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The Tangled Web Of Fiber Optics Lines & Gates
sdirector writes "Monday, super investor Warren Buffett jolted the nearly prostrate telecom industry by leading an investment of $500 million in Level 3 Communications ... Buffett's investment could set in motion a complex web of relationships and -- if you play it all out in just the right way -- put Bill Gates in charge of every fiber-optic line in the USA." The actual article itself is pretty interesting reading. Update: 07/12 08AM GMT by C :The link was broken, it has now been fixed. Sorry about that.
Here's the fixed link. The submitter didn't code the HTML correctly.
i love the part about just dismissing at&t at all... yeah ok... whatever... this is fantasy...
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The author is really reaching here. Such a deal would never make it past the regulators without selling off large portions of the network. Of course, GWB could always decide that such regulations are un-American, and tell his people to look the other way, but that is not likely considering the lack of trust that most US citizens have for corporations these days.
Additionally, Warren Buffett never buys into a company with plans to turn around and sell it; he's almost always in for the long haul. Still, Buffett has always stayed away from tech stocks in the past, so maybe he's turning over a new leaf.
"Any fool can make a rule, and any fool will mind it."
--Henry David Thoreau
Which is kind of scary. Especially as mr Gates has the money to make that bid mentioned in the last paragraph, and apparently the goodwill-between-friends to make the offer stick. And of course he's shown that he's the kind of man who likes non-competetive markets (read: monopolies). And even more bothersome is that KPNQwest also has lotsa cable running through Europe...and I thought I was safe here :(
What's funny though is the bit about mr Gates telling the three friends all about this internet thing...yup, the same mr Gates who ignored the browser market because he saw no future in that internet thingy...
Now if only he'd had the same attitude about OS', back in the day...
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Note to all Readers: As of now all your postings are moderated by Bill Gates, owner of the internet in the US.
This sounds more likely. Buffett decided the stock was undervalued after the beating it's taken lately and a good longterm investment. A Hack writter noticed Buffett's investment and wanted to grab page hits for the online version of the story, so he invented some half ass conspircy to attract the paranoid.
Quemadmodum gladius neminem occidit, occidentis telum est
The telecommunications industry is definitely ripe for consolidation. There is just too much bandwidth and too much telecom competition for any company to be very profitable. The article predicts that L3, with Warren Buffett's investment, will buy up the assets of WorldCom and Qwest to consolidate their customer bases, reduce costs, and lower competition. Since Gates has a relationship with Buffett, and current investments in L3 and WorldCom assets, he will be in a powerful position in the telecom industry after the mergers go through. But he'll still only own about 5-10% of L3. Then the article goes completely off a limb and states:
Gates could approach Buffett to buy it all. Gates would own the Internet.
This is stupid. If Gates (or probably Microsoft) wanted to own telecom, he could just buy it now at lower prices. He has enough money to buy L3, Qwest and WorldCom now. Why would he wait for consolidation to occur, the market to improve, and the price of these companies to probably triple?
Sure, Gates could own the infrastructure. But if he was still interested in infrastructure, why did he stop investing in MSN? Over the past few years Microsoft has abandoned most of its infrastructure projects and focused once again on software. And the Qwest/L3 investments are years old, back when MS cared about MSN.
Saying that Gates is trying to buy the telecom industry is just flamebait. There's nothing recent to suggest that he's trying to do that.
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From the American perspective it does not take an evil conspiracy to explain why providers would prefer the Internet to be used to deliver content not interactivity. If there is a market it is likely considering the American culture that this is the best way to make money by satisfying consumer demand. Americans with money will have relatively big houses and the willingness to spend thousands of dollars on home entertainment systems. In the past decade American consumers have shown they are willing to purchase billions in content in the form of DVDs. In the US at least it is not considered shameful to spend whatever free hours one has on self-emersed isolated personal entertainment, and there is a strong psychological demand for such entertainment.
The fly in the ointment is simply the classic analysis by Tanenbaum that one should not underestimate the bandwidth of a station wagon transporting tapes down the highway. That is, if one can ignore latency of 12 hours, there is no bandwith advantage to the Internet when it comes to delivering content. In the US at least it is very easy for the lone commuter in an automobile to stop by the store on the way home to pick up a DVD. Unless the Federal Government were to launch a program on the scale of the building of the Interstate highway system to close the last mile gap with fiber, something that will not happen, the average US consumer will suffer less latency from just dropping by the local store versus waiting for content to be downloaded. The current cable/DSL piddly bandwidth relative to what DVD quality content demands simply can't cut it.
I would not exactly say pussy. But if you look at the commentary he wrote in ZDNet "The last chapter" he was massively depressed.
I think he is part of a generation that now has to come to grips with a word called "Recession". This guy was 25. He developed tech, became king of the world. Then the bubble burst and folks like him were jettisoned. As they say easy come easy go. Of course since we are talking about human emotions this has the result that it becomes difficult to cope with.
Unless of course you are a few years older and have lived through a recession already...
"You can't make a race horse of a pig"
"No," said Samuel, "but you can make very fast pig"
If Bill Gates owned every single piece of fiber in the US, it's definately a step in that direction. Perhaps even the only thing preventing a standards change now.
You can find the article here:. html
http://www.pbs.org/cringely/pulpit/pulpit20010802
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Ever fought one?
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Snow Crash here we come.
-Mark
While this would be unlikely behavior for Gates, it's even less likely for Buffett.
His strategy is based on taking a very long-term view. Generally, when he buys stock (or the company, outright) he intends to hold on to it "forever." Why would he go ahead and sell this company he just invested in - to make a quick buck? Not his style at all.
Let's look at the 802.11x market: the little local guys who used to pull Cat 5 for companies are probably sufferring, because a lot of companies are moving to 802.11x.
Uhm...right. Wireless can't get me 100Mbps or 1000Mbps like cat5/fiber can. Until then, wireless is best suited to PDAs and laptops. At my house, the desktops are all cabled while my laptop and Zaurus are on 802.11. At work, there is some wireless, but security issues have everyone looking for a better solution. The cable pullers are still very much in business here, and I don't think they will be fearing for teir jobs for quite a while.
Yeah, and Level 3 and UUNet are global companies, in case you haven't noticed.
Nothing like some knee-jerk US-bashing.
"That is, if one can ignore latency of 12 hours..."
You must not be an American. I start climbing the walls if my pizza takes longer than 20 minutes.
Talisman
"Study your math, kids. Key to the universe." -The Archangel Gabriel
Wires still rule. For long-distance hauls, relatively error-free transmission and high-speed links, fiber and wire will be the only way to go for a long time.
Wireless is susceptible to weather, depends on line of sight, and the requirements for a quality link are very strict. Wireless is also limited by spectrum licensing, data rates, and nasty things like roof-rights and buildings cropping up 5 years later in front of your installation.
Wireless is fine and dandy for 11Mbps LANs and 45Mbps WANs. But we're not talking about offices and campuses here. We're talking about highspeed datalinks spanning cities, states and continents.
Even if wireless could approach the level of reliability of fiber and copper, you have that little "curvature of the earth" problem for long haul networks. And bouncing signals off sattelites is not a solution.
It's called the Warren Buffet - all you can eat, right inside Nebraska Furniture Mart/Megamart (Nebraska's attempt at a Fry's clone)
That's because the research arms of most companies, while potentially of a major benefit, are typically a small consideration. If you bought, say Cisco, do you think more money would be coming out of the existing sales, or out of the R&D department? (Ignore the common barbs against Cisco's R&D.) While R&D could come up with some really great products, that will be then, not now.
The customer base is also important. Consider that if you have 100,000 customers, and your target company has 50,000 customers, if there is no direct competition between your company and your target, you now have a 50% larger potential customer base for your original products, and triple the porential customer base for your target. It's a simplified view, I know, but it's still a strong consideration.
Finally, keep in mind that sometimes it's the smaller companies that don't get advertised that a company buys to allow expansion of the products. Maybe they see that a little $1M a year company is on the right track, but does not and perhaps will never have the capital to make it big. When your $5B a year company offers $5M plus stock and a job with a hefty raise to this little guy, the media isn't going to pay much attention, and the sale will likely end up as a brief press release or perhaps no more than a blurb in the "What happened yesterday in brief" column of the business section of your local paper. The sum total of it would be something like, "XYZ Corp. (Symbol: XYZ) purchased the privately held ABC, Inc., yesterday for $10M is cash and stock." That's often it.
If you know where to look, you'll see these things. The trick is, there are thousands of publicly-traded companies, and monitoring the sales of all of them can be very tricky.
You can never go home again... but I guess you can shop there.