Re: Too much capacity...yada...whoops...MCI to Spend $100 Billion over Three Years
Thread- Apparently the time may be coming around for the analysts, money managers, financial reporters, etc. to start pushing the issue back from, "Too much capacity..." back to, "Too little capacity..." I'm sure the rumored buyout figure Deutsche Telekom is willing to pay for Qwest may have something to do with it.
And speaking(in my previous MMDS post) of the LD players having robust LD business, sans local phone service, here's an article that spells it out pretty clearly. And apparently in the real world there may not be too much capacity afterall. This article speaks for itself and Bernie addresses the yada...yada talk in bold below. -MikeM(From Florida)
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MCI Chief Sees Big Outlays to Handle Net Traffic
By Peter J. Howe, Globe Staff, 3/7/2000
In good news for richly valued telecommunications equipment providers, MCI-WorldCom president Bernard J. Ebbers estimated his company may have to spend as much as $100 billion over the next three years upgrading its network to handle an explosion in data and Internet traffic.
Ebbers, appearing at a New Economy summit at Boston College, said MCI has recently had to add capacity to its global network at a rate of 800 percent annually to keep up with soaring demand for Net traffic.
If demand continues to grow at that rate, and Ebbers gave no indication he doubts it will, by 2003 MCI-WorldCom could have to spend cumulatively $40 billion for routers, $40 billion for facilities to keep signals moving over fiber-optic lines, and $20 billion just for power lines and support for 'signal regeneration' sheds. By 2003 MCI-WorldCom may have to add as much bandwidth capacity every day as it recently has added in an entire year, Ebbers said, citing what he said were new in-house projections.
Ebbers's estimates come in the context that he is trying to get federal approval for the company's planned $130 billion merger with number three long-distance carrier Sprint. He has portrayed the Sprint combination as crucial to amassing the size and profitability needed to support investments that must be made to serve the world's booming telecommunications needs.
In a later interview, MCI spokeswoman Elena French insisted Ebbers was not exaggerating. 'We're not the only ones looking to get bigger. Everybody needs to get bigger. The Bells are doing it. The other long-distance companies are doing it,' French said.
Ebbers made his comments in an afternoon panel discussion that included Desh Deshpande, co-founder and chairman of Sycamore Networks Inc., the year-old Chelmsford optical networking concern whose rocketing stock price has made it the second-biggest company in Massachusetts by market valuation.
Deshpande questioned whether Ebbers' estimates include the likelihood that new technologies being developed by his company and others, which use fiber-optic connections from computers and telephones straight to the Internet to add capacity, will drive down the cost of new telecommunications capacity.
Ebbers said it did, adding, 'It still is $100 billion.'
'We'll take it all,' Deshpande shot back, to cheers from the 1,800 people attending the event at BC's Conte Forum. Sycamore's stock closed at 1721/8 yesterday in trading on the Nasdaq Stock Market.
Ebbers and Deshpande disagreed with warnings issued by Boston consultants Renaissance Worldwide and others that the country may soon face a glut of high-bandwidth capacity that could send data carriage prices - and market valuations for communications companies - through the basement.
'I just don't see it,' Ebbers said, and Deshpande added, 'Once we have this bandwidth, people are going to think of new things to do with it. I don't think we are going to have a problem of overcapacity.' |
