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Author: henrypeter Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 2601  
Subject: Re: Internet business model Date: 2/12/2002 1:37 PM
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Thanks for response FrozenCanuck,

I've not much to add to your comments. But FWIW,

1. Tech people where I work say Ethernet does not replace T1 boxes, but are small devices "clipped" onto wires after they leave the T1. The Ethernet devices (as it becomes a a standard) make the transmissions compatible between the various connected end user equipment. It is also, like you said, a more reliable standard, efficient, and makes the transmission less costly. (I think I got all this right.)

2. A major part of what you said relates to the elasticity of demand issue, ie.. high elasticity means as the cost goes down, demand goes up faster, resultinng in greater revenues for the telecoms, and an incentive for them to upgrade the fiber network to handle the increased traffic. This seems to be a gamble for the telecoms, based on recent activity, and thus maybe not a gamble they are willing to take in the present economic and technology climate.

3. For the residential Internet market, I paste in below a quote from someone's post on the JDSU board.
>>>> "However: I'm betting that as soon as you and anybody in the U.S. can get any movie (or Super Bowl or song or TV show) ever made on demand any time you want through a set-top box (www.moxi.com), which could happen as soon as the end of this year, the time when the need for telecom capacity will radically exceed the ability of the equipment already in the field is coming soon, and I think it will blow away most people'sexpectations."<<<<<<

Such a statement seems to be bullishly addressing the matter of a residential "killer app", which, if it occured would be a powerful driver for upgrading to NextGen Inernet gear. However, I think that when the residential user kicks into becoming an important factor in Next Gen Internet growth, people will use these killer apps off a TV screen, rather than a PC. I don't think most people would want to listen to music or watch movies, etc. on a PC screen. It does not seem that when these killer apps arrive, (probalbly not this year as the quotation expects) the market has will be forced to make a decision as to how best to get this stuff to the residential user.. ie, DSL, cable, wireless. I don't know enough about the technological implications of these competing technologies to comment on wheteher it makes a difference.

4. All in all, it seems to me there is a lot of uncertainty, and pieces missing to warrant a grand return the Internet fiber gear market for Next Gen stuff, and based on the present situation, perhaps we are several years (5-10) away from all these forces sorting themselves out, and what everyone seems to think is inevitable, a major build out to resume; especially if the present Internet will work well enough for the foreseeable future (say 5 years).

Henry.

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