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Technology Stocks : Winstar Comm. (WCII) -- Ignore unavailable to you. Want to Upgrade?

To: SteveG who wrote (3554)	1/26/1998 12:11:00 PM
From: Tom Markowski	Read Replies (2) \| Respond to of 12468

This could be the reason for upward bias in the stock today. Article in today's WSJ. Enjoy. Manager's Journal: Telecom Competition Is Coming -- Sooner Than You Think By Alex J. Mandl In the two years since President Clinton signed the Telecommunications Act of 1996, the prevailing wisdom has held that the nation's progress toward competition for local telephone service has been lamentably slow. Some of what the critics say has -- you'll pardon the pun -- the ring of truth. But there's another side to the story. True, the big Bell companies, GTE and other incumbent local telephone companies still control more than 98% of the 155 million local phone lines in the U.S., and these companies continue to collect 98% of the revenue in the $100 billion local-telephone market. The big long-distance players have not moved as quickly as some had hoped to enter local markets. A series of mergers and acquisitions has left the nation with fewer potential local telephone competitors. And the federal courts have, at least temporarily, thrown the regulatory environment into turmoil by tossing aside key portions of the act and the regulations it spawned. Now for the good news. A group of smaller companies have started to bring the benefits of competition -- lower prices, better service and greater choice -- to key segments of the local communications market. These new competitors -- including my company, Teligent -- are accomplishing this goal by battling in the marketplace rather than in the courts and the regulatory agencies. Instead of arguing over the terms under which they will be allowed to use existing monopoly networks, the new competitors are building their own advanced, high-speed communications facilities that will give them direct access to their customers, bypassing the remnants of the old Bell system. Unlike the existing copper networks, these new fiber-optic and digital wireless networks carry voice, data and video signals with equal ease. Most important, they will offer customers lower-cost access to the higher network speeds that the new digital age demands. Customers who have been accustomed to information dribbled through a garden hose now will have access to a water main. Already these "facilities-based" carriers provide service over their own lines to more than 500,000 local telephone lines. It is a small start, but one that foreshadows the future of the telecommunications industry. The big players know this: It is no accident that the company AT&T decided to buy to jump-start its entry into local markets was Teleport Communications Group, one of the largest of the new facilities-based local competitors. The growth of facilities-based communications companies has been spurred by three important developments: First, one of the key means of creating local competition contemplated by the Telecommunications Act -- leasing some or all of the existing monopoly telephone networks to new competitors -- has been disappointing thus far. The large long-distance carriers and other companies that have tried to enter the local market this way have found the lease prices so high -- and the reliability of the systems needed to acquire and serve new customers so low -- that they have been unable to make money on the business. Second, customer demand for bandwidth -- that is, network speed and capacity -- is growing at a phenomenal rate. Not only Fortune 500 companies are demanding data speeds measured in millions of bits per second. Small businesses and residential customers are finding they need that kind of speed and capacity to take full advantage of the Internet. Third, new technology, particularly in the wireless field, is dramatically reducing the cost of building networks that offer the kind of speed and capacity customers want. Companies like Teligent, WinStar and BizTel (now owned by Teleport) today are delivering new broad-band services with technology that was not available even a year or two ago. The first beneficiaries of this new trend are likely to be business customers. The bandwidth needs of Fortune 500 companies have been well served for years. But for the first time, the nation's five million small and medium-sized business customers -- about two-thirds of the business communications market -- are beginning to see real competition for their telecommunications dollars. Residential customers will not be neglected as this bandwidth boom heats up. In the past two years, cash-strapped cable-TV operators have been slow to invest in the development of telephony and other communications services that would directly compete with the Bell companies and GTE. But recently companies such as Microsoft have made significant new investments in cable networks, sending cable stocks soaring. This influx of cash, coupled with growing consumer demand for network speed and capacity, could push cable operators into the telephony market. At the same time, the cost of wireless technology will continue to decline, making wireless access to the residential market a real possibility. To ensure that the trend toward competition continues, regulators and legislators at both the federal and state level need to ensure that companies seeking to build competitive communications networks are not blocked by artificial barriers. The tough issues include customer building access, municipal rights of way, and interconnection to the existing Bell networks. But those issues are being resolved. Real competition is coming to the local telephone market. Mr. Mandl is chairman and CEO of Teligent Inc.