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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory

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To: yard_man who wrote (26475)	2/15/2005 1:28:16 PM
From: Larry S.	Read Replies (1) of 110194

akafoobar, I normally limit my participation on this thread to lurking. There are a lot of very informative posts. BUT I couldn't allow your comments on telecom to pass. You are dead wrong. Rate are low today for primarily two reasons. First, local providers are required by law to lease loops to competitors for below cost. This was done to assure the growth of competition. If you believe that you probably believe in the tooth fairy. The second and more important reason is that deregulation stimulated the worst malinvestment in the history of capitalism. The combination of low interest rates and crazy assumptions about the future market for new digital-based services (e.g., internet) stimulated the installation of masses of fiber across of country and the open seas. Only a fraction of it has even been lit up and new technology exists to more than double the capacity of existing fiber. Most the companies that installed the fiber have gone through bankruptcy and the investors have lost their money. The invested capital is gone and because the supply is so very excessive, the value is nil. As a result, long distance call costs have been nearly wiped out. You compound your misunderstanding by suggesting the VOIP will replace the existing network. Yet, the technologies used today to transport voice and data across the network are identical - the same - and they are not new. They were being introduced before deregulation. VOIP is just another technique that will further degrade telephone service which has already been degraded by marginal cellular services. Yes, the voice packets will have priority. But that doesn't do you any good if the data packets are sent from the user with packet segmentation provisions. All internet access is asymmetrical with severely limited bandwidth for the direction into the network. And the access always involves statmux capabilities. All that is needed to delay your voice packets and screw up your voice is to have your neighbor sending a long packet. I happen, at the moment, to have cable modem access. It is great and fast. One of my friends uses his internet access for voice calls and talks about how great it is. But, he frequently has some strange problems when he tries to use it in the early evening. As more and more neighbors buy into the service and more customers buy into the service, he will discover that VOIP isn't the great service he expects. It will work great as long as the access isn't being used. It will never have the lifeline capability of POTS. It works through commercial power failure and when it is really needed. Sorry, but you can't believe the hype. Larry

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