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Technology Stocks : Qwest Communications (Q) (formerly QWST)
Q 82.04-1.7%Dec 5 9:30 AM EST
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To: Shibumi who wrote (718)1/30/1998 2:42:00 PM
From: John Klein  Read Replies (3) of 6846
 
Fiber capacity is an unusual commodity. The explosion of data traffic has created great shortages of capacity along certain channels, but the funny thing is, that in this high demand/low supply market the prices are still going DOWN. The reason for this, I would suspect, is competition (duh), and that it is clear in the market place that a significant increase in supply is right around the corner (as companies like QWST build, and as existing network is moved onto higher capacity switches). The cost along the QWST route is especially cheap (for obvious reasons), and as service providers increase capacity, I would expect these rates to continue to drop. Does this mean a glut is around the corner? I am not sure, since it is tough to predict how bandwidth intensive applications will become, but I do expect the prices to continue to drop as supply increases.

I have heard QWST can make money selling capacity at 1 cent/DS0 mile - probably just a rumor. (Wholesales fiber capacity is typically priced in increments of 64kbps*mileage - what are referred to as DS0's). Has anyone done the math to determine the break-even point for their network build?

John
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