Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Technology Stocks : Winstar Comm. (WCII) -- Ignore unavailable to you. Want to Upgrade?

To: Greg Jung who wrote (10276)	2/11/1999 9:09:00 AM
From: Steven Bowen	Read Replies (1) \| Respond to of 12468

Greg, "I don't see evidence that it is less capital intensive" The numbers that get tossed about is that it will cost WinStar about $4000 to put a building on it's wireless network using the new point to multipoint technology, while it cost a fiber based LEC in the neighborhood of $100,000 to put the same building on it's network. What this means is it is econnomically feasible to run fiber to only about 3% of the office buildings in the US. The competition for customers in these 3% will probably be intense. At the same time, WinStar will not face much competition at all by addressing the other 97%, which makes economic sense to them because of their low cost of entry. Besides revenue, you also need to be looking at gross profit margins. WinStar's plan is to have 70% of it's customers on it's wireless network, and 95% on their own switch. Fiber based CLEC's have about 40% of their customers on their network, and resell the ILEC's fiber to the rest. The difference in gross profit between an on-net customer and a resold customer is about 50% (5-15% profit margin for resold vs 60-65% on-net or 25-30% on-switch).

To: Greg Jung who wrote (10276)	2/11/1999 3:20:00 PM
From: Bernard Levy	Read Replies (1) \| Respond to of 12468

Greg: You may wish to consult the article entitled ''Going the distance'' by Michael Weingarten and Bart Stuck, which appeared in the June 1, 1998 issue of Telephony Magazine at: internettelephony.com You will need to hit the archives button. Somehow, I cannot give you a direct link, since it is a site where articles appear in frames within frames. The bottom line: all CLECS have some identical fixed infrastructure costs, such as switches. However, once this is taken care of, wireless CLECs have a huge deployment cost advantage over fiber-based CLECs. In fact. fiber CLECs can only reach economically a very small percentage of office buildings in the US, while the deployment cost for wireless is about $20K/building with point to point technology, and $4K with point to multipoint technology. So, as a general rule wireless CLECs and fiber-based CLECS are not truly comparable. Wireless CLECs include WCII, TGNT, and ARTT. Fiber CLECS include ICGX, ICIX, MCLD, HYPT, ELIX, GSTX, ESPI, and RCNC among others. NXLK is now a member of both groups. There exists other differences explaining different valuations: a) cost of capital and whether financing for the entire buildout is already secured, b) percentage of resale activity, and c) target market (most CLECS are aimed at businesses, but RCNC targets the residential market). Also some CLECs are purely local, while others aim at building an end to end local and long-distance network (strategy of WCII, NXLK, and GSTX). So, there are lots of subtle differences between CLECs which explain different valuations. Besides WCII, I think NXLK is also interesting, but probably not at the current price. Regards, Bernard Levy