April 12, 2000 4:00 PM PDT

Lucent aims high-speed lasers at networks

Lucent Technologies and start-up TeraBeam Networks, a laser-based Internet access provider, announced plans to jointly create a new company to build and market laser-networking technology.

TeraBeam and Lucent will own 70 percent and 30 percent, respectively, of TeraBeam Internet Systems, a new venture that will design and market laser-based data networking systems for business networks.

Today's alliance gives further credibility to the space-age laser technology, which could become a direct competitor to other high-speed networking technologies currently in the market, such as fiber-optic networks and fixed wireless.

"(Lucent is) getting some technology very quickly instead of having to develop it on its own, as well as a ready-made customer," said Chris Nicoll, director of optical infrastructure for Current Analysis, a competitive intelligence firm.

Lasers literally beam Internet traffic into a business customer's office window. Proponents tout so-called free space lasers as superior to fiber and fixed wireless because laser technology doesn't require digging trenches for fiber or expensive wireless-spectrum licenses, making it faster and cheaper to launch. Lasers also can carry data more quickly than most fixed-wireless systems.

The lasers have some limitations in harsh weather or heavy fog, however, causing some analysts and university experts to speculate that free space laser systems will not permanently replace competing technologies. Lasers will be best for niche markets and temporary use, some say.

Lucent already had been developing its own laser products called WaveStar and OpticAir.

The company will contribute roughly $450 million worth of cash, intellectual property and other assets to the new venture, while privately held TeraBeam will provide research and development, manufacturing assets and its own intellectual property. TeraBeam chief executive Dan Hesse

The deal provides Lucent with access to a potentially lucrative new technology, and TeraBeam's technology will add new features to Lucent's OpticAir gear. OpticAir is a point-to-point technology, whereas TeraBeam's technology allows one piece of base station equipment to serve many customers, a so-called point-to-multipoint technology.

"Lucent's probably the only vendor who could have credibly teamed with TeraBeam because of Lucent's OpticAir product," said Nicoll. "Lucent already has experience in fiberless optical technology."

TeraBeam plans to send Net traffic and business data at high speeds using harmless invisible beams of light through the air, rather than through fiber-optic lines or via fixed-wireless radio waves. It plans to launch service later this year.

TeraBeam named Lucent as its preferred provider of optical components and networking gear. All TeraBeam Internet Systems products will carry the Lucent Technologies brand.

"We plan together to solve a problem that plagues our industry today," TeraBeam chief executive Dan Hesse said during a conference call today announcing the deal. "That first mile out of the building, that very short distance between the building and where the high-speed fiber networks enter the city, doesn't exist at high-capacity rates for well over 95 percent of the world's office buildings."

Separately, Lucent announced its intention today to invest $150 million over three years to expand its optical-networking production facility in Dublin, Ireland. The new expansion will create 500 jobs and is expected to reduce Lucent's product shipment times to Asian and European markets.

 

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