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To: John Biddle who wrote (706)	9/7/1998 12:26:00 PM
From: Frank A. Coluccio	Read Replies (2) \| Respond to of 5853

John, I enjoyed reading your message to Sam C., and you speak many truths IMO, as you apparently have well-cultivated insights into these issues. >>It might be hard for the carriers to make a ton in this environment, where they either have to spend too much to keep up, or spend less and profit more while their market share dwindles. But Cisco, Lucent and Tellabs should do very well indeed.<< IMO, this in large part accounts for the apparent intransigence on the parts of the LECs wrt DSL techs, and any movement whatsoever in the direction of deploying open All Optical Network platforms, although they (some of the BOCs) are, in their own way, now deploying some full service area nets (FSANs), under strict architectural rules following the ATM rules set. In the latter cases, however, end users do not have any latitude to exploit open optical interfaces that lend themselves to channel gain, i.e., discrete DWDM utility, optical add-drop, etc. These remain the province of the carrier, nickel-and-dimin' every photon along the way. Staying with the BOCs for the moment, I can appreciate your statement regarding early obsolescence, and I suppose it affects their willingness to take giant steps (or at least gives them some degree of plausible merit for their otherwise sluggish approach to opening up the last mile: >>Those products go obsolete before they're written off. The happy seller, however, is off selling the next generation product to the competitor of the previous buyer.<< The old rule of multiples of ten [i.e., don't take the next step up the backbone bandwidth ladder until the next power of ten is achieved, say, from 10 Mbps Ethernet to 100 Mbps, to 1,000Mbps, etc.] can now be substituted by a powers of 1,000 rule. It requires a little more pain during the waiting period, but it may avoid some level of breakage during the next transition. Even if only seemingly for the moment. The players you mention, while they are the best suited at the techs needed to liberate the clog points, are really targeting the carriers who, in turn, set the rules that preserve their domination over the bandwidth spigots. They do not possess the maverick mentalities needed to go all the way in terms of raising the bandwidth curtains for users, such as MFNX has demonstrated with its dark fiber offerings, IMO. In a sense, there is still an unwritten code that the vendors abide by, lest they lose their largest customers for the sake of end users who would see the established carriers' dominance approach dwindling levels of rule, approaching entropy. And so it goes... Regards, Frank Coluccio

To: John Biddle who wrote (706)	9/8/1998 1:02:00 PM
From: Sam Citron	Read Replies (1) \| Respond to of 5853

John, I would not expect an island of stability in the telecom equipment sector. As much as I like the long-term outlook for LU and CSCO, these stocks are not exactly cheap. Both are solid members of the Nifty Fifty. Message 5692949 Considering the current fragility of worldwide economic conditions and the shakiness of financial markets, I would not expect these shares to escape the anxiety of stock markets generally. They will probably come down to more reasonable PEs before resuming their more traditional upward trajectories. I tend to feel that the significant ratio to keep in mind is the subjective bandwidth/content ratio. Why do you need 60 channels of TV if the content is largely garbage? Why spend money on your website if click-through on banner ads is negligible? Why expand your network if the entire business model rests on the necessity of unrealistically high penetration rates? With so much capacity out there, and with Net stocks like AMZN at tulipmania levels, how do you justify investment in the bandwidth augmentation business? Sam