The “Last Mile” Race to Potential Billions… Who Will Win? One Emerging High Tech Company Thinks it Already Has
Without a degree in computer engineering, it is rather intimidating for us common folk to try and interpret "techno-speak. " seemingly preferred by the high-tech community to explain leading industry innovations.
For instance, in a recent article published by eCompany regarding very high speed Internet connections, writer Eric Nee stated, "To get the required speeds, the phone companies have to build fiber optic lines out to the neighborhoods, install multiplexer boxes and then put some gateway boxes on the homes to connect to the multiplexers." Huh?
Why do they all insist on making everything so difficult to understand? How are investors supposed to make intelligent investment decisions - especially on situations in the hot high technology sectors -when they don't have the first clue what the difference is between a chip set and a potato chip?
In this issue of Inside Wall Street, we will endeavor to provide you with a layman's understanding of an exciting emerging industry and of one company, in particu1ar, poised to redefine the telecommunications marketplace. Further, we will attempt to show how this one clever company believes it may, in fact, have the “last mile" solution to a costly challenge daunting major telephone carriers. If successful, a windfall of revenues and profits reaching into the billions of dollars is nearly guaranteed.
Competition Fuels New Mass Markets
First, it is vital to understand precisely What dynamics are occurring in the market place between major phone carriers and national cable providers. AT&T Corp., soon to be the number one cable company, is already delivering phone calls and Internet connections, along with movies and traditional television programming, over advanced networks, and, even then, congested traffic on thc cable loop proves slow and cumbersome.
In certain metro areas of the country, Time Warner cable subscribers can now receive over 200 television channels through a fully-digitized cable network including dozens of premium movie channels and pay-per-view selections, as well as high speed Internet connections through Time Warner’s “Road Runner” service.
Known in the industry as "voice, video and data" transmission, this comprehensive method of rapid delivery of information directly into the home is quickly transforming cable operators into multimedia behemoths. However, there is one problem. Cable companies are limited by the reach of their own cable networks Many skyhigh office buildings And remote rural areas can simply not be accessed by existing cable infrastructure.
Conversely, nearly every home and business has a telephone. But, the entire telocom industry is founded on an infrastructure built using copper wiring, or twisted pair. Until recently, telephone companies have lacked the ability to piggyback rich "video and data" content atop the "voice" transmission over a single phone line. At its best, Phone carriers using standard Digital Subscriber Line (DSL) technology, can provide home PC users with speeds averaging less than one million bits per second. The existing broadband options simply do not have the bandwidth necessary to deliver rapid Internet connectivity, much less Content- rich graphics and streaming video and audio features. However, with the advent of technologies, such as Very High Speed Digital Subscriber lines (VDSL), phone wires are now being virtually transformed into broad pipes capable of sending phone calls, TV programming and Web pages into the home - all on a single phone line.
According to The Financial Times in An October 1999 article, "Mr. (Bill) Gates said he believed consumer demand for new high-speed Internet services such as DSL -technology that turns ordinary copper telephone lines into a high capacity data highway - would soar over me next 18 months." In another article, The Financial Times reported, "The key advantage for xDSL is that copper wires run into almost every home and office in the developed world.” Clearly, there is a growing consciousness building support and excitement for this tremendous new mass market.
The Race is On – Place your “Bits”!
Companies such as Next Level Communications, Inc. (Nasdaq: NXTV)and Broadcom Corporation (Nasdaq: BRCM) are investing heavily in the development of VDSL technology, which to date, has proven successful at delivering speeds reaching 52 millions bits per second on copper wire over a distance of nearly 1,000 feet. In response, Wall Stteet. has rewarded Next Level and Broadcom with enormous market valuations reaching $16.1 billion and $64.1 billion, respectively.
However, there is a lingering problem... if households are more than 4,500 feet from the phone company’s centra1 office, the Carrier must install remote equipment stations and fiber-optic lines to bring its customers within range. That can be a costly nuisance if it means ripping up neighborhood streets. Moreover, it will require up 15,000 feet of effective copper wire transmission before the "last mile" solution can be delivered to consumers en masse. (A range of 15,000 feet reaches approximately - % of all telephone subscribers in the U.S. market)
If this feat is indeed accomplished, phone carriers - both big and small - would be empowered to compete head-to-head with cable companies for subscribers ready to pen a monthly check for one-stop voice, data, and video convenience. With billions at stake, the pressure to get high-speed data transfer perfected over that last mile is building. There is a surge of technology companies all racing toward and intent on arriving at the 15,000 foot milestone first. Who will the winner be? Next Level, Broadcom? Or maybe the winner will be one of several VDSL manufacturers such as Lucent, Alcatel, Orkit, or Aware.
LEADING THE PACK
Or perhaps, it will be New Wheel Technology, Inc., a wholly owned subsidiary of New Visual Entertainment, Inc (OTCBB;NVEI). Don't let the bulletin board listing fool you into thinking this is a situation not to take seriously. On the contrary, New Visual Entertainment has developed technology capable of achieving what the others have not – the 3500 foot milestone – and it on track to verify 8500 all at speeds of 52 million bits per second.
Christened Cu@Ocx, this proprietary and patent pending technology has already successfu1ly achieved transmission of voice, video and data over twisted pair at a distance of 3500 feet at speeds of 52 millions bits per second. Furthermore, they are well on their way to achieving the 8500 foot milestone as early as September of this year.
To further substantiate their success, New Visual has engaged Lucent Technologies' subsidiary, NetworkCare Professional Services as an independent third party, to conduct the evaluation and verification of the technology.
According to tl1e DSL Forum, there are 750 million existing copper wires in the world. New cabling wi11 take decades to replace them all. With Cu@OCx technology, telephone companies will be able to connect almost every home and business to new exciting interactive broadband services almost immediately. Upon commercialization, a single Cu@OCx line could offer simultaneous channels for personal computers and televisions while leaving ordinary telephones
undisturbed. And the transmission rates could be at least five times faster than any commercially available "last mile” solution.
The attractiveness of New Visual's Cu@OCx technology is that it completely leverages the copper infrastructure currently in operation by the telecommunications industry. While there are certain provisioning costs such as reliability testing, the only real expense associated with deploying the Company’s technology is the equipment cost: a pair of modems and a splitter on the customer's premises, and some new equipment in the telephone switch fabric.
RACE FOR THE FINISH
Moving forward, New Visual Entertainment intends to become a major Player in the broadband market and advance its position as provider to various media markets through another of its wholly owned subsidiaries, impact Multimedia. In addition, the Company has applied for a listing on the Nasdaq Small Cap Market and submitted its application to the U.S. Patent Office for patent protection of its Cu@OCx technology. Both of these events marked significant milestones for this young, emerging growth company and has positioned it for dramatic acceleration of its strategic growth initiative.
Presuming New Visual does in fact prove it bas developed a viable" last mile" solution, management expects to align the Company with a major strategic partner capable of maximizing full and immediate market impact of the technology. Potential partners could include semiconductor manufacturers, who build DSL chipsets; DSL equipment suppliers or service providers, who sell chipset solutions: and/or major phone carriers.
Investors seeking to "reach out and touch" the complex wor1d of high technology should lake a closer look at the compelling opportunity in the works at New Visual. With Lucent’s test results due out before the end of this year, the race to solve the "last mile" challenge, could, in fact, nearly be over. Don't wait! Return the postage-paid business reply card or call the tol1-free number TODAY to receive a free corporate profile on New Visual Entertainment, Inc.
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