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To: GST who wrote (136914)	1/13/2002 2:50:01 PM
From: Sarmad Y. Hermiz	Read Replies (1) \| Respond to of 164685

>> The economics of this business suggest that "not much" is the right approximate answer. GST, That is an unjustified conclusion. It might turn out to be true, but it does not follow from what we know. Absent in all the discussion here on the conundrum of dark fibre is the possibility that even though total potential supply might exceed total demand, that once a few of the more stupidly managed providers go out business, then there will be a balance. What I think occurred is the application of the amazon model to broadband. Which is that an enterprising moron, armed with equally stupid venture capital money comes to a market and tries to grab market share, regardless of profitability. That forces every other supplier in the market to install more capacity and drop prices in order to avoid being driven out of business by the new wannabe. Result: a glut of supply. And no pricing power. But as in the case of cable internet, now that @home is out of business, the cable companies are pricing the business for profits, and raising prices, confident that there is not another set of idiot venture capitalists to fund another suicidal attack on their business. My conclusion is that the growth of broadband and its suppliers will be limited not by the glut of supply, but by rate of growth of demand - in the presence of profitable prices. I personally don't think that anyone willing to pay $43/month for cable internet, would cancel their subscription if the price was raised to $50. which I think makes it nicely profitable.

To: GST who wrote (136914)	1/13/2002 4:19:46 PM
From: Glenn D. Rudolph	Read Replies (1) \| Respond to of 164685

now the question is how much pricing power are they likely to have in coming years? The economics of this business suggest that "not much" is the right approximate answer. I am not sure there will not be pricing power. In my Erie market there is a choice of four DSL vendors. All four raised their pricing for businesses. What does the business do if it wants to continue to have broadband? Clearly, in larger markets there would be more choices. The problem would be the same if they all raise their pricing.