BANDWIDTH: Breaching bottlenecks
Paul Taylor reports on a series of products designed to
provide more bandwidth capacity
The law of bandwidth is quite simple. No matter how
much is available, it is never enough.
Now Lucent Technologies, the US-based
telecommunications equipment company, has
announced a series of advanced optical networking
products that it says will help carriers provide the
capacity to break through internet bottlenecks and
optimise the performance of internet applications such
as distance learning, collaborative conferencing and
online investing.
Lucent says the new additions to its WaveStar family of
products will lead to dramatic increases in fibre capacity,
and more than a 90 per cent reduction in inventory and
operations costs and ultra-reliable network monitoring.
Among the new products is an amplifier that will enable
service providers to transmit data, voice and video traffic
in an optical wavelength band called the L-band that
cannot be used at present. The WaveStar L-band
amplifier is expected to be commercially available next
June. Meanwhile, a tunable laser will enable telecoms
companies to cut operational costs significantly.
It is all about providing ever-increasing amounts of
bandwidth as well as intelligent, cost-effective ways to
manage it, says Gerry Butters, president of Lucent's
optical networking group.
Separately, Lucent's Bell Laboratories division
announced the first successful transmission of 40
gigabits per second of information using dense wave
division multiplexing technology.
Companies News / UK & Ireland
Dixons to float fifth of internet provider
By Carol Major
Dixons, the UK electricals goods
retailer, on Monday announced
plans to float nearly a fifth of
Freeserve, its free access
internet service provider, in what
will be Britain's biggest
internet-related share issue to
date.
The company said it would float 18.25 per cent of its
subsidiary on the London Stock Exchange and Nasdaq
in July and sell an additional 1.75 per cent to Energis,
the telecommunications group that provides the phone
lines for Freeserve. Energis will buy the stake, plus a
further 2 per cent of the company over the next four
years, through Planet Online, its internet subsidiary.
Shares in Dixons rose strongly on the news, reaching
£12.20 in morning trading before falling back to £12.03 at
13.05 GMT.
The offer, to institutional investors worldwide and retail
investors in the UK, will comprise an issue of new shares
by Freeserve and a sale of Freeserve shares by Dixons.
Members of the public who wish to buy shares must
register on the internet by July 9 and invest a minimum
of £250 ($397), with preference going to anyone with a
Freeserve account.
However, Dixons did not reveal the price at which shares
would be offered, and anaylsts have valued Freeserve at
anywhere between £1.3bn and £2.6bn. It earns revenue
from advertising, e-commerce and a share of the
telephone call charge while users are online.
Graham Brown, IT analyst at Sutherlands, expected the
flotation to be a success. "It will be heavily subscribed
by UK retail customers". He was upbeat about the
prospects for Freeserve: "There's an implicit value in the
fact it is allied with the largest PC retailer in the country,
and it has the best market position in the UK at the
moment - there's no other internet stock like it. So it has
a strong lead on its competitors. In addition, internet
penetration in Britain is low compared with the US, and
is bound to grow."
Dixons plans to use the capital raised for brand
development, marketing acquisitions and strategic
investment.
Freeserve was the UK's first internet service provider to
charge no monthly fee and blazed a trail for a swathe of
similar services. It has become one of Britain's biggest
online success stories, winning 1.25m users in the nine
months since its inception, and is now the country's
biggest ISP, having usurped AOL Europe along the way.
AOL Europe said last week it was considering dropping
its subscription fee in a bid to regain its leading position.
Video Comment
Companies News / UK & Ireland
FREESERVE: TelePost investment
By Caroline Daniel
Freeserve, the free internet service provider owned by
Dixons, has made a $10m (£6.2m) investment in
TelePost Holdings, which specialises in internet-related
telephony. The announcement by the UK's largest
internet service provider comes ahead of the release of
further details, expected next week, of its flotation on the
London Stock Exchange and Nasdaq.
Freeserve said the investment would give users of its
web site exclusive access to TelePost's messaging and
conferencing services. It would also improve Freeserve's
content offerings to subscribers, helping it stand out in
the crowded marketplace for internet services.
Under the service - to be called Telserve - users of
Freeserve will be able to make conference calls with up
to six other callers. They will also be able to pick up
voice, fax and e-mail messages from any computer
connected to the internet. TelePost is a privately-owned
company based in Silicon Valley.
EUROPE: Freeserve to float in July
By Nicholas Leonard
Shares in Dixons, the electronics retailer, rose 1 per
cent in London on Monday morning after it confirmed that
it planned to float its fast-expanding Freeserve internet
venture on the stock market during July. It will sell off
18.25 per cent of Freeserve and Energis, which owns
Planet OnLine, will have a small minority stake.
The financial returns from Freeserve so far are derisory:
in the period from September 22 1998 to May 1 it made
a loss of £1m on turnover of just £2.73m. But its value in
the issue hinges on its registered user base of 1.25m
people and the hope that, despite numerous competitive
free internet services, this can be translated into
substantial profits in the future. Freeserve had 64m page
views in the four weeks to May 29.
INTERNET ADVERTISING: Signs of
maturity
Does internet advertising have a future? This may seem
a perverse question. After all, revenues have grown from
nothing to nearly $2bn in just four years, making this a
bigger market than outdoor advertising, according to the
Internet Advertising Bureau. And many traditional
advertisers are just beginning to shift spending to the
medium.
But true to the cliché about "internet time", online
advertising is already showing signs of maturity:
year-on-year growth fell from 116 per cent in the third
quarter of 1998 to 34 per cent in the fourth quarter -
hardly spectacular by web standards.
At the same time, ad rates are softening as improved
software allows companies accurately to measure what
they are getting for their money. AdKnowledge, an
internet ad management company, says the first quarter
of this year saw a 5 per cent softening in average CPM
rates - a key advertising metric based on cost per
thousand.
Simple banner ads are quickly being replaced by deals
that combine advertising and e-commerce, with the
internet company sharing any resulting revenue. The IAB
believes that towards the end of 1998 such "hybrid"
agreements accounted for half of revenue transactions.
There is potentially more upside for web sites from
sharing online sales revenues. But it ties their fortunes
ever closer to often cyclical retailers. And it places the
burden of justifying the huge valuations of internet stocks
squarely on the growth of e-commerce rather than
advertising.
LEX: Banking profits
LEX: UK stock market
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