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Problems of network industries

Tendency to overcapacity in supply
Low margin, high fixed costs that lead to price wars
Inelastic demand

The result will be that the new Telecom will look much more like the old Telcos and will re-create natural Oligopolies.

Telecom consolidation

Drivers

Excess network capacity
A number of financially weak players
Mature industry growth perspective especially in traditional fixed-line voice services
Benefit of scale and substantial user base
High entry barriers

Inhibitors

:. National Interest
:. Security concerns
:. Government ownership
Unclear customer value proposition of cross-border offerings??

Strategic Telco Themes

Focus on debt reduction
Declining voice numbers
Improve cost structure
Penetration in most markets topping out declining revenue growthand ARPUs in Europe
Delays in 3G
What should fixed line players do with FCF?
Will data growth consumption be enough to rejuvenate usage and ARPUs?

Drivers of renewed consolidation activity?

Strategic clean-up: Vodafone buyout of minorities
Potential catalysts / obstacles
Wireless:
:. can 3 players per country be profitable in the long-term?
Wireline:
:. Does Europe need 15 incumbent telcos?
:. Can cross-border synergies be realized in fixed-line telephony?
Asia:
:: what will be the roles of players such as NTT Docomo and Korea Telecom in wireless and fixed line consolidation?

Integrated and pure-play telcos by market cap:

June 27, 2003 - Mkt. cap expressed in billion euros

Vodafone 122
Verizon 97
NTT 56
SBC 76
T. Italia 58
DT 56
Telefonica 53
FT 25.5
BT 25

WLL: Wireless Local Loop

Sometimes called radio in the loop (RITL) or fixed-radio access (FRA), WLL is a system that connects subscribers to the public switched telephone network (PSTN) using radio signals as a substitute for copper for all or part of the connection between the subscriber and the switch. This includes cordless access systems, proprietary fixed radio access, and fixed cellular systems.
Full description

802.16a: From Wlan to Wman

With 802.16, the IEEE hopes to open the doors for thousands of users to share capacity for data, voice and video, while giving carriers a scalable solution that they can easily grow as subscribers demand more bandwidth. In the 802.16 vision, carriers would set up base stations connected to a public network. Each base station would support hundreds of fixed subscriber stations, probably mounted on rooftops. The base stations would then use the standard's medium access control layer (MAC) -- a common interface that makes the networks interoperable -- to nearly instantaneously allocate uplink and downlink bandwidth to subscribers according to their needs. The 802.16a standard allows for non-line-of-sight operation!
Full description

FSO: FREE-SPACE OPTIC

Free-space optics (FSO), also called free-space photonics (FSP), refers to the transmission of modulated visible or infrared (IR) beams through the atmosphere to obtain broadband communications. Laser beams are generally used, although non-lasing sources such as light-emitting diodes (LEDs) or IR-emitting diodes (IREDs) will serve the purpose.
Full description

Optical

Portfolio Overview

Agere Systems :: AGRA
Avanex Corp. :: AVNX
Corning Inc. :: GLW
Digital Lightwave Inc. :: DIGL
EXFO Electro-Optical Engineering Inc. :: EXFO
Finisar Corp. :: FNSR
JDS Uniphase Corp. :: JDSU
Optical Communication Products Inc. (OCPI) :: OCPI