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Arris Will Swallow Bay Modems

Anaheim, Calif. -- In an unexpected move, Arris Interactive
will take over the cable-modem division of Nortel Networks.

Nortel purchased Bay Networks Inc., formerly known as
cable-modem pioneer LANcity Corp., in August. Arris is a joint venture between Antec and

In the arrangement, described by both companies as a memo
of understanding, the Bay Broadband Technology Division will be "combined with"
Arris. To date, Arris has been focused on circuit switched telephony, but it is advancing
plans to shift to an IP (Internet protocol) telephony platform, which requires a
cable-modem foundation.

Guy Gill, president and CEO of Arris, said the blending of
the two companies and their combined technologies, products and skill sets
"substantially strengthens the value proposition we can offer our cable

Karl May, vice president and general manager of Nortel's
Broadband Technology Division, also applauded the move. He said that Bay's modems, coupled
with Nortel's SONET (Synchronous Optical Network) and routing gear, and with Antec's
hybrid fiber-coax infrastructure "creates an unmatched end-to-end solution for cable

The companies said Antec would receive exclusive
distribution rights for all of Bay's products in the U.S., while Nortel can sell the
modems outside the U.S. and to noncable operators in the U.S.

Antec and Nortel also plan to enter a joint marketing

John Egan, chairman and CEO of Antec, said in a statement
that by integrating LANcity into Arris, "We have a great opportunity to quickly
provide a full range of voice and data products over Arris' Cornerstone platform."

Egan expects the transaction to close in the first quarter
of next year, and said additional details -- like ownership, equity and legal structure --
will follow that.