Broadband Week Direct - Daily News 9/5/00

Today's report from Web Editor Susan Rush

• WorldCom Fuels "generation d" initiative
• FTC May Block AOL-Time Warner Merger
• Sega Streams Online Gaming Promotion
• Broadband Briefs

WorldCom Fuels "generation d" initiative

"Do you dream in digital?" WorldCom hopes its business customers will. In an effort to propel its digital agenda to the next level, the company won a bidding war to acquire Intermedia and gain a controlling interest in Digex, a managed Web and application-hosting firm. WorldCom outbid rival Global Crossing, a fiber optic network provider, by $17 a share.

The merger will give WorldCom 55 percent ownership of Digex, but more importantly, the communications giant will control 94 percent of the voting interest. The addition of Digex will strengthen WorldCom's presence in the next-generation Web hosting arena, by enabling WorldCom to provide a portfolio of Web hosting products and services to its mid- and large-sized business customers.

The total value of the transaction is about $6 billion -- $3 billion in equity and $3 billion in debt and preferred stock. The merger will be tax-free to shareholders and accounted for as a purchase.

FTC May Block AOL-Time Warner Merger

The Federal Trade Commission could derail the $129 billion merger of America Online and Time Warner, unless the companies agree to stringent open access concessions. Media reports are circulating that U.S. regulators and the European Union have expressed concerns about the possible marriage since the engagement was announced in January. The fear is that combined company would wield too much power and stamp out its competitors. The FTC's Eric London was unable to comment on the reports and AOL did not return Broadband Week's calls for comment before deadline.

One compromise that the FTC may seek is AOL's sale of its $1.5 billion stake in Hughes Electronics, a giant in the satellite arena. Satellites are emerging as the delivery medium for wireless broadband services. The Commission does not want to limit its review to just fixed cable and Internet services.

If the block is attempted, the FTC will have a fight on its hands. Officials at AOL contend that the FTC can't block the deal because no antitrust laws are being violated since the two companies are in different markets. To continue its fight, the FTC may need to file an injunction in federal court.

The merger has also sparked activity on Capitol Hill, with competitors like the Walt Disney Company and consumer advocate groups urging legislators to review the deal closely. Later this month, AOL chief executive Steve Case and Time Warner's chief Gerald Levin are set to testify before the House Commerce subcommittee. The hearings are expected to focus on issues of competition involving high-speed Internet and interactive television.

Sega Streams Online Gaming Promotion

The promotion for Sega's new online console gaming network and ISP, SegaNet streams into high gear at this week's MTV Music Awards in New York City. With the help of Digital Island's hosting and streaming services, Ulala, the hip-hop dancing sensation from Sega's Space Channel 5, will rub elbows with the stars of the music world, while showcasing the technology that will be available to SegaNet gamers. The Webcast will feature celebrity interviews and post-show party footage from the infamous Studio 54.

SegaNet's ISP service is built exclusively for Sega Dreamcast and PC gamers and will offer interviews with developers and gamers, sweepstakes, tournaments, downloads and access to exclusive games.

The streaming promotion tour for SegaNet will consist of eight live events. The second program will take place on September 9, with streaming coverage of America's first indoor snowboarding quarterpipe competition. Gamers will log on to www.sega.net to watch pro snowboarders battle it out on the slopes at Dreamcast Presents the ACG Indoor.

Broadband Briefs:

Microsoft will incorporate digital TV software in the Whistler version of its Windows software. The products will be launched mid-2001.
DISH Network expands local channel offerings via its satellite service in Cincinnati, Ohio and Greenville, S.C. DISH also entered into a partnership with Pueblo Partners, a marketing organization focused on Hispanic culture, to tap into the growing Hispanic marketplace. Pueblo members will receive free installation when they purchase a DISH Network satellite system from Pueblo.
NetZero and ThinkLink team to deliver integrated messaging voice-over Internet protocol communications to NetZero's five million plus registered users.
Verizon Online slashes DSL prices by 20 percent for residential and business customers in 14 Midwest, Southeast and Western states. Modem fees will be waived for all new subscribers.
Level 3 builds new 500,000-square-foot gateway facility in Massachusetts to meet demand for Internet and communications services in the Boston Metro area.
GoAmerica and Metricom team to deliver high-speed mobile access solution to the corporate market.
Satellite broadband networking equipment provider BroadLogic Network Technologies launches broadband access gateway, enabling 2-way Internet connection.
IBM gains access to several hundred thousand feet of AT&T Corp.'s Internet hosting facilities. The multiyear deal is reportedly worth $450 million.
Nokia launches Nokia MW 1642, a high-speed wireless Internet in-house gateway that integrates SDSL and wireless LAN technologies.