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Technology Stocks : Aware, Inc. - Hot or cold IPO? -- Ignore unavailable to you. Want to Upgrade?

To: Norman Klein who wrote (4280)	9/29/1998 10:52:00 AM
From: Bill	Read Replies (2) \| Respond to of 9236

Norman, thanks for your thoughtful response. I'll take another look at my market figures and penetration estimates for AWRE technology based on your belief that I'm underestimating. Two things pop out of this mornings' posts. One, that ADSL will roll out in Europe simultaneous with US deployment. And two, that ADSL will be used for business. I don't believe either will happen in a meaningful way. Europe is far behind the US in both business and household Internet penetration. The infrastructure is not built out yet. Rolling out ADSL to a mass market would surely overload the data backbones in most countries there because users would be elevated to higher bit rates from the existing 14.4 dial or 128 ISDN services they currently use. It would also cannibalize existing service rate structures resulting in lower revenue for service providers. US businesses have been buying HDSL-based T1 service for years with Pairgain and Adtran the leading suppliers. The RBOCs are not and will not IMO cannibalize this base in order to bring a low cost service like ADSL access to business users. In fact, the only suppliers of ADSL to business that I know of are CLECs like Northpoint and Covad who are trying desperately to co-locate CO with RBOCs. Still, I think businesses will gravitate toward 2B1Q encoding to reduce the incidence of spectrum interference and to gain symmetry for their web server applications. This means SDSL is likely the major business technology, not AWRE's DMT. This does not mean the home office won't connect with ADSL, but those figures are already included in my prior analysis. That said, AWRE could be an interesting stock to trade, long or short. Both you and Scrapps have built in an acquisition factor to your valuation model for it, which I believe is very risky. Anyway, I'll look over my market stats today to see if I've erred on the negative. Good luck. Bill Vaughn

To: Norman Klein who wrote (4280)	10/13/1998 11:09:00 AM
From: Bill	Read Replies (2) \| Respond to of 9236

Interesting article. Looks like Forrester predicts 15 miilion cable subscribers by 2002 and only 2 million xDSL subscribers. Cable Internet access facing regulatory battle Reuters Story - October 12, 1998 15:33 By Aaron Pressman WASHINGTON, Oct 12 (Reuters) - In the race to connect homes to the Internet at super-fast speeds, the cable industry is pulling far ahead of telephone carriers, but a major regulatory battle is brewing that could shake up the field. Within just a few years, analysts predict millions of homes will be connecting to the Internet through cable modems at speeds 50 to 100 times faster than ordinary telephone modems. Many fewer will be hooking up with the new technology pushed by telephone carriers dubbed Digital Subscriber Line, or DSL. Cable companies see billions of dollars in potential revenue, figures boosted by the different regulations that apply to cable and telephone services. Telephone companies are considered "common carriers" and must allow customers to subscribe directly to any Internet or online service. Typically, a customer pays the phone company a flat rate for the phone line and another $12 to $22 per month to an online service provider like America Online Inc. or EarthLink Network Inc. But cable operators have nearly complete control over what travels down the cable line and plan to act as both access provider and online service, charging about $40 a month in addition to television charges. A customer wanting another service provider, for e-mail or to serve as host for their personal Web site, would still have to pay the full cable company fee. Making customers pay extra to get any other service may be good for profits but it is sure to draw scrutiny from Congress and regulators at the Federal Communications Commission. The issue could also arise as regulators weigh AT&T Corp.'s proposed $48 billion acquisition of cable giant Tele-Communications Inc. "This is a monster regulatory issue for the cable industry," said Scott Cleland, analyst at the Legg Mason Precursor Group in Washington. "Over time, the FCC has required access to any network that people want to access. The question is whether cable is going to get a proprietary pipe that no one else can access." Online service leader America Online, with 13 million subscribers, and other Internet providers are already crying foul. "We think that it will be a benefit to the Internet, to consumers and to competition between cable and telephone services if in fact there is an open-access model to both the telephone and cable infrastructures," AOL General Counsel George Vradenburg said in an interview. Cable operators argue they have invested billions of dollars upgrading their networks for Internet capability and that the government has no right to require them to allow access to other service providers. MediaOne Group Inc. , a leading cable Internet access provider, will spend almost $6 billion upgrading its network to add channel capacity and online services, explained Susan Eid, a MediaOne vice president who is their top lobbyist. "To think of making that kind of investment and having a government agency force us to turn that over to a competitor is very concerning," Eid said. AT&T, which has battled local phone companies for access to the local phone network, is siding with the cable industry in light of its proposed cable purchase. "Cable is not a bottleneck facility," said Jim Cicconi, AT&T senior vice president and top lobbyist, drawing a distinction between the cable and telephone networks. "No one that wants AOL or any other service would be denied. You could get DSL ... or satellite service ... you can even add AOL to the cable." And amendments to cable regulations added by Congress in 1996 appeared to add Internet service to the list of allowable "cable" services, the industry argues. "There's just no legal or regulatory requirement," Cicconi adds. Currently, a vast majority of the 23 million households accessing the Internet still connect to the network over old-fashioned phone lines using modems that top out at speeds of 56,000 bits per second. Forrester Research analyst Christopher Mines estimates about 500,000 people currently use high-speed cable services, like RoadRunner or At Home Corp. , that connect at 1.5 million bits per second. With more than 60 million households going online by 2002, almost one-quarter will use cable modems and fewer than one in 30 will use DSL, Mines said. Just how and when regulators will grapple with the cable access issue remains unclear. In August, the FCC asked for comments on a variety of related questions as part of its mandate to ensure that all Americans are getting access to advanced technologies like high-speed Net access. Under the Telecommunications Act, the agency must report on the issue within six months and could propose new rules at that time. The agency could also issue a ruling if online services file formal complaints. In 1995, the agency forced AT&T and other telecommunications carriers to allow open access to a high-speed data transport service called frame relay following complaints by competitors. And Congress could jump into the act at any time, especially if constituents start complaining. Lawmakers have in the past required cable operators to carry all local TV channels and to sell television programming to competitors that they both carry and create. Of course, the free market may provide its own solutions. AT&T said it is discussing possibilities about high-speed access with AOL. "We have absolute openness to talk to AOL and those discussions have been going on," AT&T's Cicconi sai>>>>