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Strategies & Market Trends : ahhaha's ahs -- Ignore unavailable to you. Want to Upgrade?

To: deeno who wrote (4773)	7/11/2002 10:01:18 PM
From: ahhaha	Read Replies (1) \| Respond to of 24758

Oh, I get it. This guy is an investment advisor. In recent days we?ve received numerous calls from investors wondering whether it is time to buy the optical stocks, particularly the optical component stocks. Their argument is not about valuation (that?s a different story), but about recovery in demand. Recovery? It never fell. Here?s how it goes: Data traffic continues to grow at 60-110% per year, but carriers have dramatically reduced investment in their networks over the past year. Many carriers are now experiencing increased latency - constant delays in transmission - on their networks. To maintain quality of service, these carriers will be forced to re-invest in their networks. The resulting increase in spending will benefit the optical systems vendors (Alcatel, Ciena, Lucent, and Nortel) but even more so the optical component vendors (Agere, Corning and JDS Uniphase) who are most leveraged to a recovery in demand. So now is the time to buy the optical component stocks! That hasn't been the crux of my comments, but there's a lot more in it than this guy thinks. We strongly disagree with this view; our industry view on telecommunications equipment is Cautious, and not without reason. That's hardly a "strongly disagree". The ?Latency Argument?, we think, is flawed on multiple levels. Here are the problems we see with it: First, we don?t think network latency is an indicator of rising capacity utilization for optical equipment. How could network latency be an indicator of rising use of optical equipment since carriers are avoiding any capex. But, that wasn't what was stated. What was stated is incoherent. "latency doesn't indicate rising capacity utilization". There isn't enough optical equipment out there to claim it has anything to do with latency. The rest of this is uninspired and sounds like something someone would have penned on Frank Coluccio's thread two years ago. Meanwhile, throughput has doubled.

To: deeno who wrote (4773)	7/13/2002 3:18:09 PM
From: ahhaha	Read Replies (1) \| Respond to of 24758

Maybe you can get Morgan Stanley's team of telcom experts to explain why running a dslreports.com speed test to various servers across the country yields latency as a function of distance. Hops, baby, hops, which is a switch issue, or is it? Maybe it is better to uplink the spectrum to satellite and then downlink given all these hops. If so, I'd say we have more of a 'bone issue than was previously assumed, because all the switches in the world can't make all those hops and their processing millisecond delays go away. They say,"we have lots of dark fiber", so there is no 'bone issue. It's dark because the assumption of the marginal cost to light it isn't justified since the marginal cost of traffic lost due to hop switch latency is higher. Why light it if the intermediaries render its employment impractical? Or they say, "we have the SONET ring structure in place which can be enhanced". The question is whether SONET can handle the growth in BB and at a reasonable cost. It can't. Until now the structure could handle the circuit switched setup, but cable BB is suddenly and quietly taking off. People's prejudices against it which was well-orchestrated by circuit switch legacy equipment preferring non-competitive RBOCs is now fast disappearing. The people are dumping DSL for cable. With BB ramping you have an exponential demand for bandwidth whose supply requirement must be distributed across the entire nation. It boils down to this: they had better start re-doing the major trunk model because metro ain't going anywhere with the hop situation as it is. Traffic isn't mostly local. At least a hierarchical model which employs unencumbered long distance 'bones is needed. Another modelling possibility is to employ an optic mesh model as conceived by SCMR. PONS with purely optic, non-MEMS, switches in this model enable it to avoid the long distance hop latency, and so dedicated long distance wires aren't necessary.