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January 21, 1999

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Subject: Re: Going up the mountain ...
Author: DirtyDingus

This is the sort of thing that should be posted in Nicos Internet Nook area but since you asked me - in the CSCO area - here's my take ( Aside: BTW I sometimes wish you could do the newsgroup like thing of posting to multiple lists but having all the responses go to one... - Any Fool listening? ).

1) Cable Modems are not especially flawed - this is the hype that your favourite Baby Bell would like you to believe. There are so many vested interests here its confusing to try and pick out any one particular one but it all boils down to the First Mile (I noticed that Nortel are calling the bit that goes into your house as the first mile which seems better then the "last mile" that others call it) and access to it. Essentially no one can afford to dig up the road and put another piece of cable (coax, fiber, 2-pair whatever) that goes to everyones house so we are limited to the ones that already do this and the air (some kind of radio).

"I'm happily invested in the internet plumbing equipment providers (CSCO, NT, NOKA, (LU,) SUNW, MSFT etc) because I cannot tell where the money is to be made when you get higher up the food chain..."

Cable TV acts like a party line just like most LAN technologies do and so in my opinion it is more suited to the always On stuff that you want with data access. DSL is like ISDN on steroids (massive simplifications on this explanation) so you have (at some point) to make a call - the call may be transparent to the end user but trust me inside the exchange there is a call being established - so you do get the kind of 1-1 relationship you want for the first mile BUT that doesn't help because you all have to go through some kind of router to get onto the internet so it doesn't help.

[ An analogy here - imagine if everyone had a personal onramp from their driveway to the nearest freeway - BUT, just before you got onto the freeway all the local onramps in your neighbourhood merged into one onramp so that the freeway didn't have infinite onramps. There would still be a bottleneck getting onto the freeway even though you could start off from your house at 60mph. This is the problem with DSL. ]

Personally I reckon that the cable companes are slightly more consumer driven than the Bells and so are more likely to get you on faster and cheaper and upgrade you to better service quicker.

2) Ok so how does this relate to portals? Well its like this - when you use DSL or Cable Modems you tend to have less say over your ISP (none for Cable, close to none for DSL) and your ISP will of course give Joe Average a package including web browser etc that points the default home page where the ISP wants it to go. In the case of @home I expect that will be Excite now, for AOL (AOL is doing some sort of tie in with Bell Atlantic DSL I think) it's netcenter etc. However, although anyone with more than trivial know how can change their home page to something else, its like the 000s of vcrs that still flash 12:00 - its work that doesn't really get you anything 90% of the time. So this means that Portal companies (particlularly Yahoo) could be in trouble since there is no real reason to use one over another for most of the time. On the other hand Yahoo in particular has brand name recognition so if it doesn't get bought it may manage to survive as an independant portal - but the lesser breeds are probably dead now unless they cna get bought.

"So while I cannot guess which portal, ISP, ecommerce site etc will be the winner I do know who's going to be providing the equipment that the winner uses."

3) I think it would be dangerous for a portal to be bought by an eCommerce company (e.g. eBay, Amazon) etc. because the whole point of a portal is to point you to what you want on the whole internet - but it is highly likely that the ecommerce companies will want to tie themselves to the ISPs once the ISPs have got control of the portals. And it would be interesting to see whether people maintain brand loyalty to particular portals or ecommerce sites if there are others that are 2 or 3 clicks closer and have similar products. I have no idea about this but I suspect the answer is NO.

4) I'm happily invested in the internet plumbing equipment providers (CSCO, NT, NOKA, (LU,) SUNW, MSFT etc) because I cannot tell where the money is to be made when you get higher up the food chain - To paraphase Robert Heinlein (in the words of Lazarus Long) "In any horse race there will be a winner but you can't place a bet on that fact - you have to be more specific". So while I cannot guess which portal, ISP, ecommerce site etc will be the winner I do know who's going to be providing the equipment that the winner uses.

DD


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