Lucent Technologies Inc. of Murray Hill, N.J., and TeraBeam Networks of Seattle have announced that they have agreed to jointly develop and deploy TeraBeam's free-space optical system for connecting local and wide area networks. They will create TeraBeam Internet Systems and expect to launch commercial service this year.

Both companies will supply research and development assets, intellectual property and free-space products. TeraBeam also will contribute manufacturing assets, and Lucent, which will own 30 percent of the systems firm, will invest $450 million in cash and will contribute its engineering and support integration services.