Hi, Frank - "What a glorious opportunity! Are you ready for some more counterpoint?"
I'm ready for a lot more counterpoint, and this isn't simply a case of playing devil's advocate.
One of the traps in investing is the fact that your investments can make you a prisoner, in the sense that many investors end up being advocates of the technology into which they have put their money. The case that comes to mind is the still-raging debate over CDMA versus TDMA, but there are many others.
The internet phenomenon has generated some remarkable and measurable changes to the way we do business, and to the way that the world functions. But there are some assumptions about the future that deserve serious scrutiny: they may survive investigation, but they should be examined.
Ray posted a very lucid examination of the question WRT to optical startups, from which I'll draw a quote (hope you don't mind, Ray )..."That said, I simply don't see where your enthusiasms for the technology have addressed in any way my basic premise about the nature of the interaction between technological advance and the ebb and flow of advantage to the retail investor. My basic premise is that the essential flaw of the economic model for the creation of huge and capacious bandwidth pipes is that this is not particularly good for the companies (and behind them, investors) who've placed their bets on prior generations of communications networks."
Message 14628836
Ray's premise can be taken a few steps further, right to the assumptions underpinning the whole telecom 'revolution' that is supposed to be happening now, wireless, optical, internet and all.
The question becomes particularly apt when you examine European telecoms, who have now spent billions on 3G spectrum, and find themselves facing the daunting prospect of having to invest an almost equivalent amount for the required infrastructure buildout. The onus is now on them to pay off all that paper, but before they can do that, they need...more paper.
There's no doubt about it: right now, they've got the ball, and they need to pass it to some paying customers, fast.
The pressure on them to provide a business case for expansion to the capital markets is enormous; that pressure derives, more than anything else, from the interest charges mounting steadily on their spectrum debt.
To date, I haven't seen the business case, at least, not a convincing one.
Thurber once wrote a funny short story, The Day the Dam Broke, I think, in which one day somebody spied someone else running. Assuming that person was running to something important, the second person started running in the same direction; pretty soon, everyone in town was running, having convinced themselves that the reason they were running was that the dam had broken. It turned out, of course, not to be true: it was a humorous treatment of mass hysteria.
I remember Popular Science articles, with pictures of atomic jets, atomic cars, and a helicopter in every garage. Practical realities said otherwise.
We don't want to take part in a backlash, but, the business case for telecommunications and the internet: where is it?
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To bring this back to where we started, Frank, I post the following USA Today article in support and extension of your colo post...
The boom in dot-com riles neighbors
'E-victions' anger families, artists
By Jon Swartz, USA TODAY
SAN FRANCISCO — The Mission District, with its sun-splashed streets lined with palm trees, is an unusually cheery setting for ground zero of the anti-dot-com movement. Bustling open-air vegetable stands and Mexican eateries mark the longtime enclave of the Latino working class.
But signs of discontent over the explosive growth of the high-tech industry are everywhere.
"Protest to stop displacement" and "Gentrification is a hate crime" are spray-painted on sidewalks. Two city propositions on the November ballot would limit high-tech growth, which is altering settled neighborhoods and lifestyles.
The song is the same for the city's music industry, which is livid over the ouster last month of 2,000 musicians, including singer Chris Isaak, from the largest rehearsal facility to make room for a telecommunications center.
A dot-com backlash is on the rise in high-tech hot spots from Seattle to Austin, Texas, to Chicago. The industry, which has helped fuel a robust U.S. economy in the past decade, has triggered a construction-and-renovation boom. But it has also ushered in a wave of gentrification. Rising rent and escalating "e-victions" are driving out lower- and middle-income families, artists, non-profit groups and small businesses. And while planners, politicians and developers herald the shimmering new economy as a golden opportunity to upgrade cities, many longtime residents are outraged or resigned.
"The level of grieving is palpable," says Robin Rather, a high-tech executive who also is a member of Austin Network, a coalition of 20 CEOs that grapples with affordable housing, traffic and land use in Austin.
It also is widespread:
Seattle's 42-story Smith Tower was once a paean to social activism. Today, it is a temple to capitalism. Where county agencies and non-profits once occupied offices, Internet start-ups flourish as part of a $28 million renovation. The 86-year-old tower's transformation symbolizes the latest cycle in the evolution of Pioneer Square, the city's most historic and funky neighborhood. Two blocks away, 70 artists were booted in May from the 110-year-old Washington Shoe Building. "The new economy is creating a disparity between the rich and poor, white and non-white, yuppies and seniors," says John Fox, coordinator of Seattle Displacement Coalition.
In Austin, musicians grumble that Hire.com, which took over the city's legendary Opry House club, now has board meetings on the stage where Janis Joplin, B.B. King and Willie Nelson once performed. Protests also are planned in East Austin, where renters in a dozen buildings recently were given a month to make way for a shimmering tech complex and expensive condominiums. The forced migration prompted 2,000 homeowners to petition the city to slow growth. "We're not at the same stage as the (San Francisco) Bay Area, but we're getting there," says Katherine Stark, executive director of the non-profit Austin Tenants Council.
In Chicago, the gargantuan ePort high-tech complex is replacing low-income housing. Demolition of the Cabrini-Green housing projects will displace scores of African-Americans, and activists are gathering to fight on behalf of residents to stop further growth.
In San Jose, Calif., protesters are digging in for a battle against networking giant Cisco Systems, which plans to build a $1.3 billion, 20,000-worker campus. Critics claim the sprawling "city" will drive up housing and worsen traffic and air quality in ocean-side Monterey, Salinas and other nearby cities.
'This is a class thing'
Even in Silicon Valley, birthplace of the Internet industry, there is dot-com overload. San Mateo, Palo Alto, Redwood City, Menlo Park and San Carlos have all recently enacted or are considering moratoriums to limit commercial development, much of which is high-tech.
If the Internet companies were Wall Street investment banks, the reaction would be much the same. But few industries have expanded so fast, created so much wealth and gotten so much positive media attention as the Internet industry. In many ways, that has fed the backlash, especially among low- and middle-income groups that dot-coms are pushing out.
"This is a class thing. A race thing. A job thing," says Luis Granados, executive director of San Francisco's Mission Economic Development Association.
In San Francisco, much of the wrath has fallen on Bigstep.com, whose recent move into the 1960s-era Bay View Bank building squeezed out two dozen non-profits and small businesses. Last month, several dozen protesters held a sit-in, resulting in 15 arrests.
Citywide, housing evictions have doubled since the Internet boom started in 1996, according to the San Francisco Rent Board. Last year, 2,761 tenants lost their homes, compared with 1,354 in 1996. Over the past two years, rent has risen fivefold, city officials say. Residential vacancies are less than 1%.
"Dot-coms have contributed to a devastating homeless situation" in San Francisco, says Jennifer Friedenbach, project coordinator of Coalition on Homelessness.
Susana Rojas, 28, is being evicted — along with her 7-year-old daughter and disabled 64-year-old mother — from their Mission apartment building, which went on the market last month. "What's happening to us is common," says Rojas, a social worker and seven-year Mission resident. "My daughter keeps saying, 'Mommy, I don't want to be homeless.' "
The Rojas family can't afford the city's $2,000-per-month studios and will probably move to a city several hours away, where rent also has soared but isn't as high.
Rojas isn't alone. Last month, two dozen Bay Area families camped out several days to make bids on homes in South Sacramento, which is 80 miles east. "I resent the Internet start-ups and developers who are doing this," Rojas says. "But what can you do? Not everyone can work at a dot-com."
'It's a bit ironic'
As chairman of Bigstep.com, Andrew Beebe sits astride the dot-com DMZ. "It's a bit ironic, isn't it?" says Beebe, 28, a self-described "New York progressive liberal" who in 1990 occupied an administration building while attending Dartmouth College to protest its investment in South Africa. "But we're here for the long haul," he says, noting that the company provides 150 jobs.
With battle lines drawn, Gail Donnelly, watching from the fifth-story window of her Chicago-based Internet firm, can literally see the social economic war being played out in Cabrini-Green. Even though she works in the industry, Donnelly says those displaced by the ePort high-tech complex need more of a voice. That's why she is forming a grass-roots organization to lobby on behalf of displaced residents and shopkeepers. She hopes a nationwide network of such groups will eventually emerge. "It all started in San Francisco, and we want to spread the word nationally," says Donnelly, CEO of Nomadic Web Design.
So far, the effort is fragmented. "We've got our hands full in Seattle, let alone fulfilling a national agenda," says Fox, of that city's displacement coalition. Complicating matters: Most local governments are often lukewarm to the concerns of local activists as they pursue the riches of Internet companies.
Despite frustration with city officials, the real villains, activists say, are real estate speculators. Many of them, eager to cash in on the dot-com craze, sell their property for exorbitant fees to commercial developers, who lease the property to cash-rich Internet firms.
Commercial developers, several of whom asked not to be identified, argue they are simply feeding a burgeoning economy by restoring crumbling, underused buildings.
East Palo Alto, Calif., is a striking benefactor of the era of gilded gentrification. It has long been separated by a freeway from tony Palo Alto, the birthplace of the high-tech industry. Now, blocks of the ethnic, low-income neighborhood — once deemed the "murder capital of the United States" — are home to a sparkling new shopping center and private schools. Houses that went for $200,000 five years ago fetch $400,000 now.
Developers say some of their critics are politically motivated rabble-rousers who discount the benefits of the high-tech boom. "People don't like change. Even historic preservation riles them," says William Justen, real estate director of Samis Land, owner of Smith Tower and Washington Shoe Building. Seattle-based Samis is spending about $100 million to remodel 10 of the 14 buildings it owns in Pioneer Square.
Stepping up to the plate
And more change is coming. Despite a rash of dot-com layoffs as investors cool to Internet start-ups, San Francisco could easily fill 4 million to 6 million square feet to accommodate Net firms. "We either get calls from companies across the country trying to move here or firms here looking for more space," Chamber of Commerce spokesman Jim Mathias says.
Dot-com s, however, are increasingly mindful of the backlash and have "stepped up to the plate to prove ourselves a member of the community," Bigstep's Beebe says. His company set aside $100,000 to finance community projects. It hired a neighborhood liaison. It cleared space on one floor of its building for non-profit groups. "This is an opportunity to improve the situation," says Beebe, a five-year Mission resident. "We can bridge the digital divide or we can push it further." Across town, the 2,000 evicted musicians were given $125 each and $500,000 to find a new location.
In Austin, meanwhile, Hire.com CEO Jim Hammock has preserved a recording studio inside the Opry House club and lined its walls with photos of past performers. A Buddy Guy concert kicked off an open house June 4.
But if the response from Granados, of San Francisco's economic development association, and other community leaders is any indication, such gestures will not be enough to stave off the building dot-com wars. "The deeds are not in scale to the damage," he says.
usatoday.com
Regards,
Jim |
