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Technology Stocks : Voice-on-the-net (VON), VoIP, Internet (IP) Telephony -- Ignore unavailable to you. Want to Upgrade?

To: SDR-SI who wrote (1256)	9/6/1998 9:06:00 PM
From: Frank A. Coluccio	Read Replies (1) \| Respond to of 3178

Steve, Realities aside for the moment, now that I am in a more deliberate mood, after having dined like a king, I can talk about the new bandwidth (and signal processing) economy as it relates to our previous discussion, and more specifically, to the VoIP sector. Of course, I recognize the downward costs and resulting pricing schemes associated with improved bandwidth efficiencies and micro processing gains. While the effects may not be the same in carrier bandwidth terms as they are in semiconductors and micros [in fact, the impact of improved DSPs in processing, and the improved optics and DWDM techs in the long haul, may even be more profound for telecomms, depending on your view and how you measure things], they are sure to have a lopsided, possibly devastating, impact on those entrepreneurs who are in the beginning throes of five and eight year financials, which are being used to justify their rollout acquisitions with their VCs and other investors. Most of the financial pro formas I've been privy to viewing (or developing, at times) showed 1998 per minute domestic rates, never mind international, at 9 cents per minute (cpm), gradually declining straight line to 4-to-5 cpm, over a five or so year period. In some cases down to as low as 2 or 3 cpm in 2005. Those were all posted figures in business plans one or two years ago, of firms who are now operational to varying degrees of buildout today. Well, you can toss the 9 cpm out the window right now. Same goes for the 8 and 7 cpm schedules, maybe even 6 in some areas, soon, and it's still only 1998. That's a 33 percent dilution on gross revenues, according to the plan, and the horse isn't even out of the gate yet. And it isn't as though a startup could easily re-engineer its entire platform, once it's made commitments with suppliers, once it's put half of its provisions in place, once it has made long term commitments for bandwidth acquisitions, and so on. It just doesn't work that way. See where I'm coming from? I'm not disputing the new order in the larger, more cosmic context, rather I am questioning the viability of VoIP startups at this stage, when they've planned, and in many cases mobilized, using already outdated platforms in the face of newer integrated solutions that have already emerged onto the scene. Some possible ways to offset these other realities may be to scale back on quality expectations, in some instances, and perhaps cut back on back office and customer care services in others. We may be seeing the signs of these scale backs, if we look closely at certain vendors deliveries, already. Now that I've stated that, hopefully vindicating myself for the day for my earlier silliness and offhandedness, where's that bowl of ice cream... Frank C.