Subject: Arguments for a Hypothetical Takeover of MFNX/ABOV by GBLX as opposed to IIXC, assuming GBLX reverse-pyrrhically "loses" USW and FRO
Laz, you asked,
"But tell me/us, why not an IIXC as opposed to an
MFNX if the GBLX/FRO/USWest thing unravels. What, in
your opinion, would be the MFNX [Edit: and Above]
advantage to Global? "
One has to decide whether or not they want to embrace the
legacy component in addition to the future of the optical
networking domain (like QWST has done) or to build to the
future and take a scorched earth approach to all that has
gone before (like LVLT has, sorta, done). And one also has
to come to grips with the most germane question of all, and
that is,
(i) Do you believe that current and projected levels of traffic
merely reflect the very tip of the iceberg which is only now
coming into focus, or,
(ii) Do you believe that we have neared a level of demand
saturation, and are about to see a bandwidth glut within the
next two years that will be injurious to the optical networking
space?
----
Getting back to the two models, QWST and LVLT above,
you can take both of these views and insert them into
GBLX's plan, and weigh the outcomes. My view tends to be
on the side of a LVLT, so please regard the following with a
grain of salt, and for what it is worth. These are only my
views.
IIXC: While the philosophy and the network makeup of
IIXC is not the same as that of ABOV's either from the
standpoint of reach (ABOV's extends internationally) or
from an IPist's (nethead's) perspective, it still covers a
decent interstate serving area which could be leveraged for
current operations related revenues, and next generation
transport. The latter would most likely involve some level of
expense through retrofitting both the network itself and the
overall philosophical orientation (the culture) of the
company. At the same time, IIXC could begin contributing
to some degree in the way of revenues from private line
services and dial tone accounts.
IIXC 'Not': I tend to think that GBLX can avoid having to
go this legacy route, however, if they have on board a
component that will aid them along with the kind of
backbone traffic that ABOV is demonstrating, and the
already entrenched access networks that MFN has built
(and continues to build in top tier metropolitan areas around
the country).
Add to this MFN's recent accomplishments in obtaining
colocation privileges at the fiber level in BEL's central offices
as they pursue agreements with other ILECs, and it would
be all the better for GBLX, for this would give them top
perch in being able to hand off to the growing number of
feeder networks which are owned by the ever increasing
numbers of CLECs.
ABOV's peering and traffic services are widely regarded as
being forward looking without the backwards-seeking
attributes that IIXC's and most other traditional networks
contain, nor the current level of thinking that their top
officials abide by.
That is not a specific dig at IIXC, by any means, since they
are no different in many ways than most other interstates and
CLECs management thinking at this time. I surmise that they
are still very legacy focused, and loathed to take the next
step into the future at the expense of risking what has proved
to work for them so well in the past. I can't see the benefit of
GBLX taking on this posture if they don't absolutely have to,
(e.g., as a last ditch measure in order to survive), which is
what would materialize if they were to take on a USW... and
in many ways, an IIXC, as well.
IIXC possesses an embedded arsenal of legacy switching
and cross connect wares. Compare this to the heavy router
machinery at ABOV (and to some extent at FRO). And this
is yet another reason why IIXC does not quite fit into a true
next generation-ists definitions. They're still in the switch
mode, despite whatever obligatory announcements they may
have made about their coast to coast IP capabilities. They
are still very much classified as switch heads.
----
If GBLX were to go with a USW they would be foregoing
a purists approach to Next Gen status, as well. And I was
against that, too, right from the getgo. I do see the benefits
of taking on a FRO, but one of my original suppositions here
was predicated on not being able to obtain them in the first
place, and then my later statement was directed at letting
them go with USW in order to capture the $Billion in
breakups, and to take a run at MFNX/ABOV in lieu of the
combined formers.
[FRO's Global Centers and ABOV's peering sites would
have been too much of an overlap my thinking, if GBLX
would have gone for them, combined. But who knows?]
----
In short, I would see an IIXC acquisition by GBLX to be
the equivalent of acquiring some smaller parts of both
USW and FRO. The USW equivalent is found in the legacy
traffic component of IIXC, and the FRO equivalent would
be found in the interstate fiber traffic component, although
not quite as up to date or state of the art as ABOV's, nor
not nearly as widely accepted by the Internet ISPs and other
backbone providers as ABOV.
[Late Edit: In retrospect, however, after reminding myself
of the conference call details I listened to during the USW
announcements, I was a bit chagrined to hear Robert A.
talking so glowingly about the advances they could achieve
with copper based services in the LEC's serving areas. It
didn't sound too next gen to me at that time, despite the rave
projections he and Trujillo were making concerning the
future of everything including the kitchen sink over xDSL.
Anyone who reads the Last Mile thread knows that I am a
raging maniac when it comes to the need for implementing
fiber to the structure, at this time, or going into the next two
years. As might be inferred in this eleventh hour reflection
I'm now experiencing, it may not be a good idea to pick up
ABOV, since I have to wonder at this time about the
futurism that exists at GBLX, or lack thereof, as well.
It would be my desire to see GBLX adopt a future oriented
mission, as opposed to getting saddled with the Copper
Cage Syndrome. Not enough has been done yet at GBLX
to be able to tell for sure which way they are headed at this
time. It's one thing to implement a next millennium optical
transport vehicle such as those being placed in the bottom of
the seas at this time, and then it is something else altogether
to fill those pipes with revenue producing traffic.
Whose and which kind of traffic will they be hauling? The
answer to that might be found in the same place as the
answer to my first question in this reply. To repeat,
One has to decide whether or not they want to embrace the
legacy component in addition to the future of the optical
networking domain (like QWST has done) or to build to the
future and take a scorched earth approach to all that has
gone before (like LVLT has, sorta, done). And one also has
to come to grips with the most germane question of all, and
that is,
(i) Do you believe that current and projected levels of traffic
merely reflect the very tip of the iceberg which is only now
coming into focus, or,
(ii) Do you believe that we have neared a level of demand
saturation, and are about to see a bandwidth glut within the
next two years that will be injurious to the optical networking
space? ]
Regards, Frank Coluccio
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