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Mike Borsuk, Owner M BORSUK & ASSOCIATES

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Recently my stock broker sent his clients an e-mail discussing the news of a prominent investor taking a large position in a telecommunications infrastructure company. He went on to say that he felt that broadband capacity will become more scarce and that he felt the stock market had bit bottom and was to start rising.  

Here's what I e-mailed back to him:

Hi Joe,
I enjoy always reading your missives. There have been a number of newspaper articles saying that having optimism keeps one healthy--better than actually being happy even the writers say. I hope you will use BOTH methods to stay well--being optimistic (such as thinking this disaster in the faith in our government, our businesses, and the health of the world is an opportunity) and trying to be happy (as by actually making the portfolios INCREASE in value). Optimism isn't quite enough for my health.


Your comment regarding dark fiber optic is a bit of an issue of some controversy within my industry. It is becoming clear that nobody knows how much excess capacity there really is or has any sort of reasonable forecast of the demand for additional facilities (telecommunications buzzword for lines) or for data communications application needs over the next 5 - 10 years. I just had a guest lecturer in the graduate video class I just taught at CU who said that the biggest use of the new video teleconferencing standards was for "interactive video games", clearly a fad and mostly wishful thinking for a protocol that was been developed at great expense but has no business likely to be forthcoming to be applied to. Video teleconferencing was, is, and probably always will be a fringe service although some companies have survived but may not have prospered. A matter of fact, this 30 something year old Ph.D. said that the industry is looking for a "broadband driver". In other words, there are no forecasts of how to use the capacity that exists. The only obvious encouraging fact (obvious to those of us in the business if no one else) is that a good deal of the dark fiber doesn't go to where it's needed. That means that there will be some additional business installing local links for the more traditional and known uses. But the hanky panky with the paper swaps of facilities and the cooking of the books makes it completely unclear to how many years OR DECADES of growth is already paid for and in the ground. One technical fact you may not be aware of is that many "full" fibers are almost fully utilized only because the multiplexer equipment installed is of a low capacity. A simple change out of terminal equipment to DWDM devices will suddenly increase the number of unused changes by factors of up to a hundred or more--at very little cost. So, not only is there a really unknown amount of dark fiber, a full route can suddenly become very underutilized at the carriers' will. This has awful consequences on the bookkeeping, and is completely legal. Oh boy. 

I know you understand my point about the fiber technology. The fairly unknown fact is that "dark fiber" is a phony concept because of the issues I mentioned. Kind of like talking about "empty skies". The sky is very big and mostly empty, but the recent mid-air collision over Germany shows that there are exceptions to the rule. A tremendous amount of  fiber was installed on spec and to service long distance carriers' projected demand, but little is understood by most people as to how much of it represents unused capacity for telephone companies and not available for specific customer requirements. I just had lunch with the IT director for a local county. He told me that he needed a high data capacity link between cities about 18 miles apart. He was seriously considering putting in a new $250,000 microwave link as our ILEC's rates were too high and the dominant (but bankrupt CLEC) wanted to charge even more. Apparently, our phone companies doesn't want to bother with a request for T-3 (45 Mbps) from a big customer. It probably costs them too much to service, even though the fibers are in and not used. I suspect that the carriers are waiting until they can just dump the traffic on a pure IP data network. Although voice message and circuit switched traffic is now so cheap that no one makes any money on it, the transition to putting the traffic on IP via the internet or equivalent shared "packet switched" network is a technical and economic model that is quite flawed at worst and completely uncharacterized at best. The philosophy of everyone using an open service means that no one knows who is going to pay for it. Worse, perhaps, is that no one either is in a position to keep it working well. It becomes a utility without utility control or responsibility. The wireless LANs and unlicensed microwave systems are beginning to fail due to interference from each other and lack of performance standards.

Please invest wisely and if you can't make money, keep what we got.



A full report on this topic is available from the author for a nominal fee.

Also available is a new report on Gigabit Ethernet over multi-mode fiber. 

Contact us at info@mborsuk.com or give us a phone call for more information or assistance with your communications systems. 

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M BORSUK & ASSOCIATES has been providing technical assistance and education services for today's voice and data telecommunications systems since 1989. We design and analyze existing and planned electronic and optical transmission systems, generate and analyze proposals, manage projects, and help to educate our clients regarding data and voice communication systems design and acquisitions. All associates are former telecommunications industry managers, adjunct faculty members in graduate telecommunications programs, and hold graduate electrical engineering degrees.



© Copyright 2002, 2003 Michael H. Borsuk, all rights reserved