Not Surprised

[rd@cottonwood.com (Rick Dahlgren)]

The US West acquisition dance is really kind of boring.  Two companies,
both headed by former AT&T executives appear to see value in US West.  So
what?
As each placed their bids, shareholders of first, Global Crossing and then
Quest, also expressed their view by dumping stocks on companies that don't
make any money yet.

Both Quest and Global Crossing are racing to place bandwidth into
service...with each megabit or megahertz of communication space they build,
the value for that space drops.

They are comoditized on a highly descending scale.  In an analogy of the
gold rush, instead of mining to find gold which becomes increasingly
valuable as there is a limited amount in any vein, they simply make
more...and the more they make, the less it is worth.

Apparently, some shareholders of the two suiters are wondering the same
thing I do....why spend so much to buy the smallllllest of the baby bells
who is about to have real facility-based competition in five of their
largest cities from AT&T?

The most interesting thing to me was that some of the very first news on
the Global Crossing deal was that Solomon Trujillo would probably have to
move to Beverly Hills....or as we rural or pseudo-rural US West customers
refer to it........the Hills of Beverly....swimming pools.....movie stars.

So much for committment to rural America.....give me a nice polo club
membership while Global Crossing and or Quest attach a cash flow vacuum
hose to revenues that would have been spent for in-region network upgrades.
 Both GC and Q-West have a voracious apetite for cash from wherever they
get it....so what about all those rural hospitals, schools and libraries?

Another interesting sidebar is that prior to bidding for US West, Q-west
invested something like $90,000,000 in ART, a small but scrappy broadband
wireless group that is currently rolling out services in 1) Seattle 2)
Portland and 3) Phoenix.....formerly positioned as the best wireless data
competitor of US West wireline service in those markets, ART may now be
part of the family.

As for the FCC,  surprise surprise, apparently Kennard hasn't noticed that
the world, she keeps on turning and the FCC (mostly because of such a
poorly written diatribe of ambiguity also known as the Communications Act
of 1996) has been mired in either doing nothing or rolling over for the
indulgences granted by the current administration.

We have argued that Title VI should be abolished on a scheduled timeframe
and that all carrier service should be regulated under Title II.  These
industries have converged........but we're entering an election year, so
get out the checkbooks, boys!

Thanks for your indulgence,

Rick Dahlgren
Cottonwood Communications
rd@cottonwood.com