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Technology Stocks : AWARE -- Ignore unavailable to you. Want to Upgrade?

To: Peace who wrote (1514)	11/22/2000 10:19:04 AM
From: Peace	Read Replies (2) \| Respond to of 2404

aware.com The Digital Loop Carrier & Switch Upgrade Opportunity for ADSL November 21, 2000 Yesterday, Legerity issued a press release announcing that it is leveraging technology licensed from Aware to develop an integrated data + voice chipset solution. The forthcoming Legerity chipset solution is designed to revolutionize deployment of multi-port, voice-enabled, full-rate ADSL linecards in central offices (COs), digital loop carriers (DLCs), and digital subscriber line access multiplexors (DSLAMs). The chip is planned for introduction in 2001. To date, phone companies have deployed ADSL by installing DSLAMs in their central offices. New ADSL chipsets, such as the one announced by Legerity, will enable telephone companies to offer services by upgrading DLCs and existing switch equipment. The significance of these new chipset solutions is: DLC upgrades will enable phone companies to offer ADSL service to customers who were previously unable to receive it. Today, approximately 20–25% of telephone customers in the United States are served by DLCs. DLCs are used to offer voice services to remote telephone customers by placing equipment in neighborhoods and connecting back to a central office using a high-speed link (T1 or fiber). Under the current DSLAM-only central office architecture, DLC customers are unable to receive ADSL services, because ADSL signals can not pass through a DLC. With the advent of ADSL chipsets designed to upgrade DLCs from voice-only service to voice-plus-data service, many customers will now be able to receive ADSL services for the first time. Phone companies will be able to upgrade linecards located in existing DLCs in order to make ADSL available to these customers. Also, phone companies will be able to install new DLCs into their networks to reach customers who were not previously connected to a DLC, but were too far away from a central office to receive ADSL service through a DSLAM connection. These new chipset solutions open up an enormous and previously untapped market opportunity for telephone companies. Switch upgrades are a more cost-effective way of offering ADSL services at the central office. Switch upgrades reuse the existing switch equipment that phone companies currently use to handle traditional analog phone calls. ADSL switch upgrades are more cost effective than DSLAMs, because they lower service providers’ upfront capital spending and on-going maintenance costs by eliminating the need for a separate DSLAM in the central office. The idea of upgrading DLC and central office switches has gained momentum recently. Earlier this year, SBC announced Project Pronto, which is its $6 billion initiative to deploy DSL services. At about the same time, SBC also petitioned the Federal Communications Commission (FCC) to allow it to offer ADSL services through "neighborhood broadband gateways" (i.e. DLCs). In September 2000, the FCC ruled that SBC would be allowed to install ADSL-enabled linecards in DLCs so that it could offer ADSL services. SBC reported that the ruling would allow it to increase the percentage of customers it could reach with ADSL services from 45% to 80% by the end of year 2002. Recently, we have also seen DLC and switch equipment companies become more interested and focused on this upgrade opportunity. As the ADSL industry continues to grow, we believe that service providers will become increasingly more interested in deploying ADSL services in ways that allow them to do so cost effectively and that let them reach more customers. Aware recognized the potential of the DLC and switch upgrade opportunity several years ago. We partnered with two leading semiconductor companies to combine their expertise in voice technology with our ADSL technology expertise. In addition to Legerity (formerly the Communications Division of AMD), we are also working on development projects with Infineon (formerly Siemens Semiconductor) to offer chipsets aimed at the DLC and switch upgrade market. We believe that the combination of our joint voice and data technologies, as well as our customers’ relationships with their customers, puts Aware an excellent position to capitalize on this growing and large market. This commentary contains certain statements of a forward-looking nature relating to future events or the future financial performance of Aware. Important factors that could cause actual results to differ materially from those indicated by such forward-looking statements include the risks that Aware has a new and unproven business model, that Aware depends on a limited number of licensees, that Aware depends on equipment companies to incorporate its technology, and that DSL technology competes with other technologies for broadband access. These and other risks are described in various filings that Aware has made with the Securities and Exchange Commission, which risks are incorporated herein by reference.