TeraBeam, Lucent Form Optical Net Firm

Lucent Technologies Inc. Wednesday advanced its Internet strategy by sealing an optical
networking venture with TeraBeam Networks.


Lucent (LU)
invested $450 million in cash in the new TeraBeam Internet Systems, taking a 30 percent stake.
TeraBeam holds the remaining 70 percent.


The firms will implement TeraBeam’s high-speed data networking between local
and wide area networks. TeraBeam’s Fiberless Optical Network system sends
data through the air using invisible light. The data travels thousands of
times faster than current “first mile solutions.”


The core of TeraBeam’s solution is a customer unit about the size of a small
satellite dish that utilizes a proprietary holographic optical element. The
unit, which can be mounted in an office window, sends and receives data
through the air. The technology, which can be provisioned in days, provides
broadband IP connectivity to the Internet and intranets.


In a conference call Wednesday, TeraBeam Chief Executive Officer Dan Hesse said his company was forming the new venture to focus on eliminating the “first mile problem,” in which there is a downshift in speed when data is transmitted from local area networks to wide area networks.

“By tapping into
Lucent’s leadership in broadband networking, coupled with our breakthrough
technology, TeraBeam is leading
the charge in shattering the first mile speed barrier.”


He also said the firm’s use of air rather than glass technology is cost flexibile as only one Hub is required to power several end users.


Lucent didn’t stop its wheeling and dealing in the U.S. On Wednesday,
Lucent said it planned to invest $150 million over the next three years to
build a 200,000-square-foot extension to its Blanchardstown facility in
Dublin, Ireland. The facility, which will serve as an optical networking
provisioning center for customers in Europe and the Asia/Pacific region,
will reduce shipping time to these customers from several weeks to several
days.


Lucent’s deal with TeraBeam is the giant’s latest move in brushing up its
chops in the fiber optical networking market. The New Jersey-based firm is
going head to head with Cisco Systems
Inc.
(CSCO) and Canada’s Nortel Networks (NT).
The three firms are racing to break the bottlenecks in the complex technology of optical networking.


Lucent’s Bell Labs has garnered more than 2,000 patents in optical
technology alone. According to Dell’Oro Group, Lucent captured the largest
market share — 34 percent — of the $3.8 billion global DWDM equipment
market in 1999.

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