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Technology Stocks : LAST MILE TECHNOLOGIES - Let's Discuss Them Here -- Ignore unavailable to you. Want to Upgrade?

To: lml who wrote (2601)	12/15/1998 4:30:00 PM
From: Stephen B. Temple	Respond to of 12823

Last mile challenges are everywhere> Political Shift Leaves German Carriers on Hold By Peggy Salz-Trautman at CommunicationsWeek International 15 December 1998 The tug-of-war in the German marketplace over the price of unbundled access - the monthly fee Deutsche Telekom can charge rival operators for access to the "last mile" - has ended in a surprising stalemate that raises questions about the independence of the country's regulatory authority - the Regulierungsbehorde - and the agenda of its new Social Democrat government. The issue of unbundled access has been a thorn in the side of all parties concerned for over a year. Deutsche Telekom and its competitors have presented their cases three times to the regulatory authority, and each time they failed to reach an acceptable compromise. According to Telekom's calculations, DM47.26 ($28.3) would be a "fair" fee to charge for the last mile. However, its competitors argue that the price should not exceed DM15. To avoid a conflict and create a solid basis on which all telecoms operators could plan their future investments, the regulatory authority set the price for unbundled access provisionally at DM20.65 and announced it would take a final decision on 30 November. Three days before the long-awaited decision, Telekom withdrew its proposal, a move that made the Regulierungsbehorde's decision superfluous. "We had worked hard and were finished and ready to announce the decision," said spokesman Harald Dorr. "But there is no need to announce a decision since Telekom withdrew its proposal ... We would have announced, with a good conscience, a rate of DM23.20." Without a decision on unbundled access the provisional rate of DM20.65 will stand unchanged until 30 April, when the regulatory authority is again expected to announce a decision. While telecoms operators are angered by the delay, they are infuriated by Telekom's conduct and the apparent meddling of Germany's economics ministry, which oversees but has no jurisdiction over the regulatory authority. Indeed, it was economics minister Werner Muller who "recommended" Telekom to withdraw its proposal. Muller, who refused further comment, has since indicated in press statements that his involvement was necessary to avoid a blow-up of tempers, since neither Telekom nor its rivals would have accepted the regulatory authority's decision. A Telekom spokesman said Telekom withdrew its more than 1,500-page proposal because "some points in it were not clear" and needed further clarification. But the regulatory authority dismissed this, saying it had already reached a decision and had not required additional documentation. Telekom now has until February to submit its proposal for the fourth time. The VATM, Germany's association of telecoms and value-added service providers - an organization with 40 members totaling DM12 billion in sales - charges that the ministry's decision to intervene on behalf of the incumbent is a message to the marketplace that the cards are stacked in Telekom's favor. "It is unbelievable and unprecedented that a minister would use his insider information about the decision of a body under his authority to exercise influence over the course of events," said Jurgen Grutzner, deputy chairman of the VATM in Cologne. This is not the first time that Muller's actions have shocked Germany's operators. Shortly after taking office he announced that he sees himself as the "champion of the citizens and the Telekom work force." But critics in the opposition have suggested that Muller is less interested in the employees than in the fact that the government still owns 74% of the carrier. Such statements are "poison" to the marketplace, according to the VATM. "He who publicly calls himself the advocate of Telekom's work force and shareholders in this situation wipes his feet on the justified interests of tens of thousands of workers and shareholders at other mid-size and large [telecoms] companies [who are VATM members]," said VATM president Hans-Peter Kohlhammer. The decision shows the "reach of political influence in Germany," said Harald Stober, chairman of Dusseldorf-based Mannesmann Arcor AG. "It is again shown how very much politics protects Telekom. [The withdrawal] gives Telekom a chance to postpone competition in the local loop and protect its own position." Despite the insecurity created by the decision, Arcor is moving ahead with its ambitious plan to enter the local loop in major German cities in 1999. On 3 December the company launched its first end-to-end offer for customers in Stuttgart. For a monthly rate of DM44.90 customers receive a complete package of services, including an ISDN connection and Internet access with free e-mail. The offer, Arcor-All In, costs DM18 per minute for peak-time domestic calls and DM0.10 on weekends. Local calls cost between DM0.5 and DM0.9 per minute. Arcor's move is the most recent in a race by carriers to slash prices and grab market share. The price war took on new momentum in November when Telekom retaliated against "dumping prices" with a plan to slash its own prices by up to 63%. The cuts must be approved by the regulatory authority before coming into effect on 1 January. The price cuts are also Telekom's answer to what chief executive Ron Sommer maintains is an unfavorable regulatory environment, which forces it to bear the cost of integrating its transmission technology with that of rival telecoms providers. "What we see today is a price war that is carried out on the back of Telekom," Sommer said. Telekom expected prices to fall, but not "at this pace." Viag Interkom GmbH, of Munich, has said it prefers to monitor developments before possibly cutting its prices as well. Dusseldorf-based o.tel.o Communications GmbH is waiting to see if the regulatory authority approves Telekom's new rates. "Then we will react with an offer of our own," an o.tel.o spokesman said. For the moment the company is too busy regrouping under new management after its shaky start and reports that its 1998 losses might top DM2.2 billion.

To: lml who wrote (2601)	12/15/1998 8:00:00 PM
From: DenverTechie	Read Replies (1) \| Respond to of 12823

Good questions, lml. No easy answers though. 1. The answer to why renew the franchise is kind of straight forward. The cable company makes the promises up front at renewal time so that they can get renewed, then build in penalty clauses if they don't meet the upgrade dates promises at renewal time (and of course hardly ever pay due to the loopholes). But the key is that THEY ALREADY HAVE THE RENEWAL IN THEIR HAND based on the upgrade promises. Pretty nifty deal, right? 2. Length of franchise agreements vary all over the place. Most are anywhere from 5 to 10 years. I've seen some as long as 15 and 20 years, almost none less than 5 years (has to do with that capital intensive thing you discussed and time to recover investment and try to make profit). 3. Very few have early termination provisions. I've never seen one like that or heard of it happening. Every now and then a cable company will have such horrendous performance on rates and customer service that a municipality will try to oust them. A city around Denver recently tried to replace TCI at its last renewal date. The city government actually puts the matter to a vote and the people can decide. Wouldn't you know they voted to replace TCI there and sure enough TCI came back, made a bunch of additional promises, with penalty clauses, gave the government a free institutional network, etc. and people voted to keep them! That was after the city council let everyone know there would be disruption of service and higher rates if TCI was replaced (someone would have to buy the existing plant at inflated valuation of course). 4. It's nice that Century has an agreement with @Home but @Home has a very specific build plan and their own agenda. They will eventually get to you based on a schedule that only they know, where-ever your system fits in the grand scheme of things. Cable business is interesting, no?