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Technology Stocks : Cisco Systems, Inc. (CSCO)

CSCO 76.22

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Nov 24 3:59 PM EST

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To: The Phoenix who wrote (29696)	11/29/1999 12:19:00 PM
From: elmatador	Read Replies (1) of 77400

Re Cisco edge squeeze: The future of convergence in Europe is going to be data (broadband) over fixed (wired) networks, and voice by way of GSM. But I mean GSM 2G, the bread and butter existing telephony wireless. Data over the air-interface will run on 3G wireless the broad(er)band sort. Wireless telephony is a technology with better price/performance than wired technologies. So it will displace voice from fixed networks. The guys that are most willing to get rid of their fixed line (30% of them) are the guys who spend over $100 in mobile bills. The users that spend below $25 a bills are not willing to give up the RJ-11. Which means those low paying subscribers will stay on these very expensive infrastructure, the PSTN, a.ka. old world. If the telco infrastructure is relegated to carry only those universal service obligation this means telco's going out of business. By the way Telia -the Swede operator- has 46% of its revenue derived from the fixed network. In other European countries operators are buying licenses in foreign markets. Telefonica of Spain derives 10% of its revenue from LatAm operations. Those operators are investing in sophisticated services in their home markets, they are building wired and wireless networks in Brazil, Argentina, Malaysia. Look to Bell South and SBC and you will notice a similar pattern. Coming back to the European (200billion in services higher margins than the US) telco market: How the telcos a.k.a old world will react when the minutes start being ported to the wireless networks of a mammoth Vodafone cum Air Touch cum Mannesmann? Fixed operators will be hard pressed to create revenue to run over their infrastructure. They have to start rolling out xDSL services over those copper wires 'com gusto'. That's because those copper wires have value only to carry value added services. So, they will stop defending their revenue in ISDN and Leased lines and have to invest in their fised networks. By then time CSCO is in the Metro Loop markets leveraging those Cerent/Monterey platforms against the telco's running for cover. Everyone right at the customers doors steps fighting for the valuable business. Csco coming from the enterpise with IP and telco's coming from the core with ATM based Telco's form the core. 60 billion of those 200billion come from 25 metropolitan centers only. Not so difficult to target the 'meat'. The fiber is already being built connecting those 25 centers.

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