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Technology Stocks : ICGX - Intelcom Group -- Ignore unavailable to you. Want to Upgrade?

To: Phil Jacobson who wrote (60)	3/31/1998 9:04:00 PM
From: KM	Read Replies (2) \| Respond to of 335

All: Interesting piece - lotza talk about ICGXX: Wrong! Dispatches from the Front: Cramer on His CLEC Mess By James J. Cramer 3/31/98 8:44 PM ET Tuesday was the day I should have started my CLEC position. Remember a few weeks ago when I said I was learning all about an exciting new group of mini-MCIC's? I joked about how I might be late, but I had to be there because these local exchange companies were exploding. I even went on Squawk Box and made light of the fact that I was jamming a few of these names on my position sheets in order to get to know them better. Couldn't get enough of them. And I got to know them. I went right from ignorant bliss to the Competitive Local Exchange fund, buying anything that began with the Letter I and a bunch of others as I became intoxicated with these companies' beautiful, spectacular top-line growth. It was CLEC heaven, and I was strutting down the main street. Yesterday I found myself in CLEC hell. My nightmare of nightmares, an analyst making a stand: The group is overvalued. Just when I had finished my buying. Last day of the quarter, on the day when the incredibly high-profile ACNS deal gets priced, and the guy downgrades? Stick a knife in my chest, why don't you? Bayonet me in the eyes. Gut my quarter's outperformance, why don't you? Where was this guy's end-of-the-quarter etiquette? Couldn't he see my bloody entrails? It gets worse. At first I thought I was sitting pretty at the opening of yesterday's trading. The CLEC I like the most, ICG Communications (ICGX), stood like Stonewall would in the face of the downgrade. I found myself thinking, "Stonewall Jackson ICGX at your service," as the stock hung in at 39 3/4, despite the vicious, withering downgrade. "Can't cut this stock down," I yelled at Jeff. "Behold, there is a Stonewall and his name is Shelby Bryan," I muttered at Jeff, invoking the name of the youthful ICGX president. "Yeah, sure," Jeff said. I know it's early, but the stock does act great, I say to him. "What the $&$&%^ are you talking about. Stop joking. We're getting killed!" What? What do you mean? And then it hit me. Mr. Bridge machine, my %&%&^% Bridge Machine, was down. It was frozen at last night's price. 39.75. 39.75. Unchanged. Lookin' good. "Where in the $&%^%^ is this $&^%#$^ ICGX?" I asked the trading room. "Down 4," came the chorus. I grabbed the frozen screen with both hands, intent on throwing it through the glass window behind me. But I did that once before when my Bridge was frozen and all that happened was that I was out a Bridge machine and was surrounded by broken pieces of a PC. Instead, I resorted to yelling at my ever-faithful, ever-patient assistant, Jeannie Cullen, to fix the &%^%$ Bridge or get it out of my ^#^%#%$ face." Since she had to put the pieces together the last time I threw the Bridge machine in a rage, she was no doubt relieved that the only damage I had done was to the portfolio. Now I was steamed, though. For only the second time this year, I called a meeting off the desk to remonstrate, Cultural Revolution-like, about how stupid I was. Jeff, Mark Kantor, my trader, and I gathered around in Jeff's office, as mine is too small for these kinds of skull sessions. I had let it happen to me again, smitten by a new group, bought right at the top. Pulverized like some 90-day-wonder in the cold, snowy Ardennes. "^$%%$#$," I screamed. "On the last ^#^%#$% day, to get picked off like a rookie. ... They should take the ^&$&^%$^ money away, I am a &%^$#&^%$ joker. We are all ^%&^$% jokers." I thought Jeff was going to try to mollify me for a moment, but I just glared at him. The last thing I wanted to hear at that moment was some half-^#$ justification, some piece of %*&%&^ rationale about my screw up. "Now what do we do?" Jeff suggested that we write this whole incident down as a clear-cut example, a lesson to ourselves about what to do when we fall in love with a new hot group. Son of a constructive %$&^%$^%. Agreed, I said. But how about now. Jeff shrugged. And I said, "We know what we have to do. We have to pretend that we own none of these stocks. And we have to buy. Because had we been patient, had we not felt to rushed, so insistent that we had discovered gold, we would have waited. Until this moment. This is the buy point. This is the stupid downgrade we should have been waiting for. This is the opportunity. Nothing has changed." And then I asked the question that should have been asked at the top. "Jeff, do you believe in the downgrade?" Jeff said no, he didn't. "Me neither," I said. "He probably just wanted to get off the horse with a win." I instructed Mark to do the one thing I hate doing more than anything else at the office: average down. We now at last had our perfect entry point, with all the hot money out of the picture. And that's what we did. By the end to the day the buys looked good. But the bases looked awful. And we were ashamed. As we should be. We'd been had by the pressure to keep up with the Jones. We'd been had by the hot group. What a way to end the quarter.

To: Phil Jacobson who wrote (60)	4/2/1998 1:35:00 PM
From: Francis Gaskins	Read Replies (2) \| Respond to of 335

FCC May Seek Fees on Phone Service Over the Internet Telecom: Plan would require long-distance providers to pay subsidies like those in the traditional industry. By JUBE SHIVER JR., LA Times Staff Writer (4/2/98) WASHINGTON--After years of keeping their hands off the Internet, federal regulators are laying the groundwork to impose stiff fees on companies that want to provide low-cost long-distance telephone service over the worldwide computer network. The controversial plan, which is pending before the five-member Federal Communications Commission, would cool nascent efforts by AT&T Corp., Qwest Communications Inc. and others to market ultra-cheap long-distance calls over the Internet, The Times has learned. The FCC proposal contradicts a White House pledge last year to keep the Internet free of government red tape. The plan would force some Internet companies to pay subsidies to local telephone carriers that help underwrite phone service in rural and inner-city areas, in much the same way existing long-distance phone companies provide such subsidies. In recent months, more than half a dozen carriers have begun offering long-distance calling over the Internet at rates as low as 4.9 cents a minute. That's about half the cost of dialing long-distance over traditional voice networks. Internet telephony, which was once so technically arduous that it appealed only to computer nerds, is attracting a growing following. The latest technology allows individuals to dispense with computer gear and place calls over the Internet using an ordinary telephone, with voice quality approaching that of the traditional phone network. The ease of Internet dialing has attracted widespread interest, epecially from multinational corporations and immigrants seeking to circumvent the comparatively high cost of dialing internationally via the traditional system. An Internet call travels over telephone lines, but bypasses the local telephone switch and is routed by the same computerized switches that handle Internet data traffic. Analysys, a leading telecommunications consulting firm based in London, predicts that by 2003, about 25% of all international phone traffic--or 45 billion minutes of voice calls--will bypass the public telephone network and be carried over the Internet. That compares with less than 1% of voice traffic carried over the Internet today. But the FCC says it is concerned that by routing calls over the Internet, major telephone carriers such as AT&T, MCI Communications Corp. and WorldCom() Inc. avoid paying their fair share of special subsidies. Indeed, telephone calls sent over the Internet are currently not regulated by the federal government. Internet service providers, or ISPs, are exempt from paying subsidies to the so-called universal service fund as well as access fees to local phone companies for completing long-distance calls. "When a carrier that has telecommunications equipment is also an Internet service provider, it could be in a position to avoid paying universal service fund subsidies and long-distance access fees," said an FCC official who requested anonymity. "We need to level the playing field." In a speech given Monday to the Information Technology Assn. of America, FCC Commissioner Susan Ness said that "it is entirely appropriate to take a fresh look" at the FCC's hands-off-the-Internet policy. Ness said the review is made necessary by "fundamental changes that are happening in telecommunications regulation and the explosion of new [Internet]based services." The Internet proposal is expected to be approved by the FCC within the next 10 days and be forwarded to Congress. An agency spokeswoman said Wednesday that the proposal has not yet been reviewed by all of the commissioners and is not finalized. It is already being applauded by many local phone companies who have long complained that they are losing millions of dollars in revenue to ISPs, which use the resources of the public telephone network but don't financially support it. "Our contention has always been that if it looks like phone service, then it is, regardless of the technology that is used," said Robert McDowell, general counsel of America's Carriers Telecommunication Assn., a 230-company organization that in 1996 asked the FCC to crack down on ISPs offering Internet telephony. "We need to bring the law up to date and lift the ISP exemption that keeps Internet access providers from having to pay these charges," McDowell said. The FCC staff proposal was prompted by a request from the Senate Appropriations Committee that the FCC reexamine its universal service subsidy rules. Nonetheless, it has sparked an outcry from some Internet companies that believe it may lead to higher costs for all Internet users as well as more draconian government regulation. "Opening the door to regulation of the Internet based on how one technology is different from another is a dangerous proposition," said Jill A. Lesser, deputy director of law and public policy for America Online() Inc. Joe Garrity, director of regulatory affairs for Qwest, which in February began offering long-distance Internet calling for 7.5 cents a minute, said the proposal clearly is overreaction. "This is definitely going to have an economic impact on us," he said. At least one FCC commissioner, Harold Furchtgott-Roth, has also signaled his concern about the idea of defining Internet firms as telephone-service providers. "It's our belief that we must follow the law and recognize that the universal service provisions applies specifically to telephone carriers," said an aide to Furchtgott-Roth. "Anything else is a step in the wrong direction." A reclassification of some Internet service providers as telecommunications operators would require them to contribute to the universal service fund for telephony services, possibly through a per-minute levy on Internet traffic. It is unclear how the FCC staff proposes that ISPs identify and segregate telephone calls it now commingles with ordinary Internet traffic. Telephone rates for multiline business and residential users have already been raised this year by more than $2 billion annually to subsidize universal telephone service. But rural lawmakers remain concerned that Internet service providers can draw money out of the universal service fund to wire schools for high-speed Internet access and other special purposes, but don't have to pay in. They say the current arrangement could drain the fund and saddle rural telephone users with monthly bills of $50 or more for phone service.