Teddy, thanks for taking the time to provide us with those concise views of
recent GBLX events and revenues. Very nicely done.
I have a request, and a comment, which I will submit below in that order.
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The Request
Would you do an equally cogent summarization by further breaking down the
following claims?
" 'Global Crossing Ltd. Passes $1 Billion Mark for Contract Sales on
Global Fiber.' Optic Network Fourth quarter revenue of $205 million and
net income of $56 million are records. Fourth quarter contract sales total
$285 million as backlog grows to $634 million."
Something gets lost in the translation when we begin to assign traditional
revenue metrics to telecom ventures whose business is supported by IRU
sales and long term channel leasing. This holds true not only for GBLX,
but for other ventures who sell bulk capacity, such as MFNX, as well.
Traditional revenue statements and run rates of incumbent operators are
usually fairly straightforward (they are more so, in any event, than the
new players in this space), perhaps with some room for confusion due to
their own long term contract claims, but their fundamental factors usually
extract and project in linear fashion.
15 and 25- year IRUs cause confusion in this context, and one must
re-focus to make sense out of these deals which are now taking place.
Incumbent operators have been loathe, historically, to indulge in
what-were-thought-to-be these "give away" practices. Fiber optic
technology has changed some of these notions over time, however, as
new fiber-based economic notions and realities have evolved. This has
had the effect of adding a few more fruits to the old standby apples-
to-oranges equations.
I'll do some additional research on my own (something that is well past
due by now, admittedly), in order to synthesize and make better sense
from these revenue claims.
Of particular interest, at the end of the day, is how do these revs stack
against the level of available supply which remains when the capacity
reflected by those sales is accounted for? If you would give a push start in
this direction, it would be appreciated.
Also, and as an extension to the previous question, at what pace must
GBLX stay ahead of the consumption curve by producing more capacity,
in order to maintain an improved viability and profitability on the time
continuum, in the face of both competing entities (consortia) in this space, for
yet newer markets which did not exist before (namely Internet related ones)
who are now being forced to compete for the first time... and increased
efficiencies engendered by newer optical technologies, as time goes by?
TIA.
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The Comment
A little-known fact concerning Robert Annunziata is that he is no stranger to transoceanic submarine cable operations. I had the pleasure of working side by side with Bob for several years during an earlier period in our careers, when we both had an opportunity to get our "feet wet," so to speak, cross-connecting several of the continents through the implementation of transoceanic cable and geo-stationary satellite routes.
Mainly, North America with Europe, South America, Africa and the
Middle East.
During the years 1969-1970, Bob oversaw many international cable and
satellite functions while at AT&T during an assignment in T's NY City
International Transmission Maintenance Center. The ITMC was,
effectively, a super-gateway office serving the Atlantic Basin.
In addition to serving as the international portal for AT&T's own voice
and data services, the ITMC also served as the focal point (network
node) through which all other International Record Carriers (IRCs)
transited their services to and from overseas.
[As a side note which may interest some lurkers here, there were three
different and diversely routed Hot Lines connecting Washington
D.C. to Moscow transiting this office, one from each of the dominant
IRCs: WUI, RCA Global, and ITT.]
At one point, I was assigned the role of North American plant
coordinator for the implementation of Transatlantic Telephone Cable #5
(TAT-5) which originated in Rhode Island and terminated in Spain (also
extending to points within the Mediterranean Sea and the Middle East).
Bob was one of the operations supervisors at the helm, overseeing the
engineering, circuit order and operations processes in this endeavor, in
addition to a number of other managerial charges he assumed at the time.
Some of those included plant-level relations with the foreign PTTs during
the initial operator assisted-to-IDDD conversions, supported by the new
(at the time) CCITT #5 signaling platform. He also orchestrated the
satellite-to-submarine cable conversions, as new capacity on the
submarine routes was becoming available, while some of the older Intelsat
birds were, at the same time, beginning to lose their wings. [I see an
analogy here which is highly relevant, IMO, in light of some of the older
submarine cables that are slated for retirement, soon.]
Since those earlier times we've had a number of occasions to
conduct business while he headed TCG, on opposite sides of certain
client-related negotiations. And in some ways which were more congenial,
we remained in touch with one another, still on a professional level, sometimes
exchanging views on the pros and cons of topical issues related to
telecom technologies and regulation. It's always been a pleasure, and very
often inspirational, for me to exchange ideas with the man,
irrespective of the context or the situation in which we found ourselves.
---
I thought that you would appreciate knowing these what-I-consider-to-
be-significant facts, concerning Mr. Annunziata's prior experiences and
qualifications in the world of submarine cable operations, as he commences
his new role with Global Crossings.
Best Regards, Frank Coluccio |
