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Technology Stocks : George Gilder - Forbes ASAP -- Ignore unavailable to you. Want to Upgrade?

To: Charlie Smith who wrote (817)	11/20/1998 8:39:00 AM
From: Frank A. Coluccio	Read Replies (2) \| Respond to of 5853

Charlie, you ask: " Is the cost of replicating the existing installed links to 125 million homes and businesses perhaps too high for King Bernie when debt capital costs 9 or 10 percent a year instead of 6 or 7?" The cost of money is not the only factor. What would you have Bernie sink into the ground? You mention replication. I doubt if the RBOX themselves would even consider putting back into the ground what they currently have. My guess would be that they would put in something that resembles fiber to the curb, and a modified Hybrid Fiber Coax alternative if they wanted to encompass a full range of home services, along the lines of the xDSL-based (likely VDSL to the premises) full service area network (FSAN) as described by Bellcore and ANSI. On second thought, by the time such a project could get under way, the unit pricing of fiber to the premises (either plastic or ground wire types) would likely then be affordable if we're talking about the scale of a total make over. Let's run the numbers, then. At anywhere from 1000 to 1500 dollars per passed structure fully amortized across all outside plant provisions and labor, that would be a dinner bill of approximately 125 Billion to 200 Billion plus the cost of financing. Add another 100 Billion to put in place the central office systems to support these and interconnect to the rest of the world, and the cost of personnel-ing the operation, and you come to 300 to 400 Billion over how many years? Of course, this all assumes that you can find the people to operate these still-to-be adopted systems in an age when anyone who knows how to script HTML or splice a strand of single mode wants to become another Steve Jobs or Jim Crowe, respectively. You tell me... can Bernie afford this? Even if the cost per passed home were 500 Dollars, that would still amount to a large number. Charlie? George? Anyone? Frank Coluccio