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Technology Stocks : Nortel Networks (NT) -- Ignore unavailable to you. Want to Upgrade?

To: Ian@SI who wrote (8809)	11/21/2000 10:41:50 AM
From: telecomguy	Read Replies (1) \| Respond to of 14638

this bandwidth hypergrowth is so obvious.........what's not so obvious is HOW do the Telcos make the users PAY for all the new bandwidth that they will be delivering? The question that the institutions are not asking is this; If the PTT/Telcos/Carriers invest billions & billions to provide broadband capability to the end-user, they MUST charge for this bandwidth and they MUST RECOUP their investment......this is a no-brainer that the analysts and some shorts are not recognizing. The reality is that the backbone & metro networks are ALREADY a quasi-monopoly in that in most countries there are one or at most two dominant carriers who have the $'s to build-out the next-gen broadband network. And these Carriers will make sure they charge enough to generate the cashflow to pay back the interest on the bonds that financed in the first place. If we all believe that the user demand for broadband is there absolutely and that people will pay for it, then it's pretty obvious that the Carriers that build the network will be sitting pretty within few years. The days of FREE INTERNET is or will be over shortly because it is not possible in a free market that companies invest billions and then give that away for free.....this is what I don't understand why the analysts are so concerned about the financial sustainability of companies like BT, ATT, WorldCom, France Telecom, Deutche Telecom, etc......all these companies will do well because THEY will control the backbone and the edge of the network and THEY will make sure SOMEBODY pays -- for example if the ISP's are charged higher price for bandwidth consumption, they will make sure the end-user also pays...and presto, you have a new pricing/economics developing in the Internet/data world (and at this wholesale level, we will see metered billing --- how ironic that despite all the trumpeting of flat rate, all-you-can-eat pricing model that the Internet players ballyhooed about, they are all coming to the realization that SOMEBODY has to pay for all that video,multi-media which is clogging up the network - forcing the back-end Carriers to invest the billions to free up the congestion....once the data comm traffic start to be billed on a metered basis, Telcos will once again start to see huge cashflows which will easily finance any debt obligations that everyone is so afraid will swamp them. Networking business has ALWAYS worked this way.... 1) New technology gets developed (circuit-switched network, ppacketized network, Optical network, Wireless...etc.etc.) 2) End-Users adopt the new technology in a big way (telephone, Internet) 3) Telcos/PTT's/Carriers invest billions once they KNOW that the demand is there. It happened with the good old POTS telephone, it happened with the cell phones, and it WILL happen with the Internet 4) Now, here is the key point....after the Carriers spend BILLIONS, they will FIND a way to CHARGE to recoup their investment.....and the reality is that the true Carriers are few & far between and it's still a OLIGOPOLY meaning that they will instinctively know when to start ratcheting up wholesale prices (actually this is already happening) and find more sophisticated way of making the USER pay for their CONSUMPTION - not this nonsense that we have today where i can send megabits of data for virtually nothing! 5) Last but not least, another intersting point here is that (& this is called the networking effect), the more capacity the Carriers build, the MORE demand that will generate as everyone starts to use the Net in their daily life and as billions are pumped into developing killer applications that take advantage of the new broadband, access-anywhere network. Supply increases Demand in this case which in turn increases supply even more.... 6) When you look at the history of telecom, and have a long-term outlook, this is a no-brainer that companies like NT and CSCO will prosper big time (AND the Telcos will do very well contrary to all the doom-sayers)