Feed on

Hendrik Rood is one of 12 list members from the Netherlands. His comments fascinate and this one provides some very interesting insight into the behavior of incumbents. This morning, referring to an earlier comment he wrote:

“This remark reminds me of the first IP backbone I developed in 1992-3. When I worked at Dutch incumbent KPN.

The backbone was for the Network Management System for a leased line infrastructure and consisted of a Cabletron Spectrum system communicating to Cabletron hubs with some 3rd party cards in it. It contained a Unix-blade that that ran a SNMP proxy converting proprietary (so-called Q2-) interfaces to the network termination devices (an 64k, 128k and 2 Mbit/s symmetric (H)DSL) and Router-cards from a tiny company, called Cisco … We built it together with CBIS (Cincinatti Bell Information Systems).

I only discovered in 1995, when I started working for Stratix, that this internal IP backbone of KPN was larger than the then national backbones of SURFnet (Education NREN) or Nlnet (Now Verizon Business).

It probably also carried more load. I drew several lessons from it.

Lesson 1: When incumbents have to do internal judgement only, they were very well able to choose optimal technologies for themselves.

Lesson 2: There are some weird processes at work inside marketing departments that made them continuing promoting technologies like X.400 and X.25 to the outside world and refute offering TCP/IP, when at the same time the internal IT departments, Network division and R&D labs were all already installing and operating networks based on TCP/IP.

Lesson 3: When taking the internal investor perspective throwing bandwidth at the problem was definitely the way to go.

The project director (a former division CTO, quite influential) had to push it through the districts throat, his main argument: “Anyone that can afford a 64 kbit/s leased line today at current prices, will be able to afford a 155 Mbit/s at then end of the projects date (it had a roll-out scheme of 7 year, as it was a complete overhaul and replacement project).

With respect to ATM we had shelved that in 1991 until at the end of 1993 SURFnet came asking for it. Also in our R&D lab a researcher Richard de Vries, had developed GAUSS [Grab Any Unused Slot Switch] the only non-American switch architecture I found described in Craig Partridge Gigabit Networking book.

We did deploy on a limited scle DQDB and FDDI on fiber networks, but they had the obvious ring architecture problems. The best selling item in the high end then was the ADC Magnum (3 x 10 Mbit/s Ethernet and some TDM through a proprietary multiplexer and 34 or 45 Mbit/s line system) which we hooked up for corporate customers on “tacitly sold” dark fiber links. Formally dark fiber was against policy, but it was allowed as there was no practical alternative.

When someone today observes “lightpath” backbones with multiple Gigabit Ethernets running through 10 Gbit/s SONET/SDH systems or devices like the ADVA systems or Barrolo of Cisco, this looks tremendously like a built out ADC Magnum to me. There is less new under the sun, than most imagine.

The issue has never been that inside telco’s there were no people who “did get it”. The issue was they bounced often into “official policies” even when they had a high-ranking position. And then had to force it through, an effort most were not succeeding in.

In 1992/1993 the main commercial paradigm in wide area networking at that time was still about X.25 & OSI, IBM SNA traffic and discussions about carrying IPX (Novell) network traffic and something about networks for Lotus Notes.

The weird thing was thus that major internal divisions already ate very different dogfood (TCP/IP) in 1993, and at a huge scale, than the marketeers thought the market really wanted …

It is this internal intellectual disconnect that hampers most incumbents.”


Hey what do I know about high finanance? A few months ago I read that one reason that workers pay hasn’t budged is that, under the Bush, Cheney, Rove Abramov oligarchy, the fortune 500 has been having a field day with usinmg profits for stock buy backs and taking full advantage of Republican loop holes to rob the treasury of needed tax revenue whilst enriching the exceutives and the shareholders. Stock buy backs push earnings artificially hjigher and creat buy conditions that fuel another asset bubble in equities just as the air is going out of the housing asset bubble.

I complained below about the Morris trust asking what was going on. A reader advised: Gordon, the street is rigged with so many loopholes for large corporations to reap more profits and sidestep tax obligations that it’s enough to make an honest man want to take to a life of crime. See yesterday’s release of IBM’s recent financial maneuver, nothing short of profit laundering, to sidestep tax liabilities.

lIBM Hones the Stock Buyback
May 30, 2007; Page A4 Wall Street Journal

International Business Machines Corp. said it has spent $12.5 billion to buy back its stock in one of the largest uses of an “accelerated share repurchase,” a tactic that allows a company to boost per-share earnings more rapidly than it would using a conventional buyback approach.

In the complex deal, IBM created a Netherlands unit to finance the stock repurchase with overseas earnings and avoid having to repatriate funds, which would make them subject to higher U.S. taxes.

IBM said it bought 118.8 million of its shares at $105.18 apiece from three investment banks that borrowed the shares from investing institutions, in a typical pattern for accelerated plans. The banks, in turn, will purchase an equivalent number of shares on the open market over the next nine months, and return the borrowed shares. IBM may pay more money to the banks if the average price of IBM stock rises during that period.

The overseas element, lawyers said, is an unusual twist. IBM established a wholly owned subsidiary in the Netherlands, IBM International Group, to own its international operations and repay the loan taken out by IBM to buy the shares. IBM International will pay principal and interest on the loan with cash generated by IBM International outside the U.S.

IBM treasurer Jesse Greene said the offshore tack, which he said has been used by “a few” other companies,” will allow IBM to lower its taxes by using foreign units’ funds without having to repatriate them to the U.S. Repatriation often results in a tax bill from the U.S. if the monies being returned are profits that have been taxed abroad at a lower rate.

“There’s an opportunity to use some of that cash overseas without being taxed again in the U.S.,” he said. He declined to disclose the difference between IBM’s U.S. and international tax rates. For the first quarter, IBM’s world-wide tax rate was 29.5%.

Accelerated share repurchases have become increasingly popular with big companies doing buybacks. The accelerated plans immediately reduce shares outstanding, increasing earnings per share. However, critics say the accelerated plans can hurt companies if the stock rises sharply, forcing them to pay more than expected later.

The share purchases equal about 8% of IBM’s stock outstanding and were authorized under a previously announced plan to buy $15 billion in shares. IBM said it borrowed $11.5 billion for the initial purchase from a group of banks and will pay $1 billion in cash.

IBM announced the repurchase after the close of regular trading. IBM shares rose 73 cents to $105.91 in 4 p.m. New York Stock Exchange composite trading and another 8 cents to $105.99 after hours.

IBM said that as a result of the stock buyback, it expects 2007 growth in earnings per share of 13% to 14% compared to the 11% forecast that it made when it reported earnings for the first quarter. It said the reduced shares will account for two to three points of growth, or 14 cents to 17 cents a share. Three cents of the benefit will occur in the current quarter with the remainder in the second half of the year.

Mr. Greene said in an interview that IBM believes “we’ll get a very similar result” to a traditional share repurchase program on the open market. He noted that IBM isn’t spending all the authorized $15 billion, and he said it still has $1.4 billion available under a previous buyback authorization.

IBM announced the planned buyback at its annual meeting in April, and the stock has risen since in anticipation of the reduced share float, analysts say. IBM touted the big buyback as a way to take advantage of its strong cash flow and return money to shareholders.

My list has been discussiiong the potential longevity of the wireline copper plant.

Tom Evslin wrote:

The way this plant is removed from the balance sheet is by creating a reverse Morris trust and using it to convey these underperforming assets to a small company before they lose more value and absorb more cash either for upgrade or maintenance. This neatly avoids a writedown of these assets as well. And allows capital be concentrated on fiber.

This is not theory; this is the proposed sale of the Verizon assets in Northern New England to Fairpoint.

Can Fairpoint continue to milk these assets or wring any profit from them at all? Not for long IMHO.

At least in rural areas, substantial upgrades are needed to deliver what will be minimal broadband in a year or two or to deliver broadband over DSL to a greater share of the market. Fairpoint still pays through the nose to operate and maintain this network because it is accepting Verizon’s union contract and pension obligations as part of the deal.

At the urban end of the market, Burlington Telecom has made great strides supplanting both Comcast and Verizon as service providers with their fiber to the home and triple play. Other Vermont towns are lining up to work with Burlington Telecom to the same end. Note that it is the cream of the market that Verizon/Fairpoint loses here in terms of LD revenue, access charges, feature charges, and DSL (ironically in an area close to the COs where they can deliver relatively good broadband over DSL today)

Comcast IS being aggressive with continued cable rollout in Vermont and anxious to show that there is a private solution to some of the State’s telecommunications need. They take DSL potential and current access line income from Verizon/Fairpoint.

In the very rural market where the copper would need the most work and where Comcast is not going, radio is an increasingly good alternative. WISPs may resell telephony. At the least, they make their customers aware of the saving possible with VoIP because it helps pay for a broadband connection on the family P&L. More lost income to Verizon/Fairpoint.

Verizon - understandably - seems to be segmenting its territory into places where the economics are right for upgrading to fiber and the places it wants to be out of. Those are the places where it leave what I believe will quickly be a non-self sustaining copper network behind. The pension obligation and the cost of lay offs and much of the cost of maintenance are fixed while the revenue from that copper will go relentlessly down.

David Isenberg: Whats a Reverse Morris trust?

Tom Evslin: Below is from the press release. Note that Verizon sheds debt, jobs, and obligations - reaps cash. The new subsidiary has $1.7b of new debt which will have to be serviced from the shrinking copper landline revenue and will interfere with their ability to raise further capital to upgrade that plant either as copper or fiber. Note also that wireless not part of the deal.

“Verizon’s local exchange and related business assets in Maine, New Hampshire and Vermont will be transferred to entities owned by a newly organized, wholly owned subsidiary of Verizon. This new subsidiary will incur $1.7 billion of newly issued debt and will then be spun off to Verizon’s stockholders and immediately merged with and into FairPoint.

“When the merger is completed, the companies conducting the Maine, New Hampshire and Vermont telephone and related business operations will be subsidiaries of FairPoint. The combined business will be managed by FairPoint’s executive team.

“Upon the closing of the transaction, Verizon stockholders will own approximately 60 percent of the new company, and FairPoint stockholders will own approximately 40 percent. In connection with the merger, Verizon stockholders will receive one share of FairPoint stock for approximately every 55 shares of Verizon stock held as of the record date. Both the spin-off and merger are expected to qualify as tax-free transactions, except to the extent that cash is paid to Verizon stockholders in lieu of fractional shares.

“Verizon Communications will not own any shares in FairPoint after the merger.

“The total value to be received by Verizon and its stockholders in exchange
for these operations will be approximately $2.715 billion. Verizon
stockholders will receive approximately $1.015 billion of FairPoint common
stock in the merger, based upon FairPoint’s recent stock price and the terms
of the merger agreement. Verizon will receive $1.7 billion in value through
a combination of cash distributions to Verizon and debt securities issued to
Verizon prior to the spin-off. Verizon may exchange these newly issued debt
securities for certain debt that was previously issued by Verizon, which
would have the effect of reducing Verizon’s then-outstanding debt on its
balance sheet.

Cook’s Edge: WOW! I am not an accountant nor an equity analyst. But Rod Hall, James Enck - are you reading this? To my unqualified brain this has overtones of credit and debt swaps from the sub prime market. Or maybe even Enron? No surely I am wrong. But I still must ask what does this do to the average persons ability to understand Verizon’s debt structure? Muddies it - I’d say!

“The transaction includes Verizon’s switched and special access lines in the three states, as well as its Internet service, enterprise voice CPE (customer premises equipment) accounts, and long-distance voice and private line customer accounts (for customer private lines with beginning and ending points within the three states) that Verizon served in the region before the 2006 merger with MCI, Inc. The transaction does not include the services, offerings or assets of Verizon Wireless, Verizon Business (former MCI), Federal Network Systems LLC, Verizon Network Integration Corp., Verizon Global Networks Inc., Verizon Federal Inc. or any other Verizon businesses in these states.”

Tom sent me this further Morris Trust definition: ” Tax-free section 355 spin-off or split-off transactions, combined with an acquisition of either the distributing or distributed corporation, have become an increasingly popular acquisition technique. This two-step transaction, commonly referred to as a Morris Trust or reverse Morris Trust transaction — depending on the form chosen, permits a corporation’s shareholders to sell a wanted or unwanted business of that corporation to an acquiring company in exchange for stock of the acquiring company without any party to the transaction incurring a tax liability. While the transaction can take a number of different forms, it most typically involves a corporation distributing stock of a subsidiary (which owns the assets that the acquiring company is not interested in acquiring) to its shareholders, followed by a sale of stock in the now slimmed down distributing company to the acquiring corporation in exchange for acquiring company stock in a tax-free reorganization.”

From http://www.ffhsj.com/cmemos/0076257.htm

Cook’s Edge: More recent info on Morris trust is found in Reviving the Reverse Morris Trust for Mergers
Reverse Morris Trust transactions gain popularity on the IRS’s declaration that Revenue Ruling 70-225 is obsolete and the relaxation of the ‘D’ reorganization requirement.

David has been spreading his Smart Letter 100 around the net. Net Neutrality. Oh GOD that again. I didn’t read it. I am afterall I know the arguments. I had just put Jim Crowe’s (Levl 3 CEO) take on my list… Good because he says use antitrust and the courts and stay away from Congress and especially from the FCC.

Ok - but David himself pointed out that since Ji m’s mid march statemenmt anti-trust has been watered down. Other crack attornies chimed in that you needed whole tool kit of which anti-trust was but a single hammer. But every think has been said about this that can be said I thought. And David mentioned his new essay again.

I took a deep breath and read Smart Letter 100 from beginning to end.

The essay is outstanding. David has taken all the parts that we know by heart and crafted a superb argument and structure that I think is NEW and Original. So read it and figure out how to help implement. Bottom Line is that structural separation is the only acceptable goal.
Heavy duty teaching of others is required. A recommended tool in this case is software like mind manager

Make a diagram of the ideas - give them a picture to look at like the one from JP Rangaswami here.

And check out a whole bunch maps that i just discovered here. Also from Reboot 8 a year ago.

Click on the smaller map on the right to run through about a dozen such

Thoughts on Deriving a Set of “Principles” Designed to Support a Multi-Dimensional Matrix of Connectivity


We are caught in a vortex of change that is picking up speed. Within the vortex the number of uses for the net mushrooms and the ways in which they interconnect merge into a finely spun mesh. People like David Reed, Nico Baken and Sheldon Renan have been trying to describe at a very high level what’s going on. When I sent David the short essay that forms part one below, he responded that he recognized what I was describing and added that he preferred to call it the “liquid phase” of networks. Nico describes the emerging interconnected network of the 21st century as the “mycelium” borrowing the name of the fibrous web that connects the underground root systems of mushrooms. Sheldon Renan calls the system that he has been structuring in his mind “netness.” I suppose I should look for my own unique metaphorical name. For the time being the headline title above will have to do. The point is that, with George Dyson’s estimated production of 15 billion new transistors every second, “intelligent devices” grow more ubiquitous in our environment by the hour. The ubiquity is such that it gets difficult not to imagine the phase change of which David Reed speaks. David, in a communication with me, spoke of a “liquid phase” of networks where we are like fish swimming in a sea of connectivity. How would one explain the meaning of all this to someone who was previously unaware?

One might lead off with the following ten-point manifesto:

1. Interlinked intelligent devices surround our daily existence and are creating a newly connected fabric without which our civilization will soon be unsustainable.

2. Our prior fabric of mechanical based analogue devices rested on an economic system where a publicly supported set of infrastructures enabled the commerce necessary to develop and sustain individual corporations supported by equity markets.

3.These infrastructures were basic utilities that were treated by government policy and by the law differently than private equity based businesses. They were roads; water and sewage; electricity and basic telecommunications. They were supported by taxes in the recognition on the part of the government that it was investing in an infrastructure that would not, could not and should not, on its own turn a profit – bit that it would make possible fundamental and positive change in the wealth of the populace that it – the government – was elected to serve.

4. With an explosion of microprocessors joined together via interlinked networks running common protocols a new digital all-enveloping “fabric” is maturing.

5. This fabric – from the photonic streams in fiber through the protocol layers that the photons represent - is becoming a new foundation for the commerce of ideas and trade in “things.” It underlies and connects all the sectors of a modern economy as surely as roads and electricity.

6. Therefore it demands treatment as publicly supported and funded utility that exists as an enabler for all other parts of the economy.

7. Leaving it under the control of corporations with sole responsibility to equity shareholders motivates these companies to use the technology in a way that maximizes shareholder income while restricting the ability of the infrastructure to be used in a way that creates wealth and new opportunity for those customers who pay for access to the network. This is fundamentally anti-democratic.

8. The economic interest of the corporation controlling the network and those of the larger society diverge. It is not in the economic interest of the present telcos and cable cos to act in a way that promotes the public good.

9. Since this conclusion brings up the same issues that caused the earlier utilities to be seen and regulated as vessels for the common good, it is incumbent on all of us to work towards an understanding of how to create publicly and, most likely, locally owned and controlled entities that can enable the most cost efficient networking of all these devices.

10. In order to do this we must better understand the pervasive extent of the technology transformation and web of connectivity that is being described by people like Nico Baken, David Reed and Sheldon Renan. An improved understanding maybe used to inform policy makers and investors in order to enhance the likelihood of decisions that will foster rather than stifle opportunity to create opportunity and wealth in this new world.

Those societies that grasp and move forward to implement these ideas will become stronger. Those that fail will be come weaker.

Published as the prologue to my July issue yesterday.

A valued reader in Amsterdam commented today:
Somebody built himself something in some shed somewhere…

Source, with pictures is found at:

Slurpr - the Mother of all Wardrive Boxes

There we read:

Whenever I go to Amsterdam, every once in a while I meet up with Boris. Now our meetings are always inspiring (I guess for the both of us ^_^), full of ideas, about stuff we can do and a couple of months ago Boris came up with the following (he also blogged about this)

“At this moment I can see 8 different signals. Some are closed networks but most are open and available. I can only connect to one at a time so I tend to just pick the one with the best signal. But what if I could connect to all the networks at the same time and combine their bandwith?

Yeah, that is what I need! A big, fat access point with a large antenna and a bunch of Wi-Fi cards that automatically connect to the strongest signals it can pick up. Then it would combine all these signals into one FreeLoading Broadband Channel for me to use.”

So, in the end, I guess I was the one up for the challenge and now, two days ahead of The Next Web Conference it’s time to show the world what we’ve got!

We call it: the Slurpr. (The box already has its own domain name too!)

What is it? Well, I (re)searched a whole lot of available hardware before I decided this is what this magic box should be:

click to enlarge (picture heree)

It’s a nice black box of course, but what’s inside? The inside consists of a Routerboard 532A motherboard with 564 daughterboard.

That on it’s own gives the following specs:

CPU MIPS 32 4Kc based 266MHz (BIOS adjustable from 200 to 400MHz) embedded processor
Memory 64MB DDR onboard memory chip
Root loader RouterBOOT, 1Mbit Flash chip
Data storage 128MB onboard NAND memory chip
CompactFlash type I/II slot (also supports IBM/Hitachi Microdrive)
Ethernet ports One IDT Korina 10/100 Mbit/s Fast Ethernet port supporting Auto-MDI/X, eight VIA VT6105 10/100 Mbit/s Fast Ethernet ports supporting Auto-MDI/X
MiniPCI slot Six MiniPCI Type IIIA/IIIB slots
Serial ports One DB9 RS232C asynchronous serial port

Now that is already a nice piece of equipment, but doesn’t bring us any nearer to a solution of Boris’ problem here, so I added six mini-PCI cards (and a quite famous 4GB Compact Flash card ^_^) , three of which are visible in this picture:

Big Snip

Cook’s Edge: there is a lot more there at the link. I am no expert in this technology - so don’t take my word for it - check it out

A subtitle to the title above is probably needed - in which case here it is

Because just think of the disaster we’d be facing if ATT owned all that fiber!

T would have a nearly impregnable silo fortress that it would use on behalf of it share holders. Their perceived gain would likely be smaller than imagined because their new monopoly fortress would set back our economy a decade.

It would also make our communications lifelines more brittle by placing most of our eggs in a dinosaur sized basket.

Now we know one of the things that JP has been up since he joined BT last fall.

Last night a list member wrote: BT recently released their Web21C SDK. Here is a link to some of the services that are possible via Web21C.

JP Rangaswami responded: “We have brought various component subteams together recently and that gives us critical mass. I will do my best to field questions from you guys in the meantime. I have the privilege of leading the teams, albeit with soft hands.”

Then early this morning London Time, JP made the following response to questions from the list. What follows are my own comments on what JP said:

JP Lee, thanks for your comments, much appreciated. We are still learning and have a long way to go.

Let me first try to clarify something Gordon said. I don’t want to steal other peoples thunder. I joined BT because of the cool things they were trying to do, and to get involved in those things. The key point is that they were doing them anyway.

Cook’s Edge: True. Not sure of what quote on my part JP is referring to - I hope I didn’t make it sound like BT could now do cool things JUST because he was there. The ground was already well plowed and fertile before his arrival … :-)

JP Frank asks whether what we are doing is another insidious way to create lockin. I hope not. We want to be global, open, real time. Any device any connect any data type anywhere any time.

Cook’s Edge: If I may butt in - I think I know JP’s views pretty well from both my original interview, and many hours reading his blog… and even now that i think about it from the very brief face to face conversation when I met him at supernova 2 years ago. I remember two snippets -both significant. ! “i am here to learn” - 2. I want to give the banks customers control over their information and its management. JP - seems to me is about as anti lock in as they come.

JP: We want to do this in a way that customers stay with us because they like what we do, and not as a result of being forced to.

Cook’s Edge:Whoa! there you go! make your customer happy - so happy they wouldn’t think of leaving - very different form of lock in.

In my opinion Fred Goldstein’s remarks about the BT Dec history will make it easier for JP to understand parts of BT with which he must deal - in my opinion there will be many good earnest people in BT who have vestiges of ownership of these projects embedded in their thought. If JP didn’t know that any of these events ever happened (and why would he?), he could run a risk of stepping on toes through absolute inadvertence.

JP:That is a big goal. We are bound to get things wrong. Open platforms will attract lockins as well as frees. But we will learn and improve. The focus is on making the customer experience better, both in quality as well as in cycle time.

You will make my job easier by critiquing what we do at each stage, so I look forward to comments. Bob Frankston and Doc Searls have already begun, I had the opportunity to spend time with them last week.

Cook’s Edge:I think i can underline what is going on here with the closing paragraphs of my interview with Simon Lin - done exactly a week after the one with JP in the fall of 2005. Those two conversations utterly changed the way i saw this world.

But savor what Simon says - let it slosh over your mind and see if it does not elevate your vision.

Lin: Yes. I think that my strategy was correct. Each person’s technology silo tends to be their fiefdom. But meanwhile there is global infrastructure out there, and whatever infrastructure on a global level reaches a critical mass will become dominant.

I saw that this critical mass could not be done by the commercial sectors – by definition because they cannot collaborate. Their product family must dominate. This happens by the very definition of what capitalism is. In this context academia becomes a very important balancing force. For us the power of open source enables us to leave the commercial sector behind if they do not suit our needs. I realized how open source could be used in an infrastructure way in building an open applications grid platform.

Look at my closing slides for further evidence of my beliefs – data, collaboration, and complexity reduction on the side of things. Lao Tsu has the most important vision –

lead by enabling others to feel that they have accomplished goals that they want and for which they take the credit but which goals are the examples you have set.

Then you will find that “Not to own anything is to own everything.”

An apt exchange on my list this evening.

Kevin Barron [UC Santa Baraba] wrote: Bandwidth alone can be a red herring. Yes, the case can be made for uncompressed (after all, compression has always been a kludge) HD both audio and video, along with machine to machine communication (no more human bottleneck). 1Gbps today is easily accounted for; soon 10Gbps will similarly be easy to fill (CENIC and I2 are already using 10Gbps interfaces).

Fred Goldstein [Ionary.com]The Law of Diminishing Marginal Utility is very strong in the video space. Sure, you can use ten times the resources or more for uncompressed video, but do you get much value out of it? Does it warrant the cost? I suspect that in a truly competitive market (what this FCC has killed), it would rarely be thus.

Kevin Barron More importantly, as Tom West pointed out, it’s about ownership — free speech is only free when you own the means (printing press, etc). Being unconstrained by modems and compression is every bit as important as being unconstrained by other factors.

Fred Goldstein Modems and compression are not a threat to free speech. Deep Packet Inspection is a grave threat.

This FCC’s policy is to allow only two printing presses, and proclaim that there is thus sufficient freedom of speech.

I have never pretended not to have biases. I like to “wear” mine on my shirtsleeve. Why do I say that Level 3 is a “national treasure?” I do because it holds the most fiber of any network in North American and was built from the ground up as an end to end IP network. Level 3 management from its inception has remained true to the concept of delivering the most wholesale bits for least cost. Further more unlike its fiber based competitors Qwest and Global Crossing Level 3’s management remained squeaky clean. No Joe Nachio there thank you! [Disclaimer: Level 3 is a subscriber but so is one of the 3 remaining ILECS.]

I have been frustrated with Level 3 because I have long been of the opinion that they have not done an adequate job of getting their story “out.” This opinion was reinforced recently when at a conference I asked a well respected professor who has a very excellent book out on the social economic and political benefits of the internet whether he was aware of Level 3 and the role iot played in making possible what his book described. He was unaware and looked a bit worried when I told him my concerns.

I have followed Level 3 for many years but since i don’t enjoy reading SEC 10Ks, I have followed from a distance being aware of their metro acquisitions over the last 18 months but not having a clear picture of the whole company. Turns out that such a picture is there. And what a picture! On March 14 2007 Jim Crowe and the directors of the four business units, plus Kevin Ohara on Markets and Strategy and Sunit Patel on Finance presented a four hour long tour de force.

Scroll to the bottom of the page to active the link for the web cast. I did this morning. Unfortunately my Comcast bandwidth was barely adequate and when James Crowe was answering questions at the end and summarizing company strategy - I was so struck by what he said about vertical integration that i sopped the webcast and backing it up to 14:47 in his remarks tried to restart. Failure - a network clog on my end of the duopoly. I was please by the way to hear Mr. Crowe call it a “duopoly.” anyway i managed to grab the slide that he was explaining and will post it.

For the slide deck click here. Let me say that in general the pdf, even though it is rigidly copy protected, is demand reading. Level 3 truly does lay it all out in 134 slides totally 3.5 megabytes. Grab them - read them. They tell a compelling and impressive story of the only 21st century network in North America and Europe. (BT says its building one such IP based end to end network. I need to do a copmparison.)

I am no expert of making comparative judgments of these investor shows. However, I have asked a couple of colleagues who have seem many such. They say that Level 3 does a very admirable job of letting it all hang out by comparison to what you find from incumbent carriers.

I can’t prove it but if you look at Level 3’s impact on the economy of the USA and especially do so from the point of view of its impact across economic sectors, I wouild guestimate that the existence of Level 3 adds at least one per cent per year to the GDP of the country.

If I were in charge of things, not one of the FCC commissions would be allowed to leave their office until they could demonstrate a thorough knowlege of this material. Same thing for every state PUC! On the other hand - if I were in change, the home page of Level 3 itself would highlight the slide dec and web cast. Burying it on the investor relations page does the company a disservice.

Here is the Crowe slide for which i tried but failed to capture the voice. The slide itself however is quite informative.


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