Rodent Regatta

Traditional communications systems based upon the copper wires of AT&T and its spawn will one day cease to exist. Replacing those companies and their antiquated technologies will be a new breed of fiber optic cable illuminated by optoelectronics. Both of these technologies – the fiber and the electronics at each end of the fiber – will advance in technical performance and price much like the chips and add-on devices of today’s personal computer industry.

In other words, we’ll buy vastly more capability for 30 or 40 percent less every 18 months or so. For this reason legacy accounting methods which had the telecom monopolies depreciating things over 40 years will give way to modern, reality-based depreciation schedules with realistic plans for continual upgrades to the network.

A leader in this type of thinking is Level 3 Communications, of which I’m a shareholder. Level 3 calls this approach to the market ”silicon economics.” The basis for this type of thinking can be found in the presentation materials from three of the company’s analysts’ conferences. Though the presentations date all the way to 1999, the truth of their message endures.

Level 3 is focused on long-haul economics. They are not currently pursuing mid-market customers or last mile solutions for next-generation fiber optic communication. Beginning this week, we’re pursuing a venture that has the potential to revolutionize the use of fiber, Wi-Fi, voice-over-IP and end-to-end IP networking in offices as small as 3 to 5 workers. Using technology such as that described in Level 3’s presentations, but scaled to suit businesses of all sizes, our goal will be to build finished IP services that anyone might use.

Stay tuned. The era of truly cheap bandwidth has arrived. It will get interesting very quickly.