This is from the latest Gilder Tech Report. I wish I could understand it.
"...The purchase of Frontier (FRO), announced March 17, gives Global Crossing arguably the world's most
advanced terrestrial fiber networks. The promise of the Cisco (CSCO)-Ciena (CIEN) collaboration to put
WDM transponders directly on Internet router backplanes—thus bringing nearer the grail of all optical
networks—is now bearing fruit. As we go to press, Frontier announced that it is doubling the capacity of its
IP backbone by running Internet Protocol packets directly over WDM and getting phone company costs and
complexities out of the way of the Internet. Within the next three months, it will deploy the Cisco 12000
Gigabit Switch Router (GSR), finessing the cumbersome SONET
or ATM layers, on two 2.5 gigabit circuits between LA and New York. This link will join to the IP over
WDM system Frontier has had running between LA and San Francisco since mid 1998.
Just as important, Global inherits from Frontier a chain of Internet server hubs, called "Global Centers", in
Silicon Valley, Orange County, Arizona, Washington, DC, New York, London, and Melbourne. These giant
"server farms" host arrays of mostly Sun (SUNW) computers that perform 60 percent of all Internet searches
and 70 percent of all online financial messages and house 300 of the top 500 Internet sites. A some $110
million business growing 120 percent per year, Frontier Global Centers' customers include
Yahoo (YHOO), Netscape, USA Today, Electronic Arts (ERTS), Playboy (PLA), and Pacific Bell @Hand,
generating 1.8 billion hits a day, 1.25 million hits a minute, and as many as 250 thousand Netscape browser
downloads per day. Most significant are the browser downloads, which portend a day when nearly all
software will be downloaded ad hoc for purchase or rent on the net.
Jack Scanlon, Global's Vice Chairman (formerly CEO), who brought 24 years of experience at AT&T to the
company, declares that GlobalCenters will become the Central Office nodes of the new global network.
Interlinked by the Global Crossing Web, these hubs can reduce the number of hops on a typical Internet call
from an average of around 16 today to one or two, and the average access delay from seconds to
milliseconds. Honed in the ferocious world of the World Wide Web, these hubs can take their place as
business centers for corporations around the globe. Improving the performance of the Net, they can tap the
fabulous
elasticities of bandwidth expansion and continue the onrush of new traffic. Such data opportunities give
Global Crossing executives a complacency about the future
of voice traffic that is hard to sustain at AT&T where voice represents 80 percent of the revenues and profits.
As Frontier CEO Joseph Clayton puts it: "We think voice will be essentially free." With this pro-data bias,
Global Crossing could become the new AT&T, projected on a worldwide stage.
At the announcement of the Frontier purchase the market frowned, sending GBLX down eight points or 20
percent, where it has been treading water ever since. The fear was that the 45 percent premium Global paid
over Frontier's previous closing price of roughly $7.7 billion was too high. Actually Frontier looks like a
steal...." |
