Alcatel Reinforces Leadership By Delivering Next-Generation Optical Components.

Business Editors

BALTIMORE--(BUSINESS WIRE)--March 7, 2000

Alcatel (NYSE:ALA), a global leader in communications and networking, today unveiled several breakthroughs in the commercialization of new optical technology that will bring high-speed telecommunications networks to market faster and at significantly less cost than before. It also announced a significant expansion of its U.S. production facilities for optical components.

Alcatel already leads the industry in the worldwide deployment of optical transport systems that carry soaring volumes of Internet and voice traffic. Now the company is announcing four major new areas where it is reinforcing its leadership in optical components:

-- Already a major supplier of active optical gear, Alcatel will begin selling
passive optical devices, including Arrayed Wave Guides that process up to 40
separate wavelength of light.

-- Alcatel is introducing a new generation of compact optical amplifiers that
will dramatically lower the costs of installing Dense Wavelength Division
Multiplexing (DWDM) systems in metropolitan areas, a market many analysts
believe is set to explode.

-- Alcatel announced availability of a new class of laser pumps, which will
drive very long haul optical networks that need signal regeneration only once
every 3,000 kilometers.

-- Alcatel is introducing a highly integrated 10 gigabit-per-second (OC-192)
optical interface, which will cut the size and cost of high-speed transmission
equipment.

Last fall, the consultancy RHK named Alcatel the global leader in DWDM market share, counting both submarine and terrestrial long-haul optical transmission systems. Alcatel, which was the first company to introduce DWDM lasers in 1995, is also among the leading suppliers of optical systems components, with sales in the range of $200 million in 1999. That figure is expected to grow more than 50 percent this year.

Until now, Alcatel has sold only active components such as lasers, optical amplifiers and optical interfaces. But the company today is announcing its expansion into the passive component business, including a 16-channel Arrayed Wave Guide. This product, which will be widely available at the end of Q2, allows the multiplexing and demultiplexing of 16 different wavelengths of light on a single chip. A prototype 40-channel version is also on display at the Optical Fiber Communications show.

Recognizing the huge potential of the metropolitan transport market, Alcatel has also developed a new generation of low-cost, compact optical amplifiers and lasers. These will pave the way for transmission equipment costing only half as much--and taking up only one third as much space--as previous systems. The favorable economics should greatly accelerate deployments of metro DWDM. Seeking to slash the costs of deploying and maintaining long-haul networks, many carriers are investigating the potential of fiber that exploits the so-called Raman amplification effect, which lets signals travel without regeneration as far as 3,000 kilometers--roughly 10 times the distance of ordinary networks.

Alcatel is pleased to announce the immediate availability of special laser pumps tuned to the special frequencies that make this revolutionary effect possible.

Last but not least, Alcatel is maintaining its position on the leading edge of transmission technology by introducing a 10 gigabits-per-second optical interface that integrates the laser, laser driver, alarms and multiplexer in a single compact unit. The high level of integration allows customers to reduce the size, cost and power requirements of their systems. The unit, which should be available at the end of Q1, will be fully compatible with equipment expected from Lucent and Hitachi, assuring customers peace of mind.

In order to better serve its North American customers, Alcatel also said today that it will expand U.S. manufacturing of optical components by opening a 3,000-square-meters facility in Plano, Texas in March. The facility will house about 100 employees, up from 60 currently engaged in U.S. production.

"Our exciting announcements today confirm Alcatel's leadership in the optical transport business and prove that we are ready to meet the most exacting customer requirements with innovative products at the right time," said Philippe Bregi, chief operating officer of the Optronics business unit of Alcatel. "When it comes to serving our valued telecommunications customers with next-generation technology and service, we will not be beaten."

About Alcatel

The Optronics business unit of Alcatel, markets a full range of devices and solutions for fiber optic communications. Operating state-of-the-art manufacturing plants in France and in the USA, it is a leading supplier of DWDM lasers, photodetectors, optical amplifiers, high-speed interface modules and key passive devices such as arrayed waveguide multiplexers and Fiber Bragg Grating filters. Alcatel builds next generation networks, delivering integrated end-to-end voice and data communications solutions to established and new carriers, as well as enterprises and consumers worldwide. With 120,000 employees and sales of EURO 23 billion in 1999, Alcatel operates in more than 130 countries. For more information, visit Alcatel on Internet: http://www.alcatel.com.