Bell Atlantic, NYNEX, CAI Wireless Systems Suspend Business Agreement For
CAI Provided with Option to Repurchase Bell Atlantic, NYNEX Investment in
Changing Market Conditions, Full Service Network Buildouts Lead to
Re-Evaluation Of Plans for Digital Wireless Video Strategy
December 13, 1996
New York, Philadelphia and Albany --
HREF="http://www.bell-atl.com">Bell Atlantic (NYSE: BEL),
(NYSE: NYN) and CAI Wireless Systems, Inc. (NASDAQ:CAWS) are
suspending a 1995 business agreement for one year and providing CAI
with the option to repurchase a $100 million investment in CAI
securities made by Bell Atlantic and NYNEX.
Under a new agreement signed yesterday, the way has been cleared for
CAI to develop a more flexible approach to the use of its MMDS
spectrum, including the provision of video, voice and data services in
Northeast and mid-Atlantic markets.
Bell Atlantic and NYNEX said they were re-evaluating their decision to
use CAI's MMDS (Multichannel Multipoint Distribution Service)
transport systems as an early-to-market video strategy due to a number
of factors, including changing market conditions for entertainment
services, the technical availability of fiber-based Full Service
Networks and CAI's desire to expand its use of spectrum beyond video
As a result, the companies have re-negotiated a 1995 agreement to
develop and deploy wireless video networks and have also suspended
plans to jointly launch wireless video services in Hampton Roads, VA.,
and Boston, Mass., in 1997.
Under the terms of the agreement announced today, CAI will be given an
option for up to one year to purchase Bell Atlantic and NYNEX's
interest in the company. The agreement also enables CAI to expand the
markets in which it may seek FCC approval for mixed use of MMDS
Bell Atlantic and NYNEX added that they continue to view the
marketplace for broadband services such as video and high speed data
connectivity over the Full Service Network as an attractive long term
growth strategy. Therefore, they are still evaluating a variety of
delivery systems for video and entertainment services.
Bell Atlantic is currently providing video programming over its fiber
network in Toms River, N.J., and recently announced plans to deploy
switched digital video in the Philadelphia market.
NYNEX also has selected switched digital technology as part of the
company's plan to deliver the next generation of network technology to
its customers. In October, NYNEX signed a multi-year agreement with
General Instrument Corporation that includes one million lines of
transport electronics to be deployed in metropolitan Boston and New
York City areas, as well as parts of Long Island and Westchester
County, N.Y. The first installation of this new technology, initially
for voice applications, will begin in metropolitan Boston early next
"CAI is anxious to test the versatility of its considerable MMDS
spectrum in new endeavors that combine video, voice and data
transmission," said Jared E. Abbruzzese, chairman and CEO of CAI.
have learned much from building digital wireless systems during this
trial. We appreciate that they have given us the opportunity to
charter a different destiny for our company, and we hope to
aggressively press the regulatory envelope for full flexible use of
CAI has been exploring mixed use of MMDS spectrum in markets not
covered by the original agreement with Bell Atlantic and NYNEX, such
as Rochester, N.Y., where the FCC has granted the company authority
for a market trial with 500 users. The company has also requested FCC
approval for a two-way flexible-use MMDS trial in Hartford, Conn.
Bell Atlantic Corporation is at the
forefront of the new
communications, entertainment and information industry. In the
mid-Atlantic region, the company is the premier provider of local
telecommunications and advanced services. Globally, it is one of the
largest investors in the high-growth wireless communication
marketplace. Bell Atlantic also owns a substantial interest in
Telecom Corporation of New Zealand and is actively developing
high-growth national and international business opportunities in all
phases of the industry.
NYNEX is a global communications and
media corporation that provides a
full range of services in the northeastern United States and high
growth markets around the world, including the United Kingdom,
Thailand, Gibraltar, Greece, Indonesia, the Philippines, Poland,
Slovakia and the Czech Republic. The corporation is a leader in
telecommunications, wireless communications, directory publishing and
video and entertainment services. NYNEX is also managing sponsor of
FLAG -- Fiberoptic Link Around the Globe -- the world's longest
undersea fiber optic communications cable.
CAI, based in Albany, N.Y., operates analog-based wireless systems in
New York City, Rochester and Albany, Philadelphia, Washington, D.C.,
and Norfolk/Virginia Beach, Va., and has a portfolio of wireless cable
channel rights in eight additional markets, including Long Island,
Buffalo and Syracuse, N.Y., Providence, R.I., Hartford, Conn., Boston,
Baltimore and Pittsburgh.
In addition, CAI owns approximately 52 per cent of CS Wireless
Systems, Inc., which is jointly owned by Heartland Wireless
Communications, Inc. CS Wireless has, on a pro forma basis for
announced transactions, approximately 6.2 million line-of-sight (LOS)
households and 77,550 subscribers in 17 markets located primarily in
the Midwest and the Southwest regions of the United States.