TeraBeam Corporation and Lucent Technologies to Jointly Develop And Deploy TeraBeam's Breakthrough Fiberless Optical Technology

Revolutionary Optical System Will Link Businesses to the Internet Over-the-Air

Lucent to Own 30% of New Systems Company

Seattle, WA. Addressing one of the fastest growing segments of the Internet infrastructure market, Lucent Technologies (NYSE: LU) and TeraBeam Networks said today that they are entering into a venture to develop and deploy TeraBeam s revolutionary fiberless optical networking system that provides high-speed data networking between local and wide area networks. In addition, TeraBeam and Lucent will own 70 and 30 percent, respectively, of TeraBeam Internet Systems, a systems company the two companies will create.

TeraBeam s Fiberless Optical Network system sends data through the air using invisible light. The data travels at gigabits per second speeds -- thousands of times faster than current "first mile solutions". This technology breaks what is considered to be the last significant bottleneck in accessing the Internet or other high-speed communications -- where data is slowed when it is carried between local and wide area networks.

"To fulfill the potential of today s Internet requires the ability to deliver the very high speeds carried by local area networks across a city, or country, or across the world," said Dan Hesse, CEO of TeraBeam. "By tapping into Lucent s leadership in broadband networking, coupled with our breakthrough technology, TeraBeam is leading the charge in shattering the first mile speed barrier."

"Periodically technology is developed that has the power to significantly change the landscape," said Rich McGinn, chairman and CEO, Lucent Technologies. "TeraBeam s Fiberless Optical Network system is such a disruptive technology. We are pleased to be working with TeraBeam to help them bring their gigabit speed Internet access to customers."

The broadband data market is one of the fastest growing segments of the communications networking market. According to Forrester Research, the market for U.S. broadband Internet access will be $33 billion by 2003.

"Businesses are struggling to connect high-speed local area networks with ultra high-speed backbone networks due to the last mile bottleneck," said Chris Nicoll of Current Analysis. "By leveraging Lucent s strength in broadband networking solutions, TeraBeam has the opportunity to deliver one of the most significant advances in optical networking for the new millennium."

TeraBeam s Technology

TeraBeam s Fiberless Optical network is a point-to-multipoint solution that is designed to transmit broadband data through the air anywhere within a service area at gigabits per second. At the heart of TeraBeam s solution is a customer unit about the size of a small satellite dish that utilizes a proprietary holographic optical element. The unit, which can be easily mounted in an office window, sends and receives data through the air. The technology, which can be provisioned in days, provides broadband IP connectivity to the Internet and intranets that is quick to provision, highly scalable, cost effective and does not require licensed spectrum. Target customers include medium and large commercial enterprises. TeraBeam has already deployed cell sites and began its first customer trial last month. The company expects to launch commercial service this year and is targeting to cover the top national and international markets served over the next four years.

TeraBeam will address this market both directly and in conjunction with other service providers. Lucent will also provide TeraBeam with engineering and support integration services as they roll out their service. In addition all of TeraBeam s products will carry the Lucent Technologies brand. TeraBeam has also named Lucent as their preferred supplier of optical components, networking equipment and professional services.

Under the agreement, Lucent is investing cash, certain research and development assets, intellectual property, and free-space optical products valued at $450 million. TeraBeam is contributing research and development assets, manufacturing assets, intellectual property, and free space optical products.

Lucent s Bell Labs has garnered more than 2,000 patents in optical technology alone. According to Dell Oro Group, Lucent captured the largest market share -- 34 percent (or approximately $1.3 billion) -- of the $3.8 billion global DWDM equipment market in 1999. With approximately 7,000 system installed worldwide, Lucent is the global leader in DWDM technology. For more information about Lucent s Optical Networking Group, please visit its Web site at http://www.lucent-optical.com.

About TeraBeam Networks

TeraBeam Networks will provide very high speed IP connectivity to enterprise business customers at speeds previously only available on fiber optic cables by utilizing the same optical technology advantages, but using air rather than glass as the medium. The company will deploy its fiberless optical service in metropolitan markets worldwide to enable rapid customer provisioning with scalability and value. TeraBeam Networks breaks the last-mile bottleneck by connecting local and wide area networks at gigabit rates. Founded in 1997 by Chairman Greg Amadon, TeraBeam Networks is a privately held company based in Seattle. Major investors, include Softbank Ventures, Oakhill Ventures, Madrona Investments, Morgan Stanley Dean Witter, Merrill Lynch IBK Positions, Fidelity Management and Research Co., T. Rowe Price Investment Services, Capital Research and Management Co. and four major telecommunications carriers. For more information on TeraBeam Networks, visit their Web site at http://www.terabeam.com.

About Lucent Technologies

Lucent Technologies, headquartered in Murray Hill, N.J., USA, designs and delivers the systems, software, silicon and services for next-generation communications networks for service providers and enterprises. Backed by the research and development of Bell Labs, Lucent focuses on high-growth areas such as optical and wireless networks; Internet infrastructure; communications software; communications semiconductors and optoelectronics; Web-based enterprise solutions that link private and public networks; and professional network design and consulting services. For more information on Lucent Technologies, visit its Web site at http://www.lucent.com.

Contact:
John Callahan, 908-559-5847, or home, 703-476-6385, or
johncallahan@lucent.com, or Mary Lou Ambrus, 908-582-3060, or home, 908-707-1147,
or mambrus@lucent.com, both of Lucent Technologies;
or Carolann Samuels of Alexander Ogilvy, 303-615-5070, ext. 105, or
casamuels@alexanderogilvy.com, for TeraBeam