Hi, Rob -
"One possible outcome, which you didn't have in your list, is that there are no winners.If investors are (and continue) demanding strong IRR's on their equity capital (or equivalently wider spreads for fixed income instruments), that would require a profitable, proven business model to fund a network expansion in TLM. Has anyone established such a model?"
I think, in the near-term you are exactly right: there will be no winners: at least, not in terms of knock-your-socks-off investment returns.
However, assuming present population and business growth trends continue, there will come a point when the capacity increases offered by newer forms of modulation will have to be implemented. My own guess is that will be around 2010 - give or take a few years, maybe as early as 2007.
So, my outlook is probably more demographic than technical. In the intervening period, I expect that there will be a tremendous amount of "digestion" of many presently nascent technologies. Furthermore, I expect Moore's Law, and the steady progress of standards bodies to be harnessed in the digestion process. These will enable devices that mask the complexity of what's behind them.
I see the networking/telecomms business as having become cyclical: in that context, I see the recent bubble, and its deflation as part of a repeating cycle, and not as independent events.
The concurrence of other events in data processing, coupled with demographics, will enable a next generation of connectivity.
Until those events have gelled, like you, I see poor IR.
Despite its worst aspects, the recent bubble was a tremendous acceleration of knowledge and innovation: an explosion so great that it escaped the ability of the underlying infrastructure (and economy) to accomodate it. Much of it was just not ready for Prime Time: but it wasn't necessarily wrong.
[For example, look at on-line purchasing, even of groceries. Contrast the energy efficiency of thousands (or millions) of people, taking their weekly trek to the supermarket in the family car, to clicking out their grocery list, and having it delivered.]
Depending on one's horizon, then, the IR is possibly questionable. But - if only from an investment standpoint >g< - I'd love to be 20 years old again, and looking at the future.
Best regards,
Jim
[Edit: An interesting sidelight on the use of newer forms of modulation applied to capacity increases and demographics is that, of course, we are talking about shared resources. What will be the net effect on claims for data transmission rates, when capacity has doubled, but so has the number of users?] |
