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Technology Stocks : The *NEW* Frank Coluccio Technology Forum -- Ignore unavailable to you. Want to Upgrade?

To: A.L. Reagan who wrote (1171)	10/27/2000 5:54:32 PM
From: Frank A. Coluccio	Read Replies (1) \| Respond to of 46821

ALR, that was IMO a very good roll up of this still-emerging [real estate subdivision-aligned, and new building development] ftth sector. Thanks. An issue that the providers of such networks must be on the lookout for, given their exclusive entry at this time while developers are still in the building process, is "open access" in all of its present and still-evolving forms. Once they have their water-main- sized pipes to residences in place, other providers of various persuasions will want to jump onto those pipes and provide either their own flavor of program distribution or Internet access. SOme CLECs and voice resellers will even seek to use them for POTS, if that is a capability that they support on their system. Depending on the original facilities-based provider's [clwk's, in this case] intentions and business planning, this could be either good or bad. In such cases, these facilities-based providers' five year assumptions can be deflated, overnight, if the challengers get their way, and if it wasn't in the facilities-based providers plans from the outset. Once "new building" developments have been implemented with these forms of ftth, those who wish to piggyback them will have both environmentalists on their side -- see: news.newspress.com ... citing how re-trenching would be deleterious to the ecology, landscape and aesthetics in general -- and the Communications Act of '96, which they could always point to for additional support. And when it is self-serving for politicians to get into the act, they will stump how America needs to secure a lead in this regard, through securing a foothold in an all optical future. And so on. See: lw.pennnet.com This would hold especially true if CLEC-like or traditional ILEC-like services [POTS] are among the mix of services being offered. Which all comes back to the argument about a growing need in many sectors to develop a horizontal focus (in this case, being a very good common transport provider, or common carrier, and not competing with future customers of your system) as opposed to the vertical view, which seeks to maximize on a "bundling" strategy to encompass all services. Also, bundling often leads to the double-edged, tightly integrated, albeit eventually-proprietary, business model. It could be profitable if the provider in question isn't required to make the fruit of their buildout labors available to all comers. IMO, the only time that bundling falls into place is when the SP can amortize their buildout investments against a position of being the sole provider on their own system. Otherwise we're looking at EBITDA breakevens being extended into the future, because, when they are mandated to share their facility (as opposed to planning for such) their times to recover costs for their head-end and back office provisions for a given system is lengthened, considerably. The same follow through that they thought would exist just isn't there. Unless they can charge a premium that makes up for the difference. But with competition being what it is, it's easier for a reseller or competitor who is omly going to lease just-in-time capacity on the system to "low ball" or shave margins than it is for the builder of that system who has a cost recovery schedule to meet. This is, of course, how MCI made its initial thrust into the WAN business, by following this strategy with AT&T providing wholesale-rated facilities (both in the long haul and the local loop through its BOC subsidiaries), as the host.