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Strategies & Market Trends : Stock Watcher's Thread / Pix of the Week (POW) -- Ignore unavailable to you. Want to Upgrade?

To: RCJIII who wrote (5556)	4/6/1999 12:39:00 AM
From: Intl_Guy	Read Replies (3) \| Respond to of 52051

Comments from someone new to SI. I think I am seeing a potential sea change in telecomms coming in the US at this very moment. I have been using a MMDS internet service (ATEL) for the last year. A week ago these stocks (MMDS) started to spike on news of MCI-WorldCom buying up the bonds of these companies. The reason for the spike is a the sea change from landline phone-internet and cable to wireless MMDS. The driving force appears to be MCI-WorldCom's attempt to bypass the LEC's and RBOC's. Not to mention the fact that if they do so they may be able to avoid having to offer competing long distance carriers on their (I assume) unregulated MMDS internet-phone-video-who-knows-what services wireless system. I've been following ATEL for just over a year, since I started using WantWeb in Portland. My background is electrical engineering and I did some work just over a year ago on the privitization of electrical utilities in Brazil. The project involved looking at new business opportunities for electric utilities being privitized, including telecomm. In the coarse of this work I learned that the Brazlian govt. had put a five year ban on introducing MMDS systems into the telecomm market because it could do serious damage to the sale of the Govt. owned telecomms (land and wireless). This made made me very interested in ATEL, especially when two way was approved last summer. I have talked with the ATEL folks in Portland (Lee Haglund) about costs of capacity and channel capability. I know just the slightest amount on telecomm theory and practice, but my assumptions are based on these numbers: Each analog microwave tv channel can be converted to a digital channnel with 3000 (756k or maybe 1.5M: T-1) circuits (equipment cost $75k - certainly not the only cost, modems, T-1 lines in are over this) these circuits can be broken into spectrum 128k chunks, for my case here I'll assume 256k i.e. the 3000 756k translates to 9000 256k circuits. Then based on ISP rules of one modem per 5 customers means the 9000 times 5 equals 45,000 users per old analog channel and if they sell at $20/circuit this could mean revenue of $90k/month per old analog channel, now multiply that by 25 channels (which means 1.25 million circuits possible in Portland - which is about that population in the metro area) per city license and you begin to see income of $20 mil/month maximum. Then a yearly potential of $240 Million per year - in only one of the 32 cities that ATEL could serve. The 256k line could do phone Internet, phone and video - all at once. The customer pays for the antenna, cable modem, network card and installation - not a bad gig. One of the earlier posts to this thread mentioned the cost that Bell South paid per potential household, I've been thinking about looking at the sunk cost per household for a RBOC - i.e. how much does US West (bad reputation with Oregon PUC) have invested in the rate base per user. My guess is that ATEL, CWSS and PCTV have the potential to change the industry because my guess is that the cost of copper infrastructure is an order of magnitude or more greater. ATEL's product has limits, but so does any technology. I'd be interested in any rocks that can be thrown at my logic, number or assumptions.