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Technology Stocks : Covad Communications - COVD
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To: Bill McCullen who wrote (62)4/13/1999 12:58:00 PM
From: Alan Bell  Read Replies (1) of 10485
 
Bill,

You ask an important question - how will the home market will split between @Home, Cable modems and DSL. The DSL clecs and ISPs are trying to bifurcate the market between business and residence. They want to maintain the margins for business users while getting the volume of residential. They are doing this by making claims about reliability, limiting bandwidth at low prices, etc.

But there is no question that the Clecs and ilecs will be getting into the residence at moderate prices. PacBell has already done that. I can't believe Covad is very far behind.

The most important things the Clecs "own" are 1) the relationships with the ISPs. New clecs will have a hard time breaking in after the ISPs have chosen their preferred clecs. And the Ilecs (at least PacBell) is not likely to be a choice for ISPs other than PacBell Internet. 2) An effective service model. Setting up a DSL circuit is involved. One needs to know how to do it. One has to have a good working relationship with the copper supplying ilec. In fact, some of the clecs have a better model of the cable plant than the ilec does (ie. wires sizes in the streets, etc.)

The threats I see are that PacBell (or Ilecs) will get most of the market because they can offer lower costs by piggybacking on a home user's normal phone line. But the Ilecs may have too much bureaucracy too capitalize.

And secondly, that home service will primarily use technologies other than DSL.

-- Alan
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