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Technology Stocks : Alphanet Telecom, WOW !
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To: Sushi who wrote (94)7/30/1998 11:05:00 PM
From: wynn quon  Read Replies (1) of 117
 
Has the technological risk disappeared? Only someone who has made a high volume of calls over the network can say for sure whether the network is commercial quality or not. The key technical obstacles would be assuring that packetization algorithms work well, that the network is effectively managed and that calls are billed correctly. And making sure that all of the above still work when call traffic ramps up. None of these tasks are impossible - in fact, there are several companies in the US now who have voice-over-IP networks up and running (e.g. IDT). Alphanet has pulled back from deploying voIP and has fallen back on using even older technology so the risks should be even less (unless their proprietary stuff has bugs).

But it would be a mistake to get too hung up on the technology. The strongest challenges facing Alphanet Telecom are yet to come and they are not technological.

Assume that Alphanet gets everything running and starts to pull in long-distance revenue - are the existing telecom carriers just going to sit back and let it happen?

I see three tough roadblocks ahead. First, there may be legal challenges to force the company to take part in the settlements system that govern international long-distance. Second, the fall in long-distance rates will accelerate. The FCC in the US has moved to reduce the settlement payments and we will see drastically slimmer margins as time goes by. It will be harder to make a buck when long-distance calls become commoditized. Last but not least, the barriers to entry are low. If Alphanet can set up a network, then so can others. Off-the-shelf scalable VoIP gateways won't be long in coming and there is nothing to stop (guess who?) the large carriers from using them.

The victor in this battle will likely be the giant telcos, not the little guys. It may not be particularly fair but that's business.
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