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Gang,

The BancBoston/Robbie Stevens link I provided to the 'next generation network' technology adoption life cycle was, on my part, a hope that it would indeed open some discussion in this area. I have spent a portion of the last 18 months studying portions of the space and making initial investments. We have to break it down into various categories in order to digest it. Yes, it can be technical when when digs into fiber channel, fiber optics, wave length, DSL, Cable, etc... .

Here's another link to an article discussing one of the areas of broadband - DSL:

http://www.business2.com/articles/2000/02/content/investing.html

How does all of this pertain to gorilla game investing? Certainly the technology adoption life cycle aspect and the broadband network tornado will produce a lot of growth and wealth for companies and investors. A lot of the tornado growth will end up spawning many royalty games, rather than gorilla games. However, I am not letting that hamper my investing in the space as long as I am aware of the situation. Keep in mind, my core holdings are in already established large-cap gorillas like Intel, Microsoft, Cisco, Qualcomm, Oracle and the smaller application-software players like Siebel and i2. So, this 'hunt' is for the tornado wave of next generation networks.

I have been trying to assemble a 'basket' of stocks within the space to best take advantage of the next generation network tornado. I am not recommending this strategy to everyone, but being that it is a new technology adoption life cycle and has tremendous potential, I - for whatever reason - see opportunity as an investor. I am well aware that some of the 'basket' members will fail and at the appropriate time I will sell those and consolidate into the emerging dominant 'winners'. Once the tornado starts to slow, anything I hold that has no enabling technology/value chain gorilla characteristics will be sold. However, this post is only pointed at DSL as I think it is more benefecial to look at each category of broadband on an individual basis.

It's interesting, as you read the above article, how many companies are actually involved in DSL as a portion of their business (GTE, the Bells, Cisco, Excite@Home, etc...). The above link provides a nice view of the 'pure play' DSL space and addresses some issues of cable vs. DSL. They divide the DSL space up into the following categories:

PUBLIC COMPANIES — CONSUMER

*Covad Communications
Market cap: $5.7 billion
Subscribers: 31,000*
Availability: 22 markets
Outlook: The 60-percent market share lead is Covad's to lose.

*NorthPoint Communications
Market cap: $3.4 billion
Subscribers: 11,800*
Availability: 32 markets
Outlook: Gaining on Covad, but nobody likes a No. 2. Ability to ink partnerships and content deals key.

*Rhythms NetCommunications
Market cap: $2.6 billion
Subscribers: 6,700*
Availability: 35 markets
Outlook: Carving out nice market niche for high-end customers who demand greater speeds. But will its ability to upsell other services to those customers be enough to survive with lower market share?

*Source: The Yankee Group


EQUIPMENT

*Copper Mountain Networks
Market cap: $2 billion
Widgets: Makes DSL back-office and customer-premises equipment, as well as network management software. Outlook: Without a lead position, Copper Mountain may have to concentrate on niche markets and services. It could also become an acquisition target.

*Redback Networks
Market cap: $6.4 billion
Widgets: Primarily makes DSL equipment and network management software but moving to sell cable modem equipment and software as well.
Outlook: With almost 90 percent market share in DSL equipment, Redback is comfortable. Its
ability to expand into cable markets could determine long-term growth.

PRIVATE COMPANIES TO WATCH

*CopperCom, *Jetstream Communications, *TollBridge Technologies
Tech: Make "voice-over-DSL" equipment, which allows for packet-switched voice calls to
intermingle with data traffic over a DSL line. The voice call packets, which must arrive on time and in order, have priority over more bursty data packets.
Strategy: Target small businesses and, in some cases, upscale residential markets. Lower overall costs of data and telephony by using packet switching for both over the same wire.
Outlook: Are considered acquisition and/or IPO candidates.

*Turnstone Systems
Tech: Makes DSL back-office equipment and provisioning software.
Strategy: Offer end-to-end products to maintain DSL loops.
Outlook: Filed for an IPO on Nov. 22. Considered up-and-comer in the equipment space.

BB






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