Broadband Week Direct

Today's report from Web Editor Susan Rush

• Covad offers reduced rate DSL

• SureWest picks up WINfirst assets

• Necessary takes helm of Concurrent’s VOD division

• More modems, headend gear break
the DOCSIS 1.1 barrier

• Sycamore pares roster, products

• Adelphia misses another payment;
WorldCom defers payment

• Internet providers form coalition to lobby FCC

• Denver delays AT&T Broadband-Comcast decision

• Broadband briefs

Covad offers reduced rate DSL

DSL carrier Covad Communications is looking to lasso a few dial-up customers who are on the fence about switching to broadband, with a reduced price service offering.

The service, dubbed TeleSurfer Link, is being offered nationwide to new customers at an introductory price of $21.95 a month -- after four months of service, the price will be pumped up to $39.95 a month. The no-frills, always-on ADSL service offers subscribers 200 kbps downstream and 64 kbps upstream. Included in the offer is a free Covad Jumpstart installation kit with a DSL modem after a $199 rebate. "We recognized that we were missing the boat on the large number of dial-up customers who don't want to make the move to broadband because of price," says Bryan Bennett, Covad's senior product manager. "TeleSurfer Link gives them a basic broadband service, with an intro price close to what they are paying for their dial-up service."

"There has been talk about tiered pricing for residential customers, and this is Covad's first foray into this area," says Bennett. "We have to do something to stimulate demand, and with this offer dial customers have nothing to lose." If the service is purchased directly from Covad, a subscription does not require an annual service contract and has no disconnect fees. "If they try TeleSurfer Link, and they don't like it can cancel (the service) without any disconnect penalties," he says. The service also comes with one e-mail account, 24/7 customer support, as well as a 30-day satisfaction guarantee.

Speakeasy is the first Covad wholesale DSL partner to offer the service.

TeleSurfer Link is the third TeleSurfer service package Covad offers residential customers. The original TeleSurfer package, dubbed simply TeleSurfer, offers subscribers 608 kbps downstream and 128 kbps upstream for $49.95 a month. TeleSurfer Plus offers subscribers 1500 kbps downstream and 128 kbps upstream for $59.95 a month.

In December, Covad achieved what so many of its high-speed service provider counterparts have failed to do -- it emerged from Chapter 11 bankruptcy proceedings. In mid-August 2001, Covad filed for bankruptcy protection under a pre-negotiated filing designed to eliminate $1.4 billion in debt without affecting the company's operating subsidiaries or service offering.

Related stories:
Sprint, Covad consider high-speed net hookup, 2/13/02
Covad gets green light to emerge from bankruptcy, 12/14/01

SureWest picks up WINfirst assets

SureWest Communications is making a move to become the dominant communications provider in the Sacramento area. The company will plunk down $12 million for the assets of bankrupt overbuilder WINfirst.

SureWest has facilities near the WINfirst network in Northern California. It operates multiple telecommunications businesses, the largest being subsidiary Roseville Telephone Company, California's third-largest telecommunications company.

WINfirst officials were able to put the deal with SureWest together because its creditors agreed to be patient. In May, a group of creditors withdrew an application for the company to convert its Chapter 11 filing to Chapter 7. They agreed not to seek liquidation, and give the company time to find a buyer. At the time, SureWest had expressed interest in the assets.

Barring any snags, the deal is expected to close next month after Bankruptcy Court approval and the satisfaction of other closing requirements.

WINfirst filed for Chapter 11 bankruptcy protection in March after running short of cash during its efforts to build a high-speed video, voice and Internet system in Sacramento.

Related stories:
Creditors won't seek liquidation of WINfirst, 5/22/02
WINfirst ... Who wants it, 5/16/02

Necessary takes helm of Concurrent’s VOD division

Cable vet Steve Necessary has left the top post at PowerTV Inc. to join Concurrent Computer Corp. as president of the company’s “Xstreme” video-on-demand division.

Necessary will report to Concurrent President and CEO Jack Bryant, who had been the acting president of Xtreme since he joined the company in Oct. 2000.

In his new role, Necessary will head up the division’s VOD systems and services efforts. He joins the company during a time in which VOD’s momentum has grown among cable operators as they leverage the service to help gain and retain digital customers. Concurrent’s VOD customers include MSOs such as Charter Communications, Comcast Corp., Cox Communications, Mediacom Communications and Time Warner Cable.

Necessary is the latest executive to leave the ranks of PowerTV, the set-top box software division of Scientific-Atlanta Inc. Chuck Kaplan, PowerTV’s former vice president of marketing, left earlier this year to join Narad Networks Inc. Last March, PowerTV Chief Operating Officer James “Bow” Rodgers left to take the same post at BigBand Networks Inc.

Although S-A had once pondered taking PowerTV public, last year the company made a tender offer to buy the 15 percent of PowerTV it didn’t already own.

Prior to his tenure as CEO of PowerTV, Necessary served in a number of executive roles at cable equipment vendors Scientific-Atlanta and Antec Corp., which is now part of Arris.

According to CED Broadband Direct sister publication Multichannel News, PowerTV will not replace Necessary, but his duties will be assumed by Michael Harney, president of S-A’s subscriber networks division. S-A officials were not immediately available for comment.
-Jeff Baumgartner

Related stories:
Scientific-Atlanta power buying, 3/15/01

More modems, headend gear break
the DOCSIS 1.1 barrier

CableLabs said it handed out passing grades to eight cable modems and nine cable modem termination systems for the complex DOCSIS 1.1 specification following certification wave 22.

With those additional stamps of approval, CableLabs has certified a total of 32 modems for DOCSIS 1.1, a specification that adds quality of service and other elements that underlie cable's forthcoming PacketCable platform, which is expected to usher in new multimedia services and applications based on Internet protocol, including IP telephony.

CableLabs said the latest modem vendors to get the DOCSIS 1.1 green light include 3Com, Correlant, Joohong and Motorola. Texas Instruments and Toshiba, meanwhile, had cable modems re-certified for the specification.

Certification was significant for Motorola, a leading DOCSIS cable modem vendor that had yet to break through the DOCSIS 1.1 barrier. In the most recent wave, CableLabs certified three Motorola cable modem models: the SurfBoard 4100, SB4200 and SB4220.

CableLabs also qualified or re-qualified CMTSs from ADC, Arris, Cisco, Juniper, Motorola and Scientific-Atlanta, which re-sells Juniper’s CMTS under the “Prisma” brand. In some cases, vendors had more than on product qualified, CableLabs said. Louisville, Colo.-based CableLabs has qualified 16 CMTSs overall.

In comparison, CableLabs has certified 214 modems and qualified 28 CMTSs for DOCSIS 1.0.

“Our fourth year promised to be the most productive for DOCSIS,” said Rouzbeh Yassini, the founder and CEO of YAS Broadband Ventures and senior executive consultant to CableLabs.

CableLabs is expected to kick off certification wave 23 on July 22, with results expected on or around Sept. 26. The final wave of 2002 is slated to begin Oct. 14.
-Jeff Baumgartner

Related stories:
More on CableLabs DOCSIS 1.1 certification, 3/29/02
CableLabs stamps seven DOCSIS 1.1 modems, 12/21/01

Sycamore pares roster, products

Networking gear maker Sycamore Networks Inc. is looking to weather the economic telecom storm by cutting staff, consolidating facilities and dumping the development of its standalone transport systems.

Sycamore expects to incur fourth-quarter charges of as much as $55 million for its restructuring efforts. As part of its plan, the company is eliminating 235 of its 665 employees and consolidating some facilities.

Rather than spread itself too thin, the company will focus its efforts on the optical switch market. In conjunction with this decision, the company announced a strategic alliance with Siemens Information and Communications Networks. As part of the deal, Siemens will resell Sycamore's optical switches worldwide. The companies also will work together on products and network management integration. Terms of the nonexclusive deal were not disclosed.

By exiting the transport system business, the company expects to save between $15 million and $18 million quarterly beginning in the first quarter of fiscal 2003.

The company also warned that its fourth quarter 2002 results will fall below analysts' expectations. For the quarter, Sycamore expects to post revenue of between $5 million and $10 million, and a loss, excluding charges, of between 8 cents and 10 cents a share. Analysts on average, were expecting a loss of 10 cents a share on revenue of $11.26 million.

Related story:
Telecoms selling gear, 3/14/02

Adelphia misses another payment deadline; WorldCom defers payment

Beleaguered Adelphia Communications Corp. inched closer to a bankruptcy filing, after it failed to make roughly $30 million in interest and dividend payments due June 17.

Adelphia said it missed an interest payment of more than $23.4 million on 9-3/8 percent senior notes due on Nov. 15, 2009.

Earlier this week, the company said it missed a $52.3 million interest payment on its 10-1/4 percent senior notes due June 15, 2011.

Separately, as WorldCom Inc. works feverously to secure a much-needed $5 billion credit facility, the company announced plans to defer interest payments on some of MCI Group's preferred securities.

The move is expected to save the company roughly $15 million a quarter, according to a WorldCom representative.

The company said under the terms, it is allowed to defer the interest for up to 20 consecutive quarters without incurring a penalty.

Internet providers form coalition to lobby FCC

The Washington Post reports, "More than 100 independent Internet service providers formed a new coalition earlier this week to fight what they say are unfair policies that favor the regional telephone giants and hurt the deployment of broadband. "

"The BroadNet Alliance, based in Washington, plans to lobby the Federal Communications Commission to abandon proposals it says would threaten its members' ability to provide Internet service because they would no longer be able to access the regional phone companies' network." The Post adds, "Right now, ISPs depend on their ability to buy access to regional phone companies' networks at wholesale rates, because it is economically impossible to build new phone lines into every home in the United States, said Maura Colleton, executive director of BroadNet.

"Three similar proposals before the FCC would take away that access, according to Colleton." The Post adds, "BroadNet, which is funded by $150,000 from ISPs that include EarthLink Inc. and WorldCom Inc., is up against better-funded competition."

Denver City Council delays decision on transfer
of AT&T Broadband to Comcast

Copyright 2002 Knight Ridder/Tribune Business News
Copyright 2002 The Denver Post
Denver Post...06/19/2002
From LexisNexis

By Andy Vuong

The Denver City Council voted late Monday to postpone for three months a decision on the transfer of AT&T Broadband's cable franchise to Comcast Corp. because the companies didn't provide enough financial information at a public hearing, said Councilman Ed Thomas.

The delay, on a 9-2 vote, could hinder AT&T Broadband's proposed merger with Comcast.

"They were in a big hurry to get this thing pushed through, but there just wasn't enough information," Thomas said. "There were more questions than there were answers."

Thomas said the council wanted AT&T and Comcast to ensure their financial stability. A follow-up hearing has been set for Aug. 12.

Despite the delay, AT&T Broadband remains confident that it will receive approval, said spokeswoman Sarah Eder.

"A request for information is a normal course of business in many cases," Eder said. "AT&T Broadband is confident that once we provide the additional information that we'll meet the necessary criteria."

Eder also noted that the company has the recommendation of the Office of Telecommunications for the city and county of Denver.

AT&T Broadband and Comcast have about 5,000 cable franchises across the country and are required to transfer control of less than half of those to the merged company. The merger could be called off if enough applications are denied, although the merger agreement doesn't state an exact number.

Eder said a handful of applications have been rejected and a few others have been delayed. She said AT&T Broadband plans to appeal the rejections.

"This isn't going to stop the deal from happening," telecommunications analyst Jeff Kagan said of City Council's decision. "When companies want to get a merger done, that's when regulators come up with a laundry list of things they want before they'll put their stamp of approval on it."

Still, critics charged that the delay doesn't bode well for AT&T Broadband.

"This is AT&T Broadband's home court, and they couldn't lay to rest the concerns of that city council," said Mark Cooper, director of research for the Consumer Federation of America, which opposes the merger.

Shareholders are scheduled to vote on the merger July 10.

City Councilwoman Elbra Wedgeworth said she wanted to know more about the new company's operations in Colorado because its headquarters will be in Philadelphia, where Comcast is based.

"What is that going to mean to Denver, in terms of administration, responsibilities, customer service, things like that," Wedgeworth said. "And nobody could really, clearly, directly tell us that."

Wedgeworth also said that it didn't help AT&T Broadband that Comcast didn't have a representative at the hearing Monday.

Broadband briefs:

• EarthLink rolls out in another TWC market
Wilmington, N.C. has become the latest city to gain access to EarthLink Inc.'s high-speed Internet access. The service will run over Time Warner Cable systems in Wilmington. The service, which retails for $41.95 a month, will be available to 215,000 households in the area.

• USURF forms alliance with T2
Fixed wireless broadband product developer USURF America Inc. has teamed with T2 Technologies Inc. to develop alternative sales and distribution channels for USURF products. Financial terms were not disclosed.