Lucent eyes a stake in Fidelity broadband unit

Lucent Technologies is eyeing a possible equity investment in IG2, a subsidiary of Fidelity Holdings, that is building a broadband network in the US to deliver voice, data and on-demand video services to homes and small businesses.

Terms of a tentative agreement announced on Friday call for IG2 to acquire IP (Internet protocol) networking equipment and services from Lucent to the tune of $400 million over three years. The deal depends on a financing agreement being reached between the two firms, Lucent spokesman Tom Jones said.

The size of any equity investment hasn't been disclosed, and the companies expect to announce further details at a later date, Jones said.

IG2 plans to offer customers a bundled package of high-speed Internet access, local and long distance telephone calling, video programming, video-conferencing and e-commerce services. They will be carried over IG2's private national network and delivered to homes and offices through existing telephone wiring using DSL (digital subscriber line) technology, Kimberly Peacock, founder and vice chairman of IG2, said in an interview.

While a handful of service providers, such as RCN Corp., offer packages of converged services over cable networks, IG2 can reach a broader audience because it uses existing telephone wiring to complete the "last mile" of its network, Peacock said.

The company expects to begin a staged rollout in August in a handful of key US markets. By the end of 2001 it hopes to be operating in 62 markets in 31 US states, Peacock said. If all goes well the company plans to target European markets in the future, he said.

"Right now we've bitten off as much as we can chew," he said.

The company hopes to secure $120 million in funding to see it through 2000. Today it has commitments from investors for up to $40 million, Peacock said.

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