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    See No Evil

    By
    CAROL WILSON
    -
    January 22, 2001
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      The relationship among Wall Street, the investment community and technology is dysfunctional at best. For two years at least, investors courted network service providers that showed a flash of innovation and vision, and money flowed before the ink was dry on the business plans.

      In many cases, those investors pushed network builders to be more aggressive. And so there were companies — including the Big Three Digital Subscriber Line (DSL) wholesalers Covad Communications, NorthPoint Communications and Rhythms NetConnections — that shifted from building in targeted markets to having a national footprint within two years. Jato Communications, too, had a specific strategy — serving second- and third-tier markets, mostly in the West — but it was swept up by investor enthusiasm and tossed on the rocks when the capital disappeared.

      Its easy to look back and declare that profits, and not just growth, should always have been the investors goal. But it isnt that simple. Even as I write this, Wall Street is actively courting other new technologies and the service providers that will offer them. Over the course of the next two years, the interest in optical networking and broadband wireless is likely to crest, however.

      The real question is whether the service providers that hope to build out optical or wireless networks have learned the lessons of financial discipline that came too late for many start-ups that built their dreams on DSL.

      The bottom-line lesson here is that providing competitive communications services isnt about how quickly a competitor can get a network up and running — its about how solidly it can build an infrastructure that has the ability to deliver profitable services from day one, and yet grow when necessary to meet future demand.

      In the long run, it may not even matter which technology is put in place to provide the final access to the customer, as long as that technology is reliable, cost-effective, scaleable and profitable. In other words: Tin cans and string are fine if you can see profits in the service.

      Wall Street will again fall in love with a technology, but it will likely be blind to everything but its potential. Its much easier to talk high-speed bits and bytes and forget about provisioning software.

      So as we all survey the bloody landscape, remember that some of those competitive service providers left standing may yet fall, if they dont learn historys best lesson.

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