The great telecom meltdown / Fred R. Goldstein.

Format:

Book

Author/Creator:

Goldstein, Fred R.

Series:

Artech House telecommunications library

Language:

English

Subjects (All):

Telecommunication.

Telecommunication--Finance.

Internet.

Physical Description:

xiii, 191 pages : illustrations, 1 map ; 24 cm.

Place of Publication:

Boston : Artech House, [2005]

Summary:

In today's telecom business environment, a thorough and accurate understanding of past mistakes goes a long way in ensuring future success. Providing an authoritative account of what contributed to the failure of so many telecom firms between 2000 and 2002, this insightful resource explores the roots of the perfect storm that buffeted telecom and Internet companies and investors. Professionals find a detailed insider's look at how the crash was caused by a complex combination of risk and regulatory factors in an increasingly competitive environment, much of it originally fueled by the breakup of AT&T.

The Great Telecom Meltdown offers a solid understanding of the evolving structure of the information, communications, and telecom industries, and how companies and sectors within these industries relate to each other. Professionals gain insight into identifying sound long-term investment strategies and avoiding fads with unsound fundamentals. The book sheds light on the regulatory framework that has been evolving, as competition gradually replaces regulation among different industry sectors. Moreover, readers gain an appreciation for the context of the modern telecom industry, leading up to and beyond the Telecom Act of 1996, which, as the book explains, has been given more credit and more blame for the events of the era than it deserves.

Contents:

1 Ma Bell and Her "Natural Monopoly," 1876-1969 1

Natural and Unnatural Monopoly 1

Western Union 2

Patent Protection 3

The Kingsbury Commitment 4

The Slow Pace of Progress 5

The Smith Decision and Universal Service 6

The Final Judgment 7

Hushaphone and the First Cracks in the Monopoly 7

The Disruptive Transistor 8

2 The Rebirth of Competition 11

Carterfone Made the Network More Valuable 11

Registration Opened up the Floodgates 12

Digitization from the Outside In 13

The Integrated Voice and Data PBX Bubble 15

Computer II and the Detariffing of Terminal Equipment 18

American Bell and the Embedded Base 19

MCI's Shared Microwave Opened New Doors 20

Private Line Competition Led to Rate Restructuring 20

Execunet Gives Birth to Competitive Long Distance 22

Sharing and Resale Had Profound Implications for the Future 23

The ENFIA Agreement Made Subsidies Explicit 24

MCI's Growth Fueled by Antitrust 24

3 Divestiture: Equal Access and Chinese Walls 27

Vertical Integration 27

AT&T Kept Out of the Computer Industry 28

Legislative and Antitrust Actions Took Shape 29

The Money's in Long Distance, Right? 32

Long Distance Rate Restructuring Had Been Planned Before Divestiture 32

Birth of the Baby Bells 34

Stopping at the LATA Boundary 34

Access Charges Milked the Monopoly 36

Selecting Equal Access Carriers 38

800-Number Competition 38

The Centrex Revival 39

Digital Switching Becomes the Norm 40

Digitization of the Transmission Network 43

The First Fiber-Optic Boom 43

ISDN Fails to Make a Dent 45

Digital Access Held Hostage to Local Measured Service 49

Broadband ISDN Led to the ATM Boomlet 50

Regulators Made the Deal, but Fiber Did Not Make it Home 52

4 The Internet Boom and the Limits to Growth 57

The ARPAnet Was a Seminal Research Network 57

Other Packet-Switching Technologies Had Their Adherents 58

OSI, the Big Committee That Couldn't 62

TCP/IP Becomes the Standard 63

The Acceptable Use Policy 64

Commercialization at Last 65

Peering and Tiering 66

An Industry Structure Develops 67

Internet Traffic Explodes as the Public Joins 69

Data Traffic Finally Tops Voice 70

Short-Term Versus Long-Term Trends 71

WorldCom Set a Suspicious Pace 72

ISP Pricing Creates Permanent Losses 74

Investors Subsidized Prices 76

Dotcoms Create a Demand Bubble 76

Carrier Hotels Created Too Much Room at the Inn 80

The Bubble Bursts in Equipment Manufacturers' Faces 81

Surplus Gear Met Demand 82

5 The Deuteronomy Networks 85

The Short-Term Bandwidth Crunch Invited More Suppliers 86

ISPs Wanted Dark Fiber 86

Qwest Follows Sprint's Lead Along the Rails 87

Kiewit Sells MFS, Creates Level 3 88

Williams Sold Wiltel, Created Another One 90

Metromedia Sold Cellular and Long-Haul, Created MFN 91

XO Communications Recycles Cellular Profits 92

Undersea, Undersea, Under Beautiful Sea 93

How Much Bandwidth Was Available? 94

A Falling Price Lowers All Carriers' Ships 95

6 Losing by Winning: Wireless License Auctions 97

Original License Lotteries Led to Farcical Resale 99

The Top Cellular Networks Grew to Profitability 100

Networks Go Digital 101

Auctions as a Fair Way to Allocate Scarce Spectrum 102

The PCS Auction Was a Success 103

"3G" Combined the Allure of Both Internet and Wireless 105

European PTTs Had Recently Been Privatized 106

Bubble-Era Timing Led to Spectacular Bids 107

"2.5 G" Technologies Suffice for Most Users 107

Many Large Incumbents Were Left with Huge Debt 109

7 Competitive Access Providers, the Costly Way to Local Competition 111

RBOC Prices to Large Customers Were Out of Line 111

States Supported RBOC Monopolies More Than the FCC Did 113

The FCC Preferred a Market-Based Approach 113

Satellite Bypass Did Not Quite Fly 114

Teleport Cracks the NYNEX Monopoly 114

Competitors Outrace RBOCs to Provide Local Fiber-Optic Connections 115

Overbuilding Each Other in Top Markets 116

The Telecom Act Opens Local Service Competition 117

The Long Distance Business Declined 117

CAPs Had Head Start on Both Service and Debt 118

Fixed Wireless as an Alternative to Fiber? 119

Overexpansion Led to More Bankruptcies 121

Hybrid Fiber-Coax (HFC) Gave Cable Providers an Advantage on "Triple Play" 122

RBOCs Took the Threat Seriously 123

Hybrid Fiber-Coax Is Developed 123

Cable Modems Sparked a Cable ISP Boomlet 124

Fiber to the Home Kept Moving Further into the Future 125

Exuberant Prices for Existing Systems as Industry Consolidated 127

Overbuilding Was Often a Costly Disaster 129

8 DLECs and ELECs: An Exercise in Oversupply 133

DSL First Failed as a Video Offering 134

The Telecom Act Invites Novel Use of Unbundled Loops 134

Collocation Did Not Come Cheap 134

ILECs Controlled the Mass Market for DSL 135

Capital Poisoning Led DLECs to Overexpand 136

Dropping Like Flies 138

Survivors Face the ILECs' Regulatory Might 139

Ethernet LECs Were Data CAPs 140

9 CLECs' Winning Strategies Are Met by Rule Changes 145

The Telecom Act Anticipated CAPs and Resellers 146

Total Service Resale Had Little Value or Margin 146

State Commissions Had to Administer Federal Rules 147

Unbundled Network Elements Reduced Capital Needs 147

Initial Strategies for Serving "Classical" Voice Business 149

"Smart Build" and UNE-Loop CLECs 149

UNE Platform Displaced Resale and Discouraged UNE-Loop 150

EELs Created an Opportunity to Serve Businesses 152

The ISP Dial-In Business and CLECs: A Match Made in Heaven 152

"Virtual NXX" Made Dial-In Available in More Areas 154

Reciprocal Compensation Led to Large Initial Profits 156

ILECs on the Attack 157

The Grandfather Clause Locked Out New Entrants and Squeezed the Old 158

New Generation Switching Equipment Lowered Capital Costs 159

Enter the Softswitch 160

The CLEC Boom and Bust Led to Glut of Vendors 160

UNE-P Dominated CLEC Statistical Growth 162

An ILEC-Friendly FCC Throws New Obstructions at Surviving CLECs 163

The Triennial Review Order Fiasco 164

ISPs Face New Survival Threat from Bush Reelection 165

Role Reversal: States Become Champions of Competition 166

10 Focusing on the Bottom Line 169

Asset Valuation is Risky 170

Accounting Was Scandalous 171

Investors and Entrepreneurs Played Each Other for a Loss 171

WorldCom and the Limits to Mergers 172

AT&T Acted on Faith in WorldCom's Numbers 173

Global Double Crossing 174

New Services Need to Fit Into a Food Chain 174

Competitive Realities Will Change 176

Old Dinosaurs Die Hard 176

The Next Big Thing Usually Is Not 177.

Notes:

Includes bibliographical references and index.

ISBN:

1580539394

OCLC:

57354172