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Sources: Tellabs to Buy Future Networks

Tellabs Inc. will announce a deal to acquire closely held cable-modem vendor
Future Networks Inc. perhaps as early as this week, sources said Wednesday.
Terms of the deal were not immediately available.

Tellabs and Future Networks officials declined comment on whether a deal was
in the works.

Tellabs does not currently have a cable modem in its equipment portfolio. It
has, however, played with the idea. In December 1997, the company revealed plans
for a proprietary cable-modem card to accompany its line of residential
cable-telephony gear. But those plans didn't get very far in terms of
cable-operator deployments.

Meanwhile, Tellabs has made inroads in the cable-modem-termination-system
arena recently, announcing an alliance with Riverstone Networks Inc. at last
year's Western Show.

In that deal, the companies agreed to combine Tellabs' 'CABLESPAN 2300'
universal telephony-distribution system and 'MartisDXX' managed-access and
transport network system with Riverstone's family of high-speed edge routers,
resulting in a 'carrier-class' CMTS called the 'CABLESPAN 2700.'

By purchasing Alpharetta, Ga.-based Future Networks, Tellabs would get its
hands on a line of Data Over Cable Service Interface Specification 1.0-certified
cable modems.

Looking even further ahead, Future Networks has also submitted two models,
the '110D' and '110E,' to Cable Television Laboratories Inc. for DOCSIS 1.1

Sources said Future Networks' cable modems could help Tellabs to make the
transition from a line of circuit-switched gear to one based on Internet
protocol that takes advantage of DOCSIS 1.1 and PacketCable standards and future
VoIP (voice over IP) services.

That combination would make Tellabs a serious multiservice contender because
it would then have the puzzle pieces (cable-modem and VoIP techniques) it would
need to offer cable operators a DOCSIS 1.1-PacketCable system for IP-based
telephony services.

DOCSIS 1.1 is the underpinnings for PacketCable, a multimedia architecture
that cable operators will need to offer VoIP, as well as more advanced
applications such as virtual private networks and interactive