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Technology Stocks : Westell WSTL -- Ignore unavailable to you. Want to Upgrade?

To: bill c. who wrote (8516)	12/21/1997 9:47:00 PM
From: SteveG	Read Replies (2) \| Respond to of 21342

<..How many YEARS will it take for cable to hit 60% coverage? ..> Talking in terms of # lines, the Forward Concepts study thinks cable modems will outpace xDSL by a factor greater than 4 in 2002 for residential service. The prediction is approx 7MM cable modems to 1.75MM xDSL (which will include HDSL/HDSL2, SDSL, CDSL, IDSL, and ADSL, etc..) modems in 4 years. They may be somewhat off in their numbers and their ratios, but I think they are reading the trends right in the approx. magnitude, and definitely in the direction. This is not the FIRST recent report which views ADSL slowing and cable modems jumping ahead. <..I view it this way... cable needs to fix 90% of it's plant..> Again, Bill, with HFC - they are doing it now - and doing it in the high pop urban areas and more well-to-do rural areas where the greatest bandwidth demand is. And as we have discussed, in addition to Bill's billions, the revenue generated from more cable CHANNELS (people ARE paying) as well as new revenue from cable modems, will continue the buildout. In the meantime, they can provide higher speed downstream with existing coax, and an upstream with the phoneline that is being used for a much slower modem now. <...and the telco's need to fix 25-40%, using your numbers...> But they need to test it ALL before they can FIND the 25-40% to fix. <..Uncle Bill better have few billion ready...> He's primed the pump, and you KNOW he's ready with more if/as needed. <..CLEC don't get access to the remote DLC system today. The CLEC better start thinking about working with Bell Atlantic...> Are you sure about this? If it's ILEC local copper, it seems they would get access, and that IF the Supreme Court rules against the RBOCs, they would have to both unbundle and then rebundle the data services for CLECs. <..Why must every line be tested for ADSL? This is why you have RADSL modems that rate adapt to the highest speed. If it doesn't support ADSL, find the problem, but ~70% of the plant will supports 1.5Mbps service...> Why test every line? Because they can't sell something that they can't deliver. And they don't know if ADSL will work on your line, even if it works on your neighbor's. So they will have to test EACH line. And then spend upwards to 50 hours fixing 25-40%. Can they do it? Sure they could, and likely WILL to some degree. But I think it's going to happen more slowly than you seem to think. Let's be generous and say Forward Concepts is WAY off by a factor of 3.. that by the year 2002 there will be over 5MM xDSL lines (vs. their predicted 1.75MM). And further, let's optimistically say 85% of those are ADSL. And of those, 25% are WSTL (with ALA's aggresive moves, this may be optimistic). That's a total of 1MM WSTL lines from now until 2002 - this would yield a growth rate of about 35% (150K in 98, 200K more in 99, 275K more in 00, and 370K more in 01). Competitively at, say, $400/line. With 20% pretax margins - yielding approx $40/line after tax. So we may see $6MM (or .40/share) in profits in 98 (providing no other costs/charges), with a 35% growth rate. This would justify a WSTL price of $14 sometime in 98. And THIS is optimistic. First Call consensus estimates are actually for a loss in '98 of <.57> and a gain in '99 of .06. <..Wait for 30% usage in a neighborhood and we will see how fast your cable modem access will become...> In the few neighborhoods where bandwidth drops below 1.5Mbps, a cable could (at least Cox does) simply add another line. <..What do you think of a migration path from ADSL to VDSL...> Bandwidth pundits all agree that HFC and xDSL are all stop gap until FTTC. I doubt VDSL ever gets groundswell in the US. Maybe in Singapore tenaments and in posh Marina Del Rey-like or NYC apartments. <..Run a fiber to the DLC, and bypass those manhole covers, load coils, etc...> This doesn't address any impedance coils that are in 3-6K ft increments from the CPE to DLC. And it doesn't address bridge taps. And it doesn't address bad wire from CPE to DLC. And it doesn't address the CP wiring rat's nest. And I doubt most telcos are gonna DLC their entire plant (for distances greater than 18K, unless required for VOICE service) anytime soon. <..How many hours does if require to run fiber to a DLC system...> I don't know. How many dollars DOES it take? What does a Lightspan 2000 go for? And how much to install fiber from the CO to it? And how much to house/install/maintain it? And how much to re-route all the CO customers lines (who need it) to DLC? And how many DLCs per CO on average? What's would then be an average cost? And unlike cable, where people already are paying for higher quality picture and more channels, how many people will pay the high telco cost for bandwidth (unnecessary for MOST voice) to SUPPORT this buildout? <..Could you please answer that question...> I would guess cumulative totals of 500K at end of 98, 1.5MM in 99, 3.5MM in 2000 and 7.5MM at end of 2001. <..Do you understand that Westell actually wants cable to hit 1 million users? This WILL place some pressure on the RBOC's to deploy RADSL...> I agree that as bandwidth demand grows, ADSL will benefit. But it's a two-edged sword that may cut ADSL cos more sharply - as urban markets are HFC'd, this eats into the prime bandwidth markets (and the juiciest potential ADSL revenue). Just a perspective, as always, but worth considering. Let's see those ADSL RBOC contracts roll-in in 98. Regards- Steve

To: bill c. who wrote (8516)	12/21/1997 10:09:00 PM
From: j rector	Respond to of 21342

Hi bill c., Steve G., Two of the most knowledgeable people in the high-speed communications industry. I hope that analysts are tapping you. From my own (user) perspective, I expect to purchase cable access by 1Q '99, and migrate to ADSL (as the shared resources reduce bandwidth) by 2001--alot later than I had originally planned. I expect I'll be far ahead of the general populace, so the ratio of cable/phone of 4:1 quoted doesnt seem that far off to me, although I think the #'s will be much higher than 10MM total (try 50MM). j. Merry christmas to all the WSTL'rs/Amatians.