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Technology Stocks : Lucent Technologies (LU) -- Ignore unavailable to you. Want to Upgrade?

To: Mr.Fun who wrote (7733)	5/5/1999 2:51:00 PM
From: The Phoenix	Read Replies (1) \| Respond to of 21876

Mr Fun... Thanks for the response. It's nice to have an intelligent conversation for a change. UK, cable operators offered apples to apples telephone service over twisted pair through CO switches for 15-20% discounts to BT rates which were frozen by regulation and only got 40% take. 40% take rate is good...especially as it accelerates. Anyway, I'm not sure the UK acts as a good reference point for two reasons. One, the cable operators didn't remove the complexity out of the network and were still charging access fees. Two, the UK, Europe and any other international country has never been a template for deployments in the US due to different regulatory issues. I agree ILECs are schizoid, but I still believe their local franchise in res and small biz is difficult to attack. IMHO universal service obligation issues will come back to rear their big ugly head. Relieved of the burden of cross-subsidies, the marginal costs of the existing telephone company plant will be difficult to beat. Yeah, yeah, I can hear you now saying "maintenance costs" but I urge you to take a look at the maintenance costs for a cable company and contemplate what it might cost to keep it running at the same level of reliability as the telephone network. But I know you won't bother. We're talking the differnce between an integrated multiservice deployment which can ammoritize costs over a variety of services and provide or even push new services out in order to cover costs. Not to mention a single integrated infrastructure to maintain. IMO the next generation infrastructure will support more users at lower costs. If not then no SP will migrate. Also, even w/ TW, AT&T will control ~40 million households. Nice, but only a third of the total. T with TW and UMG..is closer to 50M households close to two thirds the total of domestic households I do believe. There are about 300M people in the U.S. at 3.8 people per household ~80M households... If TOTAL US POTS is growing 6% each year today and accelerating, how is it a wash if cable modems reach 6% or even 10% total penetration into US households by 2003? My take rate of 6% was eluding to total take rate. If half the US households are using connected PC's and half of those users move to cable modems and 25% of these customers move to integrated voice on cable that would be 5M POT's lines annually. Add to this the new single purpose devices I mentioned in my last post. Let's assume that 20% of the non-PC users purchase these new devices...since they are new installation a larger percentage will move to the new "bundled" services ...that's another 4M POT's lines for a total migration of 9M users from POT's to voice on cable. Mr. Fun, you have the POT's line growth numbers...if you lose 9M users a year (assuming no annual incremental growth) what will happen to incumbent LEC's? What will the backfill with? Would it surprise you to know that CO switching is only about 20% of Lucent's revenues? Yes, I'm aware of LU's businesses. After all I am invested in LU...this 20% number however is a number that will have to get smaller and managing this process is what my question centers on. CSCO has a different set of issues...but moving fast is not one of them. Mr, Fun, I'm sorry you feel my arguments are tired but I can assure you that they are my own and are not based on some sort of "positioning paper". Can we keep this discussion above the board or are you also going to resort to taking personal shots. Seems to be a matter of course over here. Nonethess, I can see that we agree on some points and disagree on others...mainly on how fast the market is moving. I'll leave you with this URL which perhaps will give you some pause... nwfusion.com OG