chip Manufacturer

SUBMARINE FIBER OPTICS

Global Crossing Completes Construction of Phase One of its 7,200 Km, 13-City European Terrestrial Network

TOP STORIES

Nortel Networks Extends Optical Internet Capabilities with Acquisition of Qtera for US$3.25 Billion
Nortel Networks has reached a definitive agreement to acquire Qtera Corporation, a privately-held company that produces ultra-long-reach optical networking systems, for up to US$3.25 billion in Nortel Networks common shares, a portion of which is contingent upon Qtera achieving certain business objectives. The acquisition of this start up gives Nortel Networks first mover advantage through breakthrough optical technology.
Qtera has developed technology that enables optical signals to be sent as far as 4000 kilometers or 2500 miles in purely optical form, providing advantages in cost, reliability, and scalability to long-range networks. Qtera's solutions operate at 10 Gbps, the line rate used by high-performance Internet backbone networks.
Qtera's solutions were successfully trialed by Qwest Communications, which is also a customer of Nortel Networks. Qtera has its headquarters and about 140 employees in Boca Raton, Florida, and about 30 employees in Richardson, Texas. Upon completion of the acquisition, Qtera will become a wholly owned subsidiary of Nortel Networks, with its operations remaining in those locations. Qtera president and chief executive officer Fahri Diner will continue to lead this business as president, reporting to Mike Unger, president, Optical Networks, Nortel Networks.

ADSL

RC Networks Raises $20 Million in Second Round of Financing
RC Networks Inc, a provider of DSL-driven, high-speed Internet access products for the multi-tenant unit (MTU) market, has completed a second financing round in which it raised $20.5 million, primarily from new investors.
Menlo Ventures led the group that included BancBoston Ventures, affiliated with Robertson Stephens Inc., and J. & W. Seligman. Previous investors Ampersand Ventures, Edgewater Funds, and Signal Lake Venture Fund also contributed to the round, which will be used for general operations and international expansion. Douglas C. Carlisle, general partner and managing director of Menlo Ventures, will join RC Networks' board of directors.
The RC8000 product family provides high-speed Internet access for multi-tenant offices easily and cost effectively because it uses existing in-building wiring or telephone lines being used simultaneously to carry voice traffic, providing up to 3.2 Mbps DSL access to residents.

BRAZIL

Brazil to Realign Satellite Launches
Brazil plans to rid itself of its current generation of scientific satellites after two failed efforts to put one into orbit. The latest attempt to launch a Saci meteorological satellite ended Saturday, December 11, when a rocket malfunctioned and was blown up three minutes after lift off in the northern state of Maranhao, Scientists said the rocket problem would be investigated and that it appeared similar to that of the first Brazilian rocket, which blew up soon after launch two years ago carrying the first Saci satellite.

Ericsson Wins US$200 Million Contract from Diginet
Ericsson has won a US$200 million contract with Diginet Americas Inc to further extend Diginet's fixed wireless broadband network throughout Latin America. Ericsson said the agreement expanded its previous agreement with Diginet, announced in June, which was worth US$100 million.
Privately owned Diginet Americas Inc is a provider of high-speed, high-capacity fixed wireless Internet service in Latin America. Since June Diginet, branded as Diveo throughout Latin America, has secured additional spectrum and operating licenses in Brazil and Panama, launched commercial services in Sao Paulo, Brazil, and has been awarded licenses to offer local and long distance voice telephony services in Argentina.

Brazil's Globo Cabo Plans to Triple Investment to US$150 Million
Globo Cabo SA will triple its investments to US$150 million next year with fresh capital from Microsoft Corp. and other companies. Globo Cabo, will spend the money on expanding the Internet capabilities of its network, increasing service areas and providing equipment for new subscribers, said Eric Chasser, Globo Cabo's chief financial officer.
Globo Cabo cut investment to a planned US$40 to US$60 million this year from US$258 million in 1998 after a January devaluation forced it to divert resources from expansion to the payment of debt. With about 60 percent of its debt in dollars, devaluation caused the local currency value of its obligations to soar. The cost of foreign programming also rose.

CABLE OPTICS

Com21 and Tdsoft Sign Agreement for Cable-Based V5.2 Telephony Solution
Com21 Inc. and Tdsoft have signed a joint agreement to create next generation cable-based telephony solutions based on the V5.2 PSTN standard for markets outside North America. The V5.2 standard specifies an open interface for access network systems and was approved by the European Telecommunications
Standards Institute (ETSI) and the International Telecommunications Union ITU) for PSTN, ISDN and leased lines, with concentration and protection features.
The alliance will enable cable operators to offer affordable, toll-quality voice and broadband data access as a single, integrated service, leveraging the existing public switched telephone network (PSTN) infrastructure. The terms of the agreement were not disclosed.
Com21 and Tdsoft plan to create scaleable service opportunities for cable operators to help define the cable telephony marketplace. Using Tdsoft's VoNGATE voice access gateway, cable operators and service providers will provide voice services over Com21's ComUNITY Access System.

EUROPE

Sweden and Norway Struggle to Find Resolution on Telia-Telenor Merger
In the latest twist of an ongoing saga in the European telecommunications business, both Sweden and Norway’s governments have failed to reach a common agreement on the $47 billion merger between Telia AB and Telenor. Representatives of both governments said that the meeting is likely to continue today.
One of the problems that blocked the deal was Norway’s refusal to accept a board decision to locate the combined Nordic carrier’s mobile phone unit in the Swedish capital. In related news, Telia-Telenor’s chief executive, Tormod Hermansen, rejected Sweden’s requests for his resignation after he challenged Wednesday’s board decision and injured a Norwegian radio journalist last week. Yesterday Hermansen met with two Swedish Telia managers to reach common ground, despite his reservations over the merger.
In question is the board chairman Jan-Ake Kark’s previous decision to break a tie of six Swedish board members against six Norwegian board members on the location matter. Hermansen, with the support of Norway’s minority government, maintains that the decision was illegal and should have the support of at least one Norwegian representative. However, Kark says there is not judicial issues and that Stockholm deserves to have the mobile phone unit because he claims they pioneered the mobile phone.

FIBER OPTICS

CIENA Juices up MultiWave Metropolitan Solution to Deliver 10 Gbps Over 24 Channels
CIENA Corporation has made enhancements to its MultiWave Metro intelligent optical transport system enabling it to reach speeds of 10 Gbps across 24 channels. These enhancements will offer service providers the ultimate carrier-class optical transport capacity for delivering new 10-gigabit Ethernet and broadband Internet services across metropolitan fiber networks. Customer trials are expected to begin by the end of the first half of calendar 2000.
In metropolitan networks, carriers traditionally have relied on low-capacity fiber rings for delivery and protection of data services. As data continues to overtake voice traffic in the public network, the current infrastructure is not a cost-effective means of transport, and the overlapping protection rings tend to be expensive and slow to deploy. CIENA’s Metro solution enables unprecedented capacity for optical transport on existing fiber with built-in carrier-class linear, ring and mesh protection. Metro provides SONET/SDH, IP, ATM, Gigabit Ethernet and private line service delivery, plus automated span provisioning with SmartSpan embedded software.

Lucent Technologies and Tellium Jointly Develop Optical Switching Products for Advanced Data Networks
Lucent Technologies and Tellium Inc. have entered a strategic agreement with that will provide telecommunications carriers with a solution to reap the benefits of the all-optical networking revolution. The two-year agreement integrates Tellium's optical switching products within Lucent's market-leading optical networking product portfolio, providing carriers with the optical switching solutions they need.
Under the terms of the agreement, Lucent will distribute Tellium's Aurora optical switches, StarNet Restoration Software, and other software modules to the worldwide marketplace. When combined with Lucent's recently announced WaveStar LambdaRouter, Tellium's Aurora optical switch will help comprise a portfolio that enables service providers to choose the optical switching solution that best fits their needs during the course of the agreement.
Many customers currently need such features as optical layer restoration, scalability beyond 400 Tbps, grooming and wavelength interchange as currently provided by the Aurora optical switch. Optical layer restoration enables carriers to immediately reroute information in the event of a fiber cut. Grooming enables service providers to redirect different wavelengths within a fiber. Wavelength interchange allows carriers to take the information that enters the switch on one color - or wavelength - of light and send it out on another color.

EMERGING MARKETS – ISRAEL

Government to Sell Shares of Bezeq to Private Investor
Doron Cohen, director-general of the Israeli government agency in charge of privatization, said the government has decided to privatize national telephone company Bezeq through the sale of a majority stake to a strategic investor rather than by a public stock offering. Cohen cited the low liquidity of the Tel Aviv Stock Exchange and the high level of concentration in the market as the reasons.
"As things stand at the moment, privatization through a public offering means that in a short time control of the company will be in the hands of someone who has not been chosen by the government but who has aggressively bought shares on the market," he said.
According to conditions set out by the government, all bidders for a controlling stake in Bezeq will need an Israeli partner with a minimum stake of 30 percent in the group. Bidders cannot be owned by a foreign government and must not have significant holdings in countries hostile to Israel.

INDIA

Telecom Regulatory Authority of India Recommends Unlimited Competition at National Level
The Telecom Regulatory Authority of India (TRAI) has recommended unlimited competition in the domestic long distance telephony, referred as STD. In its recommendation submitted to the government, TRAI has suggested the following:

Licenses to be issued at the national level only
Existing operators to be allowed to provide long-distance services
A two-part entry fee of INR 5 billion. INR 1 billion of the INR 5 billion fee to be paid up front, and the remaining INR 4 billion is to be in the form of a refundable deposit paid through bank guarantees or investments in tax-free government bond
Private operators will have to pay revenue-sharing fees less than 5 percent of the gross revenue annually
Government may consider levy of differential tax on the services in addition to the annualized license fee
All licenses are to be for a period of 20 years, extendable by 10 years.
Only consortiums with combined net worth of more than INR 25 billion would be eligible for licenses
Hive off long-distance business of the state-owned Department of Telecom Services in to a separate corporation. In the interim period, accounting separation has been suggested for this business. The separated arm of Department of Telecom Services will have to pay the entry fee and annual license fee at par with the private operators
Private operators should submit a blueprint delineating the construction of network, including technologies, products proposed to be used and tied-up right of way, if any
National long distance service providers should be allowed to resell their services only after three to four years of the opening up of the market
National long distance service providers will not be allowed to set up STD public phone boots, which will continue to be the domain of both state-owned and private basic telecom service providers

Infrastructure providers should be out in two categories. Category one being the infrastructure providers who would be providing assets such as fibers, right of way, towers, etc. category two would cover the infrastructure providers who make available end-to-end bandwidth. There should be no formal license for category one infrastructure providers. Category two infrastructure providers, may, however, be granted licenses on simplified terms and conditions with no entry fee.

Department of Telecommunications Opposes Regulator's Recommendations on Long Distance Telephone Service
Only hours after the Telecom Regulatory Authority of India released its recommendations on long distance service, the Department of Telecommunications rejected them arguing that certain recommendations were unacceptable. This move indicates another wrangling bout between TRAI and DoT is on the cards. If this will be case, it will be a while before private operators enter the national long-distance telephony market. January 1, 2000 is the proposed deadline for opening up this sector.
DoT officials say that the time is not ripe to open up this sector; instead only two private operators should be allowed entry into the long-distance telephony. DoT argues that TRAI's 'market forces theory' is unwarranted in a market where the telecom penetration is less than 3 percent.

TRAI Proposes Another Tariff Revision in Basic Telephony Call Charges
The Telecom Regulatory Authority of India (TRAI) indicated that it will bring about a second round of tariff revision in the basic telecom services, including local and long-distance call charges, in order to cut cross subsidies. TRAI chairman, SS Sodhi, said, "for effective and meaningful competition in the long-distance segment, TRAI has reiterated the need for further tariff rebalancing."

Telecom Regulatory Authority of India Comptroller Says Auditor General Cannot Question the Regulator on Tariffs
The Telecom Regulatory Authority of India (TRAI) has said that it cannot be questioned by the Comptroller and Auditor General (CAG) on tariff fixation issues. TRAI maintains that the process of tariff fixation and consultation has been already been made public, and hence transparent. Further fixing of tariffs is a statutory power under an Act of Parliament and thus CAG cannot question the regulator on this issue. Only recently, CAG had sought production of records relating to tariff fixation of the TRAI.

Globalstar to Launch India-Based Operations by End of 2000
Globalstar LP has decided to launch its Indian operations by the end of next year. The company is currently negotiating in India to set up three satellite gateways to offer connectivity to the entire SAARC region. The company expects that it will have to invest close to $80 million to install the satellite gateways and other facilities.
Globalstar is contemplating a phased rollout of its services. In India, it is mulling two kinds of alliances with a gateway service provider and with service providers that can afford national reach.

Dr Reddy's Holdings and IQI Launch Portal for Medical Community
Dr Reddy's Holdings and venture capital firm IQI Investments has joined forces to launch an Internet portal for the medical community. The portal, which will be called meditimes.com has been positioned as an e-service for doctors and their families. While DRH will have 65 percent stake, IQI will have the balance stake. 300 doctors are already registered at meditimes.com. Set up with an initial investment of INR 4 million, the meditimes.com is looking at a turnover of INR 25-30 million in its first year of operations.

SPOTLIGHT – EMERGING TELECOM STARTUPS

Extreme Packet Devices Chooses NEC Electronics as its Chip Manufacturer
Extreme Packet Devices Inc. (EPDI), fabless semiconductors company that provides integrated circuits for terabit switch routers, has selected NEC Electronics Inc. as its chip manufacturer. NEC Electronics will be responsible for the back end design and engineering, fabrication and packaging of Extreme's X-1 Traffic Management Chipset, one of the first commercially available 10 Gbps traffic management chipset that provides Quality of Service (QoS) at OC-48 and OC-192 line rates.
The design win is an important step for NEC Electronics' growing business in the Ottawa region, which is rapidly emerging as 'Silicon Valley North'. "Moving forward, we expect to explore more design opportunities with Extreme and with other companies in the Ottawa region, which is becoming a hotbed of semiconductor and equipment development for the next generation Internet," added LoPresti.
EPDI will be delivering the X1 Chipset to its customers in the third quarter of 2000. About the X-1 Management Chipset The EPDI chipset manages traffic in and out of the switch ports in these Terabit Switch Routers. By supporting traffic at 10 Gbps, EPDI is enabling the transport of OC-192c traffic and Quality of Service (QoS) for cell and packet based networks.

SUBMARINE FIBER OPTICS

Global Crossing Completes Construction of Phase One of its 7,200 Km, 13-City European Terrestrial Network
Global Crossing Ltd. has completed construction and is finishing final testing of the first phase of its Pan European Crossing (PEC) network. PEC will provide ultra-high bandwidth services linking major European cities with North America and Asia and, next year, with South America. This first phase includes three rings connecting 13 cities in the UK, Netherlands, Belgium, Denmark, France and Germany.
A fourth ring is expected to be ready for service by 2nd Quarter of 2000, extending the network to six additional cities in Germany. A fifth ring reaching additional five cities through France, Italy and Switzerland is scheduled to be on-line by 3rd Qtr 2000.
Additional networks for Scandinavia, Spain, Italy and Central Europe are being considered. By 2001, PEC should represent a total and fully funded network of $1.3 billion linking 32 cities in 11 countries.
A fourth ring is expected to be ready for service by 2nd Qtr 2000, extending the network to a further six cities in Germany. A fifth ring reaching an additional five cities through France, Italy and Switzerland is scheduled to be on-line by 3rd Qtr 2000.

"Today in Telecom" is a publication of Information Gatekeepers Inc. ©1999. 214 Harvard Ave, Boston, MA 02134; Tel: 617-232-3111; Fax: 617-734-8562

Headline - December 14, 1999

TOP STORIES

Lucent Technologies Teams with Tellium to Offer Optical Switching Products for Advanced Data Networks

Fiber Optics

International FibreCom Inc. Awarded $32 Million Contract from PF.Net
Worldxchange Announces Broadband Network in Europe
Nortel Lands Two Contacts in Europe Worth $100 Million
Level 3 International Plans to Deploy LEAF Fiber
Lucent to Build Data Network in Brazil

Wireless

Microsoft and Ericsson Pact May Boost U.S. Cell-Phone Market
Diginet Americas and Ericsson Expand $100 Million Relationship to Reach New Total of $300 Million
Sprint Adding New Call Center to Support Growth Of Local Communications Business

Satellite

Globecomm Systems Awarded $3.2 Million Contract by NTT Communications Corporation

BUSINESS

AT&T Canada Wins $30 Million Canadian Government Contract
RC Networks Raises $20 Million in Second Round of Funding
KPNQwest Announces Largest Pan-European Footprint for DSL Services
Iasiaworks Financing
Teleglobe Inks an Agreement with Alliatel of Czech Republic
LD COM Signs with Alcatel
Pegasus Telecom Signs Contract with Alcatel

TOP STORIE

Lucent Technologies Teams with Tellium to Offer Optical Switching Products for Advanced Data Networks
Lucent Technologies and Tellium Inc announced a strategic agreement that will provide telecommunications carriers with a cost-efficient solution for delivering information at the speed of light. The two-year agreement integrates Tellium’s optical switching products with Lucent’s optical networking product portfolio—providing carriers with the optical switching solutions they need.
Under the terms of the agreement, Lucent will distribute Tellium’s Aurora optical switches, StarNet Restoration Software and other software modules to the worldwide marketplace. When combined with Lucent’s WaveStar LambdaRouter, Tellium’s Aurora optical switch will help comprise a portfolio that enables service providers to choose the optical switching solution that best fits their needs during the course of the agreement.

FIBER OPTICS

International FibreCom Inc. Awarded $32 Million Contract from PF.Net
International FibreCom Inc.’s Infrastructure Development Division has been awarded a design-build contract with an estimated value of more than $32 million by PF.Net for the engineering and installation of a fiber-optic network in the southwestern United States.

Worldxchange Announces Broadband Network in Europe
Worldxchange Communications plans to develop and deploy a broadband fiber-optic network in Europe. The company will construct a 3000-km network using DWDM equipment and low dispersion fiber. Worldxchange operates 40 switches in 12 countries with an extensive network of owned and leased undersea and terrestrial fiber cables.

Nortel Lands Two Contacts in Europe Worth $100 Million
Nortel Networks landed two new contracts in Europe for the construction of fiber-optic networks. LambdaNet Communications will use Nortel solutions for an intercity Internet network in January 2000 linking 21 German cities and expected to expand to a pan-European network later in the year. The contract is valued at $100 million over three years.

Level 3 International Plans to Deploy LEAF Fiber
Level 3 International, a European subsidiary of Level 3 Communications Inc., will deploy upwards of 600,000 km of Corning Inc.’s LEAF optical fiber in the first installment of its European data network. Corning Cables, Corning’s European cabling division, will cable the total volume of fiber for the network. The contract follows a 1998 announcement that Level 3 would deploy more than 2 million km of the LEAF fiber in the U.S, nationwide network.

Lucent to Build Data Network in Brazil
Brazilian long-distance telephone company Embratel will join forces with Lucent Technologies to build a nationwide high-speed data network in Brazil. Financial details were not disclosed, but the network will offer ATM and frame-relay backbone connections, dedicated and dial-up Internet, and virtual private networks. Lucent’s NetCare Professional Services will provide network planning, design, and implementation. Embratel is part of MCI World Com Inc as a result of the privatization of state phone companies Telebras in 1998.

WIRELESS

Microsoft and Ericsson Pact May Boost U.S. Cell-Phone Market
Microsoft Corp’s agreement with Telefon AB L.M. Ericsson may give the U.S. cellular-phone market a boost according to Microsoft president, Steve Balmer.
New applications such as wireless email, which the two companies plan to bring to the market in the second half of he next year, are likely to attract more mobile-phone subscribers in the U.S., where cell-phone usage lags behind Europe.
Last week, Microsoft and Ericsson formed a joint company that will develop Internet applications for mobile handsets, such as mobile email and synchronizable calendars for mobile phones and PCs.
The pact comes at a time of dramatic change for the wireless market. The first Internet-ready handsets are hitting the European market. This year, the number of short messages sent by mobile phone will be more than 2 billion. Network operators across Europe are developing wireless-Internet portals with services ranging from stock updates and news to wireless movie-ticket sales and wireless bill payment. Ericsson predicts that by the year 2003 there will be 450 million mobile-Internet subscribers in the world.
The U.S. market has also seen an explosion of mobile-phone information services recently, even as the country is still struggling to convert to digital from analog mobile-phone systems. While analysts agree the U.S. wireless market is still some two years behind Europe’s in terms of subscribers, most also believe that it will take much less than two years for the U.S. to catch up with Europe.
Indeed Microsoft and Ericsson officials said their agreement isn’t exclusive: Microsoft may sign pacts with other wireless industry players and Ericsson may develop products and services with other software makers. Ericsson president Kurt Hellstrom said he welcomes other companies embracing the new joint company’s applications. Microsoft’s Balmer added that the Redwood, Wash., software maker isn’t bound to stick with Ericsson in the wireless arena. "We are not excluding any other partnerships," he said.
Analysts predict Microsoft may soon seek to sign deals with a slew of mobile-handset makers to make the company’s mobile-Internet software the wireless industry’s standard. So far, Microsoft have said they chose Ericsson because of its good contacts with operators around the globe. "Microsoft wants to create a virtual enterprise around their products, said CSFB’s Kwatinetz. "They don’t just want Ericsson."

Diginet Americas and Ericsson Expand $100 Million Relationship to Reach New Total of $300 Million
Diginet Americas Inc. announced an additional US$200 million strategic agreement with Ericsson to further build-out its fixed wireless broadband networks throughout Latin America. This agreement expands Diginet's previous agreement with Ericsson from US$100 million to US$300 million.
Since Diginet Americas and Ericsson signed their initial agreement in June
1999, Diginet has secured additional spectrum and operating licenses for its
Diveo service offering in Brazil and Panama, launched commercial services in Sao Paulo, Brazil and has been awarded licenses to offer local and long distance voice telephone services in Argentina.
Through its Diveo family of Digital Dedicated Access and IP
Business services, Diginet Americas currently provides its customers in
Argentina, Brazil and Colombia with high capacity, broadband communications for corporate Internet and data network connectivity. This strategic agreement with Ericsson brings Diginet Americas total vendor financing to $400 million in addition to $145 in private equity financing.

Sprint Adding New Call Center to Support Growth Of Local Communications Business
Sprint plans to establish a new 250-seat call center in Medford, Oregon. The new call center, scheduled to be operational by the second quarter of 2000, will handle calls from residential customers served by Sprint's Local Telecommunications Division (LTD), which serves approximately 8 million customers in 18 states.
The new jobs in Medford will increase the number of Sprint employees in
Oregon by about 50 percent. The salaries and benefits these jobs will create for the local economy should total about $10 million annually. Currently Sprint has more than 500 employees in its Local, Long-distance, Sprint PCS and Sprint Publishing & Advertising
units, including about 150 employees in LTD Consumer Markets' existing Hood
River, Oregon call center.
SO-REDI (Southern Oregon Regional Economic Development Inc.) helped Sprint find a site for the new call center. It will be located in the former Ernst Hardware building located just off of I-5 and Barnett Road. The building has about 46,000 square feet of immediately usable floor space and an additional 16,000 square feet available for expansion.

SATELLITE

Globecomm Systems Awarded $3.2 Million Contract by NTT Communications Corporation
Globecomm Systems Inc. has been awarded a contract valued at approximately $3.2 million by Japan's NTT Communications Corporation, a subsidiary of Nippon Telegraph and Telephone Corporation, for the supply of a satellite earth station in Okinawa. The earth station will be equipped with ATM switching and supporting services, voice capabilities and Internet access to the U.S. Internet backbone.
Under the terms of the contract, Globecomm Systems will design and build
the earth station in Okinawa, and provide training and support for its operation. NetSat Express, in turn, will provide the direct Internet connectivity via satellite from Okinawa to Chatsworth, California. Installation is expected to be completed in the first quarter of 2000.

BUSINESS

AT&T Canada Wins $30 Million Canadian Government Contract
AT&T Canada has won a three-year, $30 million telecommunications contract with Government Telecommunications and Information Services (GTIS), a branch of Public Works and Government Services Canada (PWGSC).
Under the contract, AT&T Canada becomes the exclusive supplier of new
Frame and ATM data network services to federal Government departments, which
are served by GTIS. AT&T Canada is also providing virtual private voice services for these departments.
AT&T Canada is providing the infrastructure to help build better networking solutions to address the program delivery needs of the federal government. In turn, this will help the government provide more efficient service to Canadians.

RC Networks Raises $20 Million in Second Round of Funding
RC Networks Inc has announced the completion of a second financing round in which it raised $20.5 million, primarily from new investors. Menlo Ventures led the group that included BancBoston Ventures, affiliated with Robertson Stephens Inc.,
and J. & W. Seligman. Previous investors Ampersand Ventures, Edgewater Funds, and Signal Lake Venture Fund also contributed to the round, which will be used for general operations and international expansion. Douglas C. Carlisle, general partner and managing director of Menlo Ventures, will join RC Networks' board of directors.

KPNQwest Announces Largest Pan-European Footprint for DSL Services Qwest Communications International Inc. announced that KPNQwest, its joint venture with KPN, intends to roll-out a local broadband DSL service, which will enhance the delivery of high-speed broadband services to customers. This new initiative will also leverage the company's European fiber-optic broadband network and CyberCenters in delivering end-to-end high-speed broadband connectivity to businesses across Europe.
The DSL rollout will be initiated in Germany, where the 'local loop' has effectively been unbundled and the regulatory framework is in place to allow companies like KPNQwest to co-locate their DSL equipment in Deutsche Telecom locations. So far, KPNQwest has secured licenses in four German cities: Dusseldorf, Frankfurt, Koln and Munich. It has also secured the right to co-locate its DSL equipment in 23 Central Offices in Dusseldorf, where the service will be introduced by mid-2000. These Central Offices connect more than 90% of businesses in Dusseldorf.

Iasiaworks Financing
Iasiaworks, a new Asian communications carrier, has received $85 million in financing from a group that includes affiliates of Donaldson, Lufkin & Jenrette and Morgan Stanley Dean Witter, executives closed to the deal said. The new investors will receive about 40 percent of the company. Iasiaworks, formerly called Aunet, is a venture capitalist-backed communications carrier led by JoAnn Patrick-Ezzell, a former senior executive in AT&T’s Asia operation.

Teleglobe Inks an Agreement with Alliatel of Czech Republic
Teleglobe Communications Corp and Alliatel a.s. inked an agreement for the deployment of a 45-Mbit/sec ATM link connecting Alliatel’s local network to Teleglobe’s global communications network. The deal enables Internet users to in the Czech Republic to have improved worldwide online access. The Alliatel data-transmission network will access Teleglobe’s GlobeSystem fiber-optic backbone in Frankfort, Germany.

LD COM Signs with Alcatel
LD COM signed a contract with Alcatel for the supply of mote than 500,000 km of fiber-optic cable for its French and European network. The contract was worth more than 2 million francs. Alcatel previously 60,000 km of fiber fir LD COM’s build-out along the Seine, in and around Paris. The new purchase will enable LD COM to further extend its network to link Lille, Calais, Lyon, Strasbourg Arles, Montpellier, and Geneva during the next year.
Alcatel also penned an agreement to provide DWDM and Sychronous Digital Hierarchy equipment to France Telecom for its pan-European and national networks. The equipment will be installed in 40 cities in 16 countries with completion planned for 2001.

Pegasus Telecom Signs Contract with Alcatel
Pegasus Telecom signed a $120 million contract with Alcatel for the supply of equipment to provide digital voice and data-transmission services in Brazil. Pegasus plans to set up a 6000-km fiber-optic cable network in four phases. The first will link Rio de Janeiro and Sao Paulo and later Minas Gerais. The network will spread throughout southern Brazil during the year 2000. Empresa Nacional de Telecomunicaciones also awarded Alcatel a contract to update the first 1400-km section of its domestic network. Under the terms of the agreement, Alcatel will supply DWDM technology to expand the network to 32 wavelengths at 2.5Gbits/sec, scalable up to 16 times at 10 Gbits/sec.

Headline - December 13, 1999

TOP STORIES

Nortel Networks and AT&T Sign $600 Million Wireless Supply Agreement
Andersen Consulting to Form New Venture Capital Unit that will Invest $1 Billion in Emerging E-Commerce Companies
RCN Expands National Footprint with Acquisition of 21st Century Telecom Group. For $500 Million

BRAZIL

America Online’s Foray into Brazil Hits Speedbumps

EUROPE

NTL Inc. Comes Closer to Inking Deal to Acquire Cablecom for $3.7 Billion
chello Broadband Tops 106,500 Subscriber Mark
Telia Launches Enhanced Dial and Leased Line Services
Vodafone UK, Nortel Networks to Conduct 3G Wireless Internet Trial

FIBER OPTICS

Level 3 Launches Long Distance IP Voice Service with Quality and Clarity of Traditional Phone Service
Lucent/Fitel Fiber Optic Cable for Sale

INDIA

Information Technology Ministry to Support India’s Information Technology Industry
VSNL and Undersea Cable Firm FLAG Cite Differences
DoT to Plug Up Revenue Leakages from Private Telecommunicaitons Operators
MTNL to Expand Footprint Outside India
Enron International Searches for Partner to Enter India’s Telecommunications Market
Manufacturers Seek Duty Cut on Mobile Handsets
VSAT Pledges Government to Implement Open Sky Policy

INTERNET/E-COMMERCE

America Online and Wal-Mart May Form Retail Alliance

JAPAN

KDD Considers Merging with Faltering Competitors DDI Corp. and IDO

SATELLITE COMMUNICATIONS

Iridium’s Stock Plunges 45 Percent on Warning of Poor Standing

TOP STORIES

Nortel Networks and AT&T Sign $600 Million Wireless Supply Agreement
Nortel Networks and AT&T have signed a $600 wireless supply agreement under which Nortel will supply the long distance company with switches and other equipment for a wireless network based on the TDMA standard. This equipment, which will be deployed throughout five western US states, is aimed at increasing AT&T’s wireless capacity to accommodate expected subscriber-base growth. In addition, Nortel will help AT&T build an Internet protocol-based wireless network.

Andersen Consulting to Form New Venture Capital Unit that will Invest $1 Billion in Emerging E-Commerce Companies
Responding to the new potential of e-commerce companies, Andersen Consulting will form a venture-capital unit that will invest $1 billion over the next five years in emerging e-commerce companies. The new unit, which is called Andersen Consulting Ventures, will be run by Jack Wilson, 52, who was previously the company’s global market unit.
To get the venture into motion, the company plans to invest $500 million of its own money to fund the unit, with the remainder coming from unnamed venture capital firms and investment banks. According to Wilson, the new unit will seek out e-commerce companies that create virtual markets for the exchange of services over the Internet. Also, the venture plans to grab equity shares ranging from 2 to 51 percent in emerging e-commerce companies throughout Europe and North America.

RCN Expands National Footprint with Acquisition of 21st Century Telecom Group. For $500 Million
The windy city of Chicago will soon be presented with another choice for its phone and cable services as RCN Corporation signs a definitive agreement to acquire 21st Century Telecom Group Inc. for approximately $500 million, payable in RCN stock and assumed debt. The acquisition will enable RCN to expand its operations into a new, high-density residential market with over 8.6 million people and 3.1 million homes.
``The addition of this market expands our coverage to nearly 42 million homes in an area that generates 44 percent of the nation's telecom traffic in only 6 percent of its geography,'' said David C. McCourt, RCN's Chairman and CEO.
The addition of Chicago allows RCN to leverage 21st Century's operating and network expertise and provides access to the Chicago Transit Authority's right-of-way. With regulatory approvals and rights of way secured, 21st Century has built nearly 25 miles of fiber along Chicago's lakefront from Evanston to the Hyde Park area, including the ``Gold Coast.''
In a stock for stock transaction, intended to be tax free, 21st Century common shareholders will receive approximately 4.7 million RCN Common shares, subject to certain adjustments and conditions. In addition, RCN will offer to exchang approximately 62 million worth of RCN Common shares for 21st Century's outstanding Exchangeable Preferred Stock and will offer to purchase 21st Century's outstanding 121/4 percent Senior Discount Notes for approximately $250 million in cash.

BRAZIL

America Online’s Foray into Brazil Hits Speedbumps
Only weeks after it made its official debut into the Brazilian telecommunications market, America Online’s presence has been hit with several problems. First, Francisco Loureiro, president of AOL of Brazil, recently resigned over conflicts with other executives. Second, at the same time of Loureiro’s departrure, consumer protection authorities had been weighing the possibility of fining AOL about R$3 million, or about $1.4 million, in response to several complaints over the alteration of online browsing systems by the company’s installation software.
Analysts see AOL’s problem as result of failing to educate their potential new customer base. Louana d’Olivera, president of Sky3, a Florida-based consulting firm specializing in Latin America’s Internet Industry said, "It might be that because of their tremendous growth in the United States that they just packed their bags and headed to Brazil."

EUROPE

NTL Inc. Comes Closer to Inking Deal to Acquire Cablecom for $3.7 Billion
NTL continues on its aggressive move to conquer the European cable television market, as it comes closer to reaching a final agrement to acquire Cablecom, a cable television business controlled by Swisscom, for about $3.7 billion. This acquisition, which may be officially announced in the next few days, will be the latest in a shopping spree the companiy has been on. Most recently, NTL beat out competitors such as Telewest Communications to buy the residential cable business of Cable & Wireless Communciations for $10.23 billion.
With its headquarters in the US, NTL’s primary holdings are all in Britain. During the past year the company has emerged as the dominant player in the consolidating European cable television business. The company beat out bids from other companies shuch as UPN Communications and Mannessmann before it became the hostile target of Vodafone Group. This potential deal comes after Swisscom announced in July that they would sell its 32 percent stake in Cablecom, which is Switzerland’s major cable company.

chello Broadband Tops 106,500 Subscriber Mark
chello broadband nv (chello) announced figures that show 106,500 billed subscriber accounts across Europe as of Friday 3 December 1999. This follows on from chello's recent award for 'Best European Consumer ISP' at the ISP Forum 99 held in Amsterdam.
Mitch Clarke, chello's Managing Director, Sales and Affiliate Operations, said, "chello is driving the European market and has shown consecutive record net monthly gains as we continue to see ever- increasing numbers of connections in all our markets. The passing of this significant milestone means that chello has grown by 190 per cent since its official launch in March 1999, with growth during the previous three months exceeding 60 percent."

Telia Launches Enhanced Dial and Leased Line Services
Telia, Scandinavia's largest telecommunications and Internet provider, has adopted the Internet Management System (IMS) from Belle Systems to define, set up and manage customer profiles, services and billing for its Danish leased line and dial customers. Later this month, IMS will be deployed at the centre of Telia's network infrastructure to standardize customer services, profiles and accounting facilities.
Telia's leased line and dial up customers will immediately benefit from the enhanced service facilities and flexibility within IMS. For example, interaction between IMS and the Cisco Systems' NetFlow Collectors will allow Telia to deliver greater service and network management monitoring and flexibility, and will also enable the company to offer sophisticated charging schemes, based on criteria such as time of day, access or volume.
The new IMS-based network functionality will utilize the in-built RADIUS engine to offer enhanced control and flexibility of dial accounts. Via the unique Self Care facilities within IMS, these customers will be able to amend personal and service profiles, set or amend billing thresholds and settle their accounts on-line.

Vodafone UK, Nortel Networks to Conduct 3G Wireless Internet Trial
Vodafone UK and Nortel Networks are planning a trial in London beginning early next year of W-CDMA third generation (3G) wireless radio and IP (Internet Protocol) networking technologies expected to deliver faster, more reliable and more profitable Wireless Internet services.
Nortel Networks and Panasonic, which formed an alliance in 1998 to develop 3G wireless voice and data solutions, will provide the radio equipment, core data network and terminals for the trial. A high-speed IP data connection - featuring Nortel Networks' Multiservice Passport* platform - will interconnect the trial equipment to various corporate intranets and the Internet.
Vodafone UK will be able to test a variety of innovative data and voice services using prototype terminal equipment that subscribers can instantly recognize as consumer electronics devices. Among the devices to be tested is a mobile phone with a built-in camera and video screen which utilizes the MPEG4 video codec and is capable of transmitting and receiving data at rates up to 64 Kbps. Other planned trial devices include lightweight, pocket-sized voice terminals, wireless modems for laptop computers, and a mobile data device with transmission speeds up to 384 kbps. The trial will feature business and consumer applications. Participants will be able to hold live video communications sessions using the mobile videophones, or view streaming media from the Internet.
In addition to this trial with Vodafone UK, Nortel Networks has W-CDMA trials planned or already underway with British Telecommunications PLC, France Telecom and the North American GSM Alliance. Nortel Networks is also planning cmda2000 3G trials beginning next year with Telstra in Australia and Bell Mobility in Canada, and has demonstrated cdma2000 and wireless IP capability with Sprint PCS and Vodafone

FIBER OPTICS

Level 3 Launches Long Distance IP Voice Service with Quality and Clarity of Traditional Phone Service
Level 3 Communications Inc. has launched its (3)Voice service. (3)Voice is an enhanced service delivered over Level 3's Internet Protocol (IP) network that offers customers voice quality indistinguishable from traditional telephone networks, but with the efficiencies and inherent cost advantages of IP. (3)Voice requires no change in how end-users dial or in the equipment that they use.
The service will initially be offered on a wholesale basis to resellers, other carriers, enhanced service providers, fax service providers, wireless service providers and competitive local exchange carriers. The initial rollout will be in major markets across the U.S., and the company plans to continue to expand to additional markets over the next year.
One of the initial customers signing a contract for (3)Voice is Network Enhanced Technologies Inc. (NET), an international telecommunications service provider based in Los Angeles.

Lucent/Fitel Fiber Optic Cable for Sale
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Call immediateley with any questions Detailed specs are available phone 315/ 374-1560,315/463-1287 or fax bid 315/463-4337

INDIA

Information Technology Ministry to Support India’s Information Technology Industry
The Information Technology Ministry is giving the final touch to a Bill, to enable Indian companies and individuals to take patent rights for computer chips design.
This is for the first time that India will bring semi-conductor design under the purview of trade related intellectual property rights regime. The Indian strategic sector, including defense and space, alone import Ics worth hundreds of millions every year.
The Bill is likely to be put up before the Cabinet on December 15, and seeks to confer exclusive right to the creator of an integrated circuit or computer chip and protect the layout design on the chip from copyright infringement or unlawful commercial exploitation.

VSNL and Undersea Cable Firm FLAG Cite Differences
While ISPs have been allowed to uplink to foreign satellites for international connectivity, the use of submarine cables continues to be an issue.
Differences have cropped up between Videsh Sanchar Nigam Ltd. and the privately owned FLAG international undersea cable system, with the latter stating that it can market its services directly to ISPs. VSNL, however, maintains it has exclusive rights for FLAG services in India.
FLAG has been marketing its services its services to private ISPs. The company has maintained that VSNL is only the 'landing party' that implements the connection between the cable at its landing point in Mumbai to the rest of the country's telecom network. That is why FLAG can sell the bandwidth to any other service provider. VSNL does not have an exclusive right to market the service.
VSNL argues that it will re-sell FLAG capacity to ISPs, but on its terms. FLAG, however, is looking at directly negotiating tariffs and tailor packages for the ISPs.

DoT to Plug Up Revenue Leakages from Private Telecommunicaitons Operators
In an exercise aimed at plugging loopholes in revenue collection from private operators, the Department of Telecommunications (DoT) has proposed to include revenue from allied activities and subsidiaries in 'gross revenue'. The definition of gross revenue, however, promises to become yet another bone of contention between the DoT and the telecom regulator, which has divergent views on the matter.
Officials confirmed that it was in DoT was in favor of adopting the same definition and method of revenue calculation for telecom services across-the-board. This will have far reaching impact on the telecom sector.
In order to prevent companies from hiving off activities into separate subsidiaries, for which license is not required, DoT has proposed to 'add revenue of such subsidiaries to the revenue of the operator recognizing them as associate companies of the licensee company.

MTNL to Expand Footprint Outside India
In a significant development, the state-owned Mahanagar Telephone Nigam Ltd. (MTNL) has been empowered to provide telecom services within and outside India by way of joint venture or partnership and to fix, modify, increase or decrease tariffs for any of the services provided by the company.
The tariff fixed or modified will be subjected to the policy of the government and directives and regulations of the Telecom Regulatory Authority of India (TRAI). The amendments form part of the enhanced autonomy and delegation of powers granted to the MTNL board by the government.

Enron International Searches for Partner to Enter India’s Telecommunications Market
In a bid to enter the Indian telecom market, Enron International has launched a frantic search for strategic partners in the telecom sector, and is currently negotiating with various Internet service providers and corporate houses to provide telecom facilities.
Enron's telecom services in India would include acquiring international fiber and satellite capacity, building intelligent terrestrial fiber backbones and data centers to deliver broadband capacity.

Manufacturers Seek Duty Cut on Mobile Handsets
Nokia will approach the Finance Ministry along with other handset manufacturers like Motorola, Ericsson, Alcatel, Siemens, and Samsung, seeking a cut in the import duties on mobile phones from the present 49 percent in the forthcoming Budget session. Only a sharp cut in the import duty would increase spread of mobile phones in India.
Currently, there is an effective duty of 49 percent on the shipment cost, including basic customs duty, ad veloram and surcharge. The effective duty has been brought down by about 5 percent in the last Budget and there have been consistent cuts in the last few years from about 70 percent level.

VSAT Pledges Government to Implement Open Sky Policy
The VSAT industry has asked the government to immediately implement the 'open sky policy' as stated in the New Telecom Policy to spur growth in this sector. Representatives of this sector said that the Indian VSAT industry is starving due to lack of satellite capacity.
The VSAT industry, which has grown at an average rate of 50 percent in the first three years of its existence, has logged a paltry 10-15 percent growth rate in the past 15 months. There is a huge demand for the VSAT services but there is no way this can be met unless the government allows these service providers to use the transponder capacity in foreign satellites.

INTERNET/E-COMMERCE

America Online and Wal-Mart May Form Retail Alliance
In the effort to realign its online presence, Wal-Mart may team with America Online to market each others’ products and services. Wal-Mart, which plans to debut a realigned web site in January, has been searching for a partner that could bring it out of a dissappointing trial on the Web.
America Online, on the other hand, sees a partnership with Wal-Mart as a means to access a new segment potential users for its Internet service, and a signifcant revenue stream if the retailer’s foray into the Web is successful as its conventional retail outlets. However, the terms of the potential deal are not clear, and both companies would not comment.

JAPAN

KDD Considers Merging with Faltering Competitors DDI Corp. and IDO
KDD Corp. is in talks with its rivals DDI Corp. and IDO Corp. over a possible merger agreement. At this time, the companies said that no definitive deal has been struck and their talks were centered around the possibility of the companies creating a new generation of mobile phones. However, the possibility of a merger, which would create Japan’s second largest telephone company after Nippon Telegraph and Telephone Corp. will heat up the realignment of the Japanese ttelecommunications sector.
One possibility is that the three companies could simply band together to seek one of the three lucrative licenses the government plans to award next year to allow telecommunications companies to sell telecommunications companies advanced cellular phone services, including high-speed Internet access. The combined companies, if merged, would have revnue of 3 trillion yen, just 30 percent of the 10 trillion yen, or $97.18 billion, in revenue that NTT is expected to earn this fiscal year.

SATELLITE COMMUNICATIONS

Iridium’s Stock Plunges 45 Percent on Warning of Poor Standing
Following news that its stock will most likely be worhtless after the bankrupt company reorganizes, the publicly traded stock of Iridium LLC plummeted 45 percent. Shares of Iridium World Communications Ltd., Iridium’s investment machine, closed at $3.50, down $2.875, or 45 percent, after the warning late Thursday that it was unlikely that shares would retain any value after a reorgnization

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