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Bay Networks hedges its bets

In releasing a 56-kbps software upgrade amid a lawsuit over a rival modem technology, Bay tries to steer around pitfalls.

In an effort to simplify the process of adopting faster modems, Bay Networks released a software upgrade that incorporates 56-kbps technology into the servers accessed by remote users.

Available on the company's Web site, the software will upgrade two of Bay's remote access servers so that they are compatible with x2, a 56-kbps specification developed and marketed by the U.S. Robotics division of 3Com. Instead of having to replace extensive amounts of hardware, Internet service providers and corporations seeking faster Net connection speeds need only change the software that drives Bay's digital signal processors.

The release comes as 3Com and Rockwell Semiconductor Systems duel over competing standards for 56-kbps technology. Last week Rockwell sued Bay for breach of contract, alleging that the Santa Clara, California, network products manufacturer violated the terms over licensing Rockwell's competing specification, known as 56Kflex. (See related story)

Rockwell executives have declined to detail exactly how Bay allegedly violated the licensing agreement except to say that the company was "combining" the two technologies.

Bay has steadfastly denied it is breaching the contract, and said today the suit would have no effect on the company's plans to offer the software upgrade.

"There's no connection whatsoever," said Jonathan Sieg, vice president of Bay's signal processing group. He added that the company's plans to offer the upgrades had been in the works long before Costa Mesa, California-based Rockwell filed the suit.

Representatives from Rockwell were not immediately available for comment.

Attempts to reach a standard for 56-kbps technology have reached an impasse, making companies leery of investing money in a specification that may end up being tabled once intellectual property disputes holding up the negotiations are resolved. Bay appears to be hedging its bets by providing both technologies. Two analysts said that by allowing either to be implemented via a software--rather than a hardware--upgrades, Bay appears to be making a savvy business move.

"Bay doesn't want to get locked out if ISPs go a particular way," said Lee Doyle, an analyst with International Data Corporation. Doyle added that the move "may help Bay to gain recognition among ISPs," where it lags behind competitors such as Cisco Systems, 3Com, and Ascend Communications.

Neither Bay nor Rockwell will discuss the licensing agreement for 56Kflex, citing confidentiality provisions. But Ken Krechmer, editor of Communications Standards Review, speculated that a contract provision forbidding Bay from offering x2 and 56Kflex in the same product is at the heart of Rockwell's suit.

Bay's Sieg said in an interview that the lawsuit will have no bearing on the release because the two specifications will not be run simultaneously on its products. "Customers will have to decide on one or the other," said Sieg, adding that a 56Kflex upgrade will be available by the end of the year.