Broadband Breakdown: Whose Halt Is It, Anyway?
By Tish Williams
Senior Writer
2/22/01 5:33 PM ET
Tuesday night some of the communications equipment world's hottest names congregated in lovely Santa Clara, Calif. to discuss the future of broadband. But there were no elbow-straining handshakes, no finishing each other's sentences on how gosh-darned irresistible the Internet is.
After two years of having rose petals thrown at their feet, CEOs of Broadcom (BRCM:Nasdaq - news - boards), JDS Uniphase (JDSU:Nasdaq - news - boards), PMC Sierra (PMCS:Nasdaq - news - boards) and Juniper (JNPR:Nasdaq - news - boards) sat sobered by a reality in which communications companies aren't as loose with their cash as in quarters past, and in which each of their stocks lost at least 15% in the last week alone. Forced to answer as individuals, each CEO came up with his own theories on the group's economic performance and on the future of the public network technology that will bring us our bandwidth.
Gentlemen, start your brain cells.
Standing firm despite recent downgrades of JDS Uniphase, new co-Chairman and former CEO of merger partner SDL Don Scifres said that from what he knows, SDL is on track to fulfill its promise of doubling revenue in 2001. Financial estimates got murky from there, as PMC Sierra CEO Bob Bailey fuzzily proposed that we haven't seen the worst: "I don't think anybody knows where the bottom is, or you wouldn't see the market doing what it's doing," while Juniper CEO Scott Kriens playfully dodged the issue by blaming "financial TV" for the problem. Clearing his throat for something a little more serious, Kriens took the reassuring approach, insisting that the past few years have been a period of overinvestment -- a good thing for the buildout of bandwidth -- and that good companies will get creative with the cash they've already raised.
Broadcom's outspoken chief Henry Nicholas had an equally macro-economic theory, laying blame on the dot-com investment bubble and the unsustainable business models of competitive local-exchange carriers. Why discuss Broadcom's economic outlook when you can pontificate on the missteps of a telephone company trying to link metropolitan areas with expensive fiber-optic networks?
We'll let him zoom out. He's done enough already. Hossein Eslambolchi, an AT&T (T:NYSE - news - boards) vice president and the interim president of Excite@Home's (ATHM:Nasdaq - news - boards) broadband network, used his discussion of carrier financials to segue into an outright castigation of the equipment-side congregation. Eslambolchi waved off the whiz-bang devices at the core of the network -- the high-speed nosebleed vanguards. His spending languishes on the edge, the last mile that brings the broadband network to users' homes and offices. AT&T likes broadband and wireless, but it needs them to work in those thousands of last miles across the country. "The mindset is 'just get it out there,'" he said of his equipment provider co-panelists and of the often-flawed new wares that so excite the futurists. "After that, it's like fixing a 747 mid-flight."
On that note, the panelists painfully agreed that the long-awaited networking breakthrough -- the move to a computer-network protocol (IP) from a telephone network protocol (SONET) -- is still a few years off. Eslambolchi argued that the move to IP would be faster if equipment providers could relieve the "operational nightmare" of last-mile equipment -- saying that until his life gets easier, he'll stick with reliable, older SONET technology.
Juniper's Kriens tried to appease mighty Ma Bell with his understanding of fundamental customer wishes. "Costs are up here, revenues are down here," he said of network upgrades to provide more bandwidth. He's got to help get those numbers switched, because telephone companies can't fork over all that network-upgrade money for nothing. His self-serving proposal (he's a CEO, it's his job) is that the telephone network operators "stop spending on what they don't want to own in three to five years." Say "no" to Lucent (LU:NYSE - news - boards).
At that point the jovial back-pat alarms started going off.
thestreet.com
Too bad, the panel wasn't on record or audio.
Jack
Nicholas offered his services in helping generate the revenue needed to offset expensive network costs. You just come up with some great services which you can charge customers for, and he'll deliver them with his chips. So generous and giving, that Nicholas. PMC Sierra's Bailey argued that the best engineering talent is focused on IP development, which will give IP-based network equipment technological superiority in the future. OK panelists, let's stay focused, here. We're losing you. |
