Thanks for that clipping from Barrons, John. I have to question some of the author's assertions and conclusions, however.
It's amazing what some upstarts can accomplish with emerging technologies and the right engineering staffs, without the tonnage of the past on their shoulders. This is especially true when they are led by individuals who have successfully pioneered prior disruptive enterprises, unafraid to move away from the tried and true, and unbound by egregious layers of regulation, such as those in which the LECs find themselves.
Yes, this was their (i.e., the LECs') own doing to a great extent. Nonetheless, it will not be for the ready undoing by any suitor who comes along. Both Annunziata and Nacchio would have to establish a second set of modalities and expectations, should either of them succeed in winning this duel. The victor would have to establish and play by two different sets of rules. One on the WAN/Internet side, and one in the local exchange. This does not make for a coherent game plan, architecturally speaking, from where I sit. Disconnects and philosophical wandering would be replete, throughout all phases of development, deployment and operations.
When you consider a GBLX or an Above.net, or a QWST or LVLT, they don't have the baggage of all that plagues the legacy telephone companies today. It almost begs the question: Why would they then want to pick up a USW in the first place, since it is actually antithetical to their mission, since it would cause them to expend valuable resources (time, being among the most expensive of them) to grow in a backwards manner. In other words, why would someone want to weigh down a racing car with a reverse gear assembly, when the course ahead has been declared clear for the taking?
This, it would seem to me, would cause them to slow down, and grow some of their assets in the wrong direction, when the future holds out nothing but opportunity for more forward-looking technologies. Many of those near term and future capabilities, incidentally, are already poised to subsume those which are being offered by the LECs today. And this, in my view, is LVLT's orietnation, and the reason why they will not be fully operational for a couple more years.
And there is a great degree of validity in this view, IMO, if you can afford to wait it out. And of course some of this would also depend on some luck, in addition to some very precise planning, in order to establish a trajectory that would cause them to land on target when they land. Landing just a moment too soon, or too far out into the distance, could have a very serious impact on them. All the more reason, ironically, for them to announce their intentions with even greater reservation, and to execute with even more care.
The answer that each has given to "why a USW?" is 'traffic' to fill the larger pipes that are being placed. They need the traffic. Even the most expensive and best built high rise plumbing architectures in today's skyscrapers always attach to the toilets on the upper floors, in the final analysis.
If it's POTS services, and what we have thus far come to regard as enterprise level "internetworking" traffic, then I would agree, but with qualifications. Is this where a GBLX or a QWST see their fortunes being made over time? By selling services that they themselves have characterized in the past as being antiquated and outdated?
At the same time, those areas which will be increasingly consumptive of bandwidth are in emerging traffic profiles which will be generated in the future in the residential space by cable modem, dsl, and independent wireless service providers. And these will soon come to include voice services as well, as soon as they get the shims straightened out between the physical lines and the upper service layers. And in the business sector, traffic will go increasingly to other specialized carriers who will soon begin offering optical services, as well.
These emerging services are not in any way facilitated by the tens of billions of depreciating inside (and in many cases outside) plant that USW currently has on its books, BTW.
Where traffic is growing the fastest, in fact, it will shift to other local operators whose orientations are similar to the upstarts under discussion here, i.e., those who will also depend on their ability to overcome (indeed, they will be creating themselves) a host of disruptive operating issues of their own. FRO fits this profile in the greater WAN. But USW, I'm afraid, does not.
Yes, they can upgrade and install new platforms at the same time, but it will take them a decade to outgrow their cultural patterns and the depreciation issues, which are considerable. All of which will add to their overall cost of carriage, which will afford their competitors some margin of advantage who will be fleet of foot, without the need to keep cadence with the gods of old. Comments welcome.
Regards, Frank Coluccio |
