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Technology Stocks : LAST MILE TECHNOLOGIES - Let's Discuss Them Here -- Ignore unavailable to you. Want to Upgrade?

To: elmatador who wrote (12180)	3/12/2002 3:55:59 PM
From: D. K. G.	Read Replies (1) \| Respond to of 12823

Cable flourishes--FCC to cut red tape By Reuters Special to ZDNet News March 12, 2002, 4:20 AM PT zdnet.com.com The number of subscribers to high-speed Internet service via cable rose almost 13 percent, to 7.2 million, in the fourth quarter of 2001, a trade group said Monday, days before federal regulators begin shaping the framework for what rules apply to the service. More than 800,000 new customers signed up for cable-modem service during the last three months of 2001, up from 6.4 million subscribers at the end of the third quarter, according to the National Cable and Telecommunications Association (NCTA). "Deployment of, and demand for, advanced broadband services continued to experience strong growth during the fourth quarter of 2001" despite numerous uncertainties including a recession, said NCTA Chief Executive Robert Sachs. Plus, Excite@Home, one of the biggest cable Internet service providers went bankrupt last fall, forcing subscribers to find new service. Consumers have not signed up for high-speed service via traditional telephone lines, known as digital subscriber line (DSL), as quickly. The biggest provider, SBC Communications, has 1.3 million subscribers while the biggest cable company, AT&T Broadband has 1.5 million cable-modem subscribers. At the same time, the Federal Communications Commission is poised Thursday to classify cable-modem service. Analysts have said they expect it will be deemed an information service, subjecting it to fewer regulations. The classification is a first step in a process for developing fuller regulations for cable Internet service. The FCC is expected to also launch a notice of proposed rulemaking that seeks answers to questions on additional potential rules. Consumer groups have lobbied for the FCC to safeguard a choice of Internet service providers for consumers while using cable modem service. Meanwhile, cable companies have asked the government to keep regulations off to ensure further deployment. Another area that will likely evoke heated opinions will be the role of the local franchise authority (LFA)--the local government entity that oversees cable franchises and community public rights of way--related to the emerging service. Cable companies already pay franchise fees of up to 5 percent of gross revenue to the LFAs for cable service, and many have been paying the franchise fees on revenue from the Internet service as well. However, if the FCC designates cable-modem service as an information service, as analysts expect, that could spark a big fight over whether that removes the requirement for cable operators to pay that fee. "If the commission finds that cable modem service is an information service, there is no legal basis or policy justification for subjecting it to local regulation, including franchise fees," NCTA said in a recent filing with the FCC. NCTA also said 1.5 million households added digital cable service, bringing the total to about 15.2 million subscribers, or 21 percent of all cable customers. And there were 50,000 new subscribers to telephone service via cable, bringing the total to more than 1.5 million, NCTA said. Story Copyright © 2002 Reuters Limited. All rights reserved.

To: elmatador who wrote (12180)	5/4/2002 9:09:45 PM
From: John Trader	Read Replies (2) \| Respond to of 12823

Question to the thread: The railroad boom/bust analogy has been used a lot recently to describe what is happening in the telecom industry. The question I have is whether or not the railroad analogy applies. As noted in the Washington Post article below, during the railroad boom too many parallel railroad lines were constructed to destinations, and other railroad lines were constructed to locations that did not have enough traffic to support the railroad. The resulting bust took a very long time to correct itself. If the railroad analogy applies, the best thing to do now might be to get out of telecom or telecom equipment stocks, or else on the next rally. If the railroad analogy applies, we are in many years of further pain in this sector. One reason the railroad analogy may not apply is because this equipment (except perhaps for the fiber itself) may be obsolete in a few years, vs. perhaps never for a railroad line. One question I have is how quickly does this communications equipment become obsolete? I am referring to fiber optic components, lasers, switches, routers, etc. Suppose back in 95 about 5 times as many PC's were produced as were needed. Lets assume these were original Pentium 100 MHZ machines. Today these machines would be almost completely worthless, and I am guessing many would have been shipped overseas to be sold at a great discount in foreign countries. At any rate, the problem would be completely gone today, or close to it. In communications equipment, however, I am not sure how quickly equipment becomes obsolete. Perhaps it is still of value 5 years later, unlike PCs. I think the answer to this question will be a big factor in how long this telecom/bandwidth downturn lasts. One other reason the railroad analogy may not apply is that the internet may be growing at a rate much faster than the traffic did on those original railroad lines. I have read all sorts of conflicting opinions on how fast the internet is growing and how much of a bandwidth glut there is, so this question will probably not be resolved for quite a while. It is a fact that video requires much greater bandwidth. If the last mile bottleneck is overcome in the next two or three years, perhaps by Ultra Wide-Band technology, then demand on the long haul networks should increase significantly. One other issue with the telecom industry is the argument that the business models are flawed. In other words, pricing should be based on the amount of bandwidth that is used. I don't know what to say about this issue, any fix seems rather complicated. I heard that in Korea they have such a business model for bandwidth, and also that Korea has a much healthier telecom industry. Thanks in advance for any replies. I have some positions in AMCC, JNPR, JDSU, and CIEN right now. I am wondering whether to bail or to buy more on the cheap. Also considering buying back into NEWP and GLW here. For anybody that missed it, there was a very bullish call on GLW in Barrons last week. Basically the argument is that Corning's other businesses will do well, and the stock should be purchased primarily for that reason, given the current valuation. John washingtonpost.com a snip from the article: "Telecom wouldn't be the first to go through such a boom-and-bust cycle. During the railroad boom of the late 1880s, so much money was invested building so many parallel tracks -- or tracks to places that would never support profitable service -- that the entire industry went bankrupt. Much the same story is told of the airline industry, which because of so many losing years has yet to turn a net profit."