SBJ Buzz

Motorola, Palm to collaborate

Motorola and Palm Inc. announced Sept. 25 that they are collaborating on a new smart phone that blends the functionality of a Palm handheld computer with the compact form of a mobile phone.

The companies signed an agreement to co-develop and co-brand these mobile smart phones, leveraging Motorola's wireless technologies, product line and distribution channels with Palm's core handheld functionality, its Web clipping technology and its operating system, according to a Palm Inc. release.

The cooperative effort will initially produce a tri-band GSM wireless smart phone, expected to be available early in 2002.

The companies envision the device will contain a larger color screen than standard mobile phones, as well as Palm's HotSync software and over-the-air synchronization via Motorola's Starfish TrueSync software, the release stated.

The device will feature general packet radio service compatibility, and it is expected to be the first in a series of smart phone products that Motorola and Palm will explore.

This effort is an extension of an agreement in December 1999 under which Motorola took a minority equity stake in Palm Inc.

The new device initially will be distributed through Motorola's existing sales channels.

Motorola plans to provide primary support for the product, including initial customer calls and warranty; Palm intends to supply software and operating system support.

Internet companies to merge

Phone.com Inc. and Software.com Inc. announced Sept. 1 that they were granted early termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended in connection with the previously announced merger of the two companies.

Consummation of the merger also requires approval by the shareholders of each company and satisfaction or waiver of the other conditions set forth in the merger agreement.

The companies expect the transaction to be consummated during the fourth calendar quarter of 2000.

Phone.com is a provider of software, applications and services that enable the delivery of Internet-based information and voice services to mass-market wireless telephones.

Software.com is a supplier of carrier-scale Internet infrastructure software for communication service providers worldwide. Software.com provides the scalable platform that enables service providers to deploy next-generation business and consumer Internet services, including e-mail, IP unified messaging, mobile mail and mobile instant messaging.

In addition, Software.com has established strategic relationships with Cisco Systems, Hewlett-Packard, IBM, Nortel Networks and Telcordia Technologies (formerly Bellcore).

More information about the companies and the merger as recorded in their individual and joint filings with the Securities and Exchange Commission is available at the SEC's Web site at www.sec.gov.

FCC says regulation unnecessary

An FCC study concludes that the competitive Internet backbone market shoujld remain free of telecommunication regulations.

The Federal Communications Commission's Office of Plans and Policy Sept. 26 released "The Digital Handshake: Connecting Internet Backbones," part of the OPP Working Paper Series.

Authored by Michael Kende, director of Internet policy analysis in the Office of Plans and Policy, the paper examines the interconnection agreements that have evolved in place of traditional interconnection regulations between Internet backbone providers.

The most commonly known form of interconnection is peering, an agreement enabling backbones to exchange traffic with one another at no cost. Another form of interconnection is known as transit, an agreement whereby one backbone pays another backbone for delivering its traffic, according to an FCC release.

Kende notes that in the past several years, a number of parties have questioned whether it is fair when larger backbones refuse to peer with smaller ones.

The paper demonstrates that in a competitive backbone market, there may be legitimate reasons for a backbone provider to not peer with another but offer transit arrangements instead. As long as transit arrangements are available on a competitive basis, smaller backbones can enter and ensure that the backbone market remains competitive.

The paper concludes that competition, governed by antitrust laws and competition enforcement that can prevent the emergence of a dominant firm, can act to restrain the actions of larger backbones in place of any industry-specific regulations.

If a dominant backbone provider should emerge through unforeseen circumstances, however, regulation may be necessary, as it has been in other network industries.