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Today's report from Web Editor
Susan Rush
• It's OK To Spin Off
• AOL Extends Merger Deadline
• Residents Prefer Cable Modems
• Lucent Drops, But Beats Expectations
• Gemstar Claims Infringement
• Broadband Briefs
It's OK To Spin Off They're
not talking yet, but market pressures and growing unrest among investors may have sparked
AT&T Corp.'s board to approve a plan to spin off the company's wireless and cable television business units into two new companies. Under the
purported restructuring plans, AT&T also will create a new tracking stock for its long distance unit. AT&T declined to comment on the spin-off
plans circulating in the news media.
"It is ironic, just when AT&T seemed to have all of its
bundled offerings ready and capable, they announce that it isn't going to
work...that the market isn't going to accept it," says Elliott Hamilton, senior vice president
of research firm Strategis Group.
C. Michael Armstrong, AT&T chairman, has directed the
investment of billions to reinvent the company as a telecommunications
one-stop shop, but the spin offs negate that plan, without really giving the
bundled service plan a chance. "They just started putting the AT&T Broadband
brand on their cable systems, and I wonder if the market conditions were
better and the company could wait 6 months or even a year, if the decision
to split up would be made?" asks Hamilton. "The bundling concept may not be
dead; it may be reinvigorated in a few years after companies have their back offices set
up and ready to handle combined services."
For now, even with an AT&T decision to split, Hamilton
warns that the new companies should try and retain AT&T brand
recognition, especially for the consumer's sake.
Related Story:
AT&T:
And Four Stand Alone, BroadbandWeek Direct, 10/23/00
AOL Extends Merger Deadline
The negotiation table is open for two more weeks, after America
Online and Time Warner agreed to
extend their merger deadline as they seek government approval. The companies
originally hoped to begin final preparations for their merger following
Friday's cut-off date, but the talks will continue as they try and hammer
out outstanding issues with the Federal Trade
Commission, such as open access.
Although AOL would not comment on the specific reasons for
the extension, AOL spokesperson Kathy McKiernan did say the AOL-TW deal is
on track to close later this fall. "Our conversations with the FTC are
proceeding well," she says.
The European Commission
has already approved the deal, while the Federal
Communications Commission has decided to reserve its comments until
after the FTC rules. Last week, Time Warner's chairman Gerald Levin said he
was "highly confident" that the merger would close during the
fall.
Related Story:
Levin: Merger Close Is
On Track, Multichannel News, 10/18/00
AOL-TW: Access Remains An Issue At FTC, BroadbandWeek Direct, 10/16/00
Residents Prefer Cable Modems
Early market entry has thrust cable modems into the homes of
high-speed Internet access customers, giving the technology an edge over DSL
in the residential market, according to a new report from Allied
Business Intelligence.
"Subscribers to data over cable services will increase
from 3.3 million worldwide in 1999 to 58.6 million worldwide in 2005, a
compound annual growth rate of 61 percent," says Joshua Wise, an ABI
analyst. The United States will lead the cable modem charge over the next
few years with a 37 percent increase in subscribers to 17 million by 2005.
According to the "Cable Modems Worldwide: High-Speed
Internet Access Over Cable Networks" report, ease of installation plays
a large part of the technology being embraced by residential customers. The
report also examines current and future deployment trends in the largest
cable markets around the world, including North America, Europe and the
Middle East.
Despite the rosy picture painted by the report, the cable
industry cannot rest on its laurels because DSL is picking up momentum.
Related Stories:
Broadband
Battle: Cable vs. DSL, Broadband Week, 9/00
Plugging
Cable Into Web-Ready Toasters, Multichannel News, 2/14/00
Lucent Drops, But Beats Expectations
The results are in, and they are not that pretty...again.
Lucent Technologies' fourth quarter
profits dropped 22 percent, but the silver lining is the telecommunications
giant beat analysts' recently lowered expectations by a penny.
Q4 earnings were 18 cents a share, and although that number
is down from 24 cents a share during the same period a year ago, analysts at
First Call/Thomson Financial
were only predicting 17 cents a share. In mid-October, Lucent lowered its
expectations for the quarter, and Wall Street in turn lowered its
projections.
The company is trying to reinvent itself, starting with
yesterday's replacement of Lucent top dog, Richard McGinn with former Lucent
head Henry Schacht. Wall Street cautiously responded to Lucent's moves, with
trading up 4.5 percent to $23.06 as of 10:34 a.m. EDT.
Related Stories:
Lucent
Boots McGinn, BroadbandWeek Direct, 10/23/00
Lucent
Exceeds Expectations, But Growth Stunted, Wireless Week, 7/20/00
Gemstar Claims Infringement Before
the dust could settle on its settlement deal with Motorola,
Gemstar-TV Guide Inc. is back on the warpath, and this time has set its
sights on EchoStar Communications Corp.
The interactive programming guide software developer has filed a patent infringement
lawsuit in the U.S. District Court for the Western District of North
California claiming that satellite provider is using guides without its
permission.
A spokesperson for EchoStar says the company had not yet seen
the suit, and therefore could not comment. Gemstar is seeking an unspecified
amount of damages. The EchoStar suit is at least the fifth court filing Gemstar
has initiated to prevent companies from infringing on its interactive
programming guide patent. The company settle its suit with Motorola
for $200 million.
Related Stories:
Motorola
Interacts With Gemstar, BroadbandWeek Direct, 10/17/00
Gemstar
Closes TV Guide Deal, Multichannel News, 7/12/00
Broadband Briefs:
- Adaptive
Broadband Corp. reports $24.2 million in revenue for the quarter ended
September 30, 2000, up from $17.1 million during the previous quarter. New
orders for its AB-Access fixed wireless broadband product totaled $30 million
for the quarter.
- Alcatel teams
with software provider Oracle to develop
Thirdspace, an interactive television joint venture company. Thirdspace will
offer broadcast television and movies on demand over DSL lines.
- Copper
Mountain Networks Inc. selects the Hydra G.SHDSL chip set from Metalink
Ltd. for its low power consumption and high density.
- Lightyear
Communications uses Accelerated
Networks broadband voice gateways, T1 access concentrators and
carrier-class integrated access devices in its nationwide broadband access
network.
- NorthPoint
Communications and New Edge
Networks extend their DSL resale agreement. NorthPoint also made an
undisclosed private equity investment in New Edge.
- Sprint
launches its broadband wireless services in Silicon Valley. The two-way fixed
wireless service will be offered in Oakland, Calif. beginning November 2.
- Motorola strengthens
its relationship with Spain's Telefonica Moviles, after securing a deal to
supply GPRS high-speed wireless data services on the Movistar GSM network.
- Actiontec
Electronics and Texas Instruments will
deliver their jointly developed self-install USB DSL modem to retail stores
nationwide.
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