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Non-Tech : Amati investors

AMTX 1.500

+3.4%

Dec 9 3:59 PM EST

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To: pat mudge who wrote (14706)	4/19/1997 7:59:00 AM
From: Bob Smith	of 31386

[Ameritech Delay] Pat, Some thoughts on Ameritech's "slight delay" (Q1/Q2 '98) in rolling out a ADSL solution. We know that they have been trialing successfully. Customer comments and your discussion with the IBM'er support a solution that's ready to go. My take on the delay: --------------------- 1) Interconnection agreements with other carriers (AT&T/MCI.....) are huge issues. Letting each other sell in each other's customer base has been slow at best. Initially, Long Distance carriers can "resell" any service that an RBOC offers. So, could "others" resell this service? Not sure. 2) Carrier Access fees Big debate...you may have seen the MCI ads to lower access fees. 3) ISP Access Fees Same issue. ISP's pay pratically nothing for local loop access... RBOC's think they're getting a free lunch while they need to invest to increase infrastructure. You may have read the US West White Paper on offloading the internet traffic off the voice network. 4) ADSL Business Model for RBOC offers This has been shared before by all. A "fat pipe" going to a consumer's home means a couple things: - you may only need one copper pair...no need for additional RBOC lines...this has been a recent cash cow for the RBOCS - T1 tarriffing...as we have seen in recent articles... how do you plan to cannabalize your dedicated service "gracefully" - Upside - new offers can be realized for telecommuting, video services....etc. All of these issues affect how agressively you can price a solution that may be around "for the next 40 years". Think of it. The RBOC's can now go after LD, however 2-3 other companies will go after their local base. RBOC's make "huge money" in access fee's..heck I think AT&T paid $15-$20B (estimate) in access fee's last year to these guys. This is going to be reduced..and saving passed to consumers (hopefully). As we have said before...there's more to this than technology when you look at the Supplier - RBOC - customer model. I think you'll see RBOC's move at different speeds ... it shows who is ready to deal with the above ... and who isn't. Maybe the delay is good news for Amati in that RBOC's are not rushing and forced to consider an initial CAP solution. I read the Southwestern Bell release (from '96) which dicussed trial Westell modem's. SBC (part of JPC) said they may not neccessarily deploy what they were testing. You can read alot into that... but I think he was referring to the availability of a better solution. As you can see... the RBOC's have a "full plate" ... perhaps this is a reason for the "slight delay". Just thoughts, Bob

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