grant mcdonald <rgrantmcd@yahoo.com> wrote: > hi, a friend of mine is laboring under the delusion > that the internet (the backbone services such a UUnet) > are suffering from a "too much supply, not enough > demand" problem right now, and that this is what is > hurting Telecom stocks. > i can't seem to convince him that nothing could be > further from the truth, that in fact there is SO much > DEMAND, that prices are at an all time high, and the > reason telecom stocks are shitty is because of > congestion on the networks. Well, it seems to me that there can be congestion even in the presence of an abundance of bandwidth. Congestion is a property of network dynamics. To make a (simplified) analogy, consider how in major cities, there can be severe congestion at certain intersections, with little or none at others. Making the major arteries wider (more backbone bandwidth) does not necessarily relieve the congestion. Changing how the traffic moves, e.g. by resequencing the traffic lights, or even putting traffic lights in where previously there were only stop signs, can. [off topic-ish] That said, I find it distressing that telecom and networking stocks continue to be under pressure, not just because I'm an investor, but also as a professional in the computer industry. Also, to tie it in with the rfc3271 thread, there is a feeling in some parts that IPR laws (that even restrict or prohibit copying for personal use) need to be passed to encourage provision of video-on-demand services, which will in turn encourage the buildout of infrastructure to carry such services, ie. telecommunications networks. If that's what it takes to make the telecom industry healthy, I'll be disappointed (although not too surprised). After all, there is past precedent, e.g. in licensing of communications spectrum and the rise of the broadcast industry, that what wound up driving innovation and buildout of the infrastructure was primarily one-to-many commercial information and entertainment. Perhaps it was just wishful thinking that the Internet was somehow "different" in that it would not only create a financially viable means of peer-to-peer communication, that it might somehow reshape society so that peer-to-peer would be able to pay for the buildout of the infrastructure without the necessity of the one-to-many revenue and the types of regulation that generally accompany it. I think your friend is quite right; telecom stocks are being punished because there is an overabundance of supply and no demand. There is a lot of evidence to support this. All that infrastructure was built out in advance of what was thought to be a "revolution" where anyone and everyone could set up shop on the Internet and become wealthy. Problem is, too much of the sources of these funds were investors looking to reap huge rewards from IPOs, etc. After a while, it became apparent that most of these companies were poor investments. The money to fund these ventures went away, then the ventures went away, but the infrastructure remained. (IMHO) the normal course of business that seeks to make a reasonable profit, as opposed to great wealth, can't drive the telecom industry to the heights it was at a couple of years ago. --gregbo