Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: Kenneth E. Phillipps who wrote (9519)	2/1/2001 10:15:25 AM
From: telecomguy	Read Replies (1) \| Respond to of 14638

The significance of what NT is trying to do is this: NT is always customer-focused. I think they realized better than the other vendors (because I have heard Roth & Chandran voice this point many times in the past few years ago) that the IP/data was NOT generating the required revenue stream to replace the cash-cow circuit switched network driven voice business. So the logical problem that is now coming to hit the Telcos is that when the Internet revolution & de-regulation is eroding the cash-cow voice revenue stream, HOW were the Carriers going to maintain the revenue growth & cashflow to fund the next-gen network buildout. Again NT was smart to realize that if the Carriers/PTT's do NOT have the ability to generate decent revenue from their Internet business, they were not going to be able to justify subsidizing the IP buildout on the backs of declining voice business and that sooner or later, the capital for IP buildout would die (it turned out to be sooner than later!). So, this content & bit driven on-demand virtual bandwidth platform that NT is proposing is really to address the problem of generating more revenue from the Internet market. Clearly there are many users who WOULD pay higher premium to get faster & more intelligent response from the Internet service providers (ISP, Carriers, PTT, etc.). By introducin a suite of technology to allow the service providers to DIFFERENTIATE their customer base and allow them to charge higher fee for premium service levels means that they finally have a way to generate much higher revenue stream than was possible under the current "dum" all-you-can-eat fixed mthly price plan that does NOT differentiate the fact that different users have different needs from both bandwidth & content points of view. In essence, we are coming back to the old-world Telco model where you get charged MORE for more traffic (voice for example is driven by usage since the more you talk, the more you pay). NT is saying to the service providers, we will now give you the tool to make money in the Internet business.....thereby generating the required cashflow to continue the buildout. IF the service providers can take this NT technology and create a new revenue plan that allows them to charge higher fee for those customers who are prepared to get faster connection, higher SLA levels, higher bandwidth, more intelligent content, & other as-yet undeveloped functionality, their revenue stream has the potential of expanding exponentially. This means NT will get more money from these service providers to build more new networks! Brilliant strategy if they can pull it off -- and one that could TOTALLY differentiate them from LU, CSCO & others if they do not come up with competing platforms.