Excerpts: National Communications Forum 2000 (10-17-2000)
“My perspective on the state of today’s industry is that we’re in a time of increasing contrasts, and we're getting some mixed signals. Let me give you a few examples of what I mean.
“On the one hand, we’re reminded constantly that the U.S. is enjoying the longest economic expansion in human history. Long-awaited productivity gains are finally being attained, thanks to information and communications technologies.
"Yet the collective Wall Street performance of our industry has recently been called the tech wreck. Two weeks ago Business Week raised the specter of an economic downturn they called the Coming Internet Depression. (I was glad to see the closing editorial that said, ‘We remain optimistic.’)
“Another set of mixed signals arises from what has become an annual exercise -- hand-wringing about future growth prospects for the telecommunications industry. For the third October in a row, we’re hearing a lot of dire predictions: slowdowns in revenue growth, cutbacks in spending, sagging market value.
“On the other hand, it seems very clear that nearly $1 trillion is going to be spent worldwide in the next 3 years on re-vamping and building the next-generation of Internet networks. Morgan Stanley recently estimated that peak-hour Internet bandwidth is currently honking along somewhere between 100% and 400% year-over-year growth. About 10 million miles of optical fiber is being laid over 1999 and 2000 to support explosive demand for bandwidth. That’s literally enough to circle the earth 400 times.
“Optical networking seems to be on the verge of unlocking vast new worlds of opportunity. Yet some commentators are already raising the possibility that backbone transport is becoming a commodity, predicting that prices will fall. That’s another interesting contrast. Breakthroughs in the optical core, as well on the customer premise with broadband access and gigabit Ethernet, are all moving the focus now to metropolitan area networks. That’s clearly the next frontier for fighting bottlenecks.
“Where broadband access isn't available, new, over-the-air optical technology promises to smash the bottleneck in the ‘first mile.’ I believe it will spur even more competition in high-speed data networking between local and wide area networks.
- - -
“Service providers who can make the evolution from a pure transport business to Net-based VPN services will have all the business they can handle. There’s no doubt. But just a few years ago, there was no doubt about solid services such as consumer long-distance. Today, JP Morgan expects those revenues to shrink an average of 4 percent a year through 2005 -- due to excess network capacity, competition and new technology. Once again, quite a contrast.
“The final set of contrasting perspectives I want to mention is around financing.
Capital availability appears to be tightening for service providers of all kinds, from green field startups to the largest consolidated players. But on the other side of the coin, it seems those service providers who can turn up significant new revenue streams -- from differentiated, growth services -- will continue to have access to the capital they need.
“So all in all, my perspective is that we’re living in a time of deepening contrasts and conflicting cues. Complexity is on the rise. Making the right choices for building the network of the future has never been more difficult.”
Like what you're reading? Let's talk. Contact Curtis Wilson at i&p.
> return to i&p wordsmith
> return to about i&p
> i&p
home
