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Technology Stocks : Global Crossing - GX (formerly GBLX) -- Ignore unavailable to you. Want to Upgrade?

To: Brian P. who wrote (3848)	1/5/2000 2:26:00 PM
From: JDN	Read Replies (2) \| Respond to of 15615

Dear Brian P: I dont know the answer to your question but I doubt the Irish Govt is paying for it. Rather, I suspect GBLX has received some type of monopoly on the service for a period of time and maybe some tax breaks. Is that a problem to you? JDN

To: Brian P. who wrote (3848)	1/5/2000 2:36:00 PM
From: Frank A. Coluccio	Read Replies (1) \| Respond to of 15615

Hello Brian, your persistence has paid off. -g- The strategy could very well be similar (and I suspect that it is) to how the competitive access providers (CAPs, now CLECs) first began penetrating commercial buildings in the early Eighties, when the potential uptake of new their services wasn't fully known, and when competition was extremely scarce or nonexistent, save for some microwave bypass alternatives. The idea was to have the first customer in the building or complex who had requested the service pay the entire, or a substantial part of the costs for the build (street cuts, estrarodinary franchise fees, breaking ground, building penetrations, risers, common easement spaces, environmentals, etc.) on a cost plus 15%, say, basis. From that point out, the CAP would leverage that build and the established easements for use by the other tenants. In the case you cite, I would doubt that the Irish would be paying all of the costs up front, but a pro-ration of what they will use, at the least. And I'd have to be almost certain that some of JDN's suggestions concerning tax abatements as a negotiating chip may come into play, too. But I don't know for certain. Getting back to my earlier example, the first tenant would only need to actually use two to four strands of a 48 or 96 strand pull, leaving the remaining strands in place for other subscribers. In the latter case, a general services agreement was drawn up with the anchor customer that usually spelled out some healthy discounts for additional bandwidth going forward, if the buyer was astute. Next-alongs didn't necessarily fair so well unless they committed for substantial amounts of bandwidth for very lengthy terms. In executing this first-customer-pays strategy they received cost plus going in, and residuals coming out. Of course, in the case of GBLX they don't have additional physical "strands" per se, instead they have virtual strands in the way of additional "lambdas" or wavelengths, or OC-48/192 derivatives of same, that they could sell once the original country's (Ireland, in this case) very minimal (relatively speaking) requirements were satisfied. I'm sure the actual calculus in the case you cited is not as straightforward as my simplistic explanation suggests, but these are some of the parameters and the negotiating strategies which have been known to be used. They get'em comin' and goin', usually. Other factors which could affect final the settlement terms have to do with maintenance agreements, the use of the indigenous carrier's POPs (colo'ing), certain international accounting rates, etc. Regards, Frank Coluccio