Hi Jim, I was going to suggest that we move this discussion over to the MFNX thread, but since the same dynamics and market principles will most likely apply to GBLX and the other high-capacity submarine ventures as well, I think leaving it here will be ok with GBLX investors.
What you say sounds all very well and good. However, I wonder if Van Wagoner has MFNX's core business pegged correctly. MFNX, while one of the emerging Fiber Barons of the day, is not what one would conventionally call a CLEC, yet. CLECs often mimic the ILEC by offering comparable "types" of services as the ILECs, and many go beyond the plain vanilla in delivering advanced, and even customized, voice and data services.
MFNX, OTOH, is quite clearly not offering these types of services in the main, rather, they are doing something that the ILECs and many of the CLECs would be very loathe to do, and that is selling dark, un-modulated fiber to other carriers and larger enterprise customers. Since the inception of fiber optics in telecommunications, dark fiber sales have been something that the IXCs, ILECs and even the CLECs have shunned like the plague. MFNX, and now QWST, have shattered that long standing taboo by selling off much of their route assets, i.e., raw fiber strands, even though their motivations are different.
The distinctions are twofold: Business Model, where MFNX is concerned over the long term; and Tactical, where QWST is concerned.
MFNX sells strands outright, and this, along with annual maintenance fees to ensure the long term viability of those strands, accounts for their main revenue streams, presently, and looking forward, over the next several years, unless something has changed radically in the recent past that I am unaware of, but I don't think that that is the case yet.
This is not to suggest that MFNX would deny their larger enterprise customers SONETized services, if asked. Rather, doing so simply is not their principal forte at this time and not where they have invested their resources. They (MFNX) would prefer to stick to their game plan of selling fiber as a carrier's carrier and to large enterprises.
DWDM is an area that I do see them getting into, big time, since this will allow them to sell a lot more virtual stands, as wavelengths and lamdas are now called, in the future, allowing them to follow their basic model without the complexities and intricacies of higher layer platforms.
While fiber optic strand sales is a Layer One game, it's not as simple as most folks would imagine, and MFNX does it exceedingly well, IMO.
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QWST, and some of the others given the moniker of Fiber Baron who are now following QWST's lead, sell excess strand capacity along their routes in order to raise capital to fund their current and emerging core network ATM and IP platforms and other business outlays. For example, their sales of large denominations of strands to GTE and FRO were made in order to avoid going back to the well to supplement their IPO cap, in order to cover ongoing construction costs and other capital intensive platform deployments such as their routing and switching overlays. And other things, I'm sure, as a matter of running a business. Stated another way, unlike MFNX which is focusing on the sale of dark strands, QWST and LVLT are cultivating a sophisticated upper-set of layers through their use of CSCO and ASND high-capacity transmission and routing core networks.
GBLX is a different story in many ways, since theirs is a situation where only a limited number of active strands will be deployed, four pairs, I believe. And they will be supporting large International Carriers and ISPs as a carrier's carrier for the most part, on the basis of long term leases and IRUs of a relatively limited set of lit capacities, in comparison to those of MFNX which traditionally has been deploying up to 432 strands per inner duct along its routes.
A different supply and demand dynamic kicks in here, which will have the effect of shutting out many organizations that cannot ante up the price of entry for high capacity links [SONET Tributaries]. The flip side of this, and one that goes into the risk equation, is that other submarine ventures are simultaneously in the middle or their deployments, and some of them will have higher capacity ratings on their routes. Another obvious distinction is that the stateside land-based ventures are placing additional spare conduits along their rights of way, and of course, this [or some such equivalent measure] is not feasible at this time on the submarine routes. Big difference.
Perhaps future submarine undertakings will consist of considerably more strands, possibly using improved amplification spacing intervals, that may dwarf GBLX's current capabilities within three to five years, or so. In fact, I'm certain that this will be the case, and GBLX will probably be among those who are at the forefront of this movement.
Hope this clears up the matter somewhat, and
Best Regards, Frank Coluccio
FWIW, I attempted posting this message at 930 Eastern Time, and was not able to, getting "unable to read page" or some such announcement. Couldn't post on PMs either, but now it seems ok. Anyone else have problems earlier today? Just curious... |
