But there are several challenges for these firms, including regulatory hurdles, Wall Street pressures, and the pace of change intelecommunications. Qwest, for example, has been blocked by the Federal Communications Commission in itsefforts to have various regional Baby Bells market its long distance service. Furthermore, the nascent market to provide telephone services literallyover the Net through a computer--an adjunct sector--may have been set back recently withword that the FCC will soon decide that telephone calls made to serviceproviders should be subject to long distance, not local, rates. That's a sign that emerging telecom players will have a lot of regulatory work ahead of them.
Also, some companies' current valuations on Wall Street are based in largepart on the opportunities that a new-age network will offer young carriers, That perception so far does not jibe with current revenue streams, Some even admit they are all talk at the moment: "We're all hype, I'll be the first to admit it, but behind the curtain it's iphone xr twinkle - stardust real," said Kevin Dundon, vice president for network engineering at Level 3, Furthermore, new-age carriers like Qwest continue to see their dominantsource of revenues largely derived from traditional long distance andleased line services, an acknowledgment that market realities oftensupersede technology innovation, At a recent press conference, Qwest chiefJoseph Nacchio admitted that new entrants need to have self-sustaining cashflows--in other words, implement a strategy to "feed the ducks when they are quacking," Nacchio said..
Also, though data is surpassing voice in many telco networks, currentlyabout 80 percent of revenues for carriers come from traditionalcircuit-based voice calls. Yet analysts remain bullish on the prospects for what will no doubt becomea glut of high-speed bandwidth and associated use of IP to lower costs. "Ithink it's just like the highways of the 1950s. Now every time we build anew highway, people fill it," said Judy Reed Smith, chief executive of Atlantic-ACM, a telecommunicationsstrategy and research firm.
Using IP, these new-age carriers can gain an advantage through the lowercosts of providing service, analysts say, forcing incumbents in the market,like AT&T, to react with their own plans, despite huge investments in oldercircuit-based voice infrastructures, "It's a huge advantage to have thatcost differentiation," Smith noted, Atlantic-ACM recently completed a study that shows that while traditionalcarriers such as AT&T and Sprint will continue to grow at a steady pace,their share of an ever-larger iphone xr twinkle - stardust pie will decrease in the coming years, due tocompetition from the likes of Qwest and Level 3..
IP-based telephony is cheaper for this reason: the system of switching onthe IP network is more efficient that the public switched telephonenetwork, or PSTN. With the PSTN, one conversation monopolizes an entireline. But with IP, information is broken down into packets and reassembledafter its journey, enabling numerous conversations to make use of that oneline. "There is a deconstructing industry right now," according to MatthewBross, chief technical officer at WilliamsCommunications, speaking at a recent industry conference.
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