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Technology Stocks : Semi Equipment Analysis

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Nov 28 4:00 PM EST

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To: The Ox who wrote (2967)	4/30/2002 3:50:01 PM
From: Crossy	Read Replies (1) of 95487

re: broadband deployment strategies.. hi to all on the thread again. Was cut off my cable modem (makeover of my flat required it) for the last days so far.. let me add my 2 cents on this issue.. The synopsis presented by BWAC is generally correct. However that is more or less a summary of yesterday'S situation. the strategic predisoposition underlying the different participants can be summarized as follows: the RBOCs hat everything "symmetric". Or very high-speed assymetric like VDSL. Why ? Because right now they sell T1/E1 lines to business for around $1k per month (bidirectional 1Mbit/second). Now look how their "residential" and SOHO xDSL offerings are priced. Get the differerence ? Pricing is $50-100 per month. The Baby Bells fear of cannibalization of a high-margin offering they have been selling very succesfully for 25 years now - T1. In reality they have often actually deployed HDSL2 or SHDSL - this is way cheaper to deploy than "true T1" but has the same speed or even higher line rates yet still lower costs. The extra profit margin - how could it be different - can be pocketed by the RBOC.. So service cannibalization fear was one issue to stretch out deployment cycles of xDSL. Another issue were remote central offices (distance limits) and the need to deploy NGDLCs instead of DLC (digital loop carrier) systems in remote areas (not cheap, those boxes, market leader here is TLAB if I'm right).. What "forced" DSL to the market anyhow if incumbents were so reluctant ? Cable modem threat (cable MSOs wanted incremental stable revenue) and loop unbundling eventually enabling DSL to a certain area around COs even of "unwilling" and uncooperative incumbents.. The REAL broaband however is nothing of the like (HFC cable modem or xDSL). Real broadband is Ethernet to the Home - optically delivered at best. Carriers like Cogent (Amex: COI) will give you 100-Mbit Fast Ethernet to the building for $1k per month. Telseon and others offering similar services. In such an environment you can forget about all the unneeded carrier-mindset oriented WAN gear like ATM, Frame Relay, SONET etc. All you need is Ethernet, if necessary spiced up to enable CoS/Qos functions. Different roads will lead to this goal MPlS and RPR offer differnent future architectures with comparable bottom line benefits on resilency (RPR going further by sort of merging SONET ring architecture with Ethernet upper layers) To me this is the architecture of the future and it doesn't look like as if baby bells could deliver it, even if they wanted. Cable companies are in a better position to do this IMHO. MAybe electrical & gas utility or any other ROW holder to SOHO/residential areas will be able to deliver here.. just my 2 cents CROSSY

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