He "...also indicated that as bandwidth economics are favoring purchases of capacity over dark fiber, only those who can readily and reliably provide capacities ranging from 2.5 to 10 gigabit will become leaders of the digital economy."
Dark fiber is that fiber that's in the ground but not lit. By purchasing capacity you either lease the fiber and build your own system or you buy capacity from someone who has. Those who follow the carrier space will tell you who leases dark fiber and who doesn't. (Level3 360Networks, GlobalCrossing, Broadwing, etc.)
Bottom line, with higher channel-count systems you get more for your money. The economics are so compelling, any carrier who doesn't upgrade will eventually go out of business. Soon the added efficiencies of ultra long-haul will be added to the equation. TerraWorx, a division of Tycom, can run 80 channels at 7500 kms. Corvis, Alcatel and Nortel are all working hard to bring out similar systems. Every time a carrier eliminates a regeneration hut, costs plummet.
As for bandwidth glut, it's not what you have but what you do with it. Carriers have to be price competitive and they have to be able to differentiate services and both require advanced networks. So even if fiber's in the ground, they'll have to upgrade it. Right now they've slowed down because 1) money's tight and 2) getting the services into usable form at the metro level has slowed them down. The old economies-of-scale dilemma: prices had to come down and they could only do that as quantities picked up. To monitor progress, watch the pure metro players. One is Sorrento [FIBR], who reported today:
Separately, the company announced financial results for the fourth quarter and fiscal year ended Jan. 31, 2001, for its subsidiary, Sorrento Networks Inc. (Sorrento). Sorrento's revenues for the 2001 fiscal fourth quarter totaled $11.1 million, an increase of 56% over the previous quarter's revenues of $7.1 million and a 172% increase over fourth quarter revenues in the prior year.
Ciena [CIEN] is another to keep an eye on.
biz.yahoo.com
Pat |
