SIDGMORE SEES OPPORTUNITIES FEWER, DIFFERENT—BUT STILL HUGE

January 23, 2002 |Miscellaneous

SANTA CLARA, Cal. -- WorldCom Vice Chmn. John Sidgmore said remaining telecom upstarts still faced tough battle to survive, but continuing Internet growth sparked by broadband, wireless and especially voice-command innovations would create enormous business opportunities in e-commerce and other spheres. About-face in capital markets makes it appear “2 or 3 years ago we were all geniuses and now we're all idiots,” Sidgmore told SuperNet conference here Tues., adding that’s not so: “There will be huge opportunities in telecom -- but they're not the same opportunities as a few years ago.” His prediction that Internet would become most important technology advance ever remained on track, he said. As with last comparable innovation, automobiles, however, only few companies will survive shakeout but they will become giants that contribute great portion of GDP.

Tech market crash wiped out generation of companies based on great ideas, Sidgmore said, listing Covad, Exodus, Northpoint, PSI, Teligent, WinStar: “When the capital markets change, a lot of these terrific ideas go down.” What separated them from survivors was financing based largely on debt rather than equity, he said. Doomed companies’ premise was that technology advances would make them profitable through cost-cutting. They failed to take account that if they borrowed lot of money, interest payments remained same, Sidgmore said. Even now, he said, companies such as Allegiance, Level 3 and Williams are hardly out of woods because expense-saving technology represents, in form of switching and transport, only about 7% of voice costs and 15% of data.

On other hand, Internet growth should continue, little interrupted by CLEC and dot-com wipeouts, he said. Many write off e-commerce because it remains tiny in defiance of predictions, but huge companies continue plunging in because Internet undeniably presents enormous savings in acquiring and serving customers and processing orders, said Sidgmore, who also is CEO of e-commerce firm eci2. Wireless and local data explosions will drive increases in communications service revenues despite continuing voice declines, he said. Demand for bandwidth will continue to grow strongly, but revenue won’t necessarily increase at same rate. Broadband opens vast vistas of telecommuting, multimedia, teleconferencing, distance learning and telemedicine uses.

But Sidgmore reserved his greatest enthusiasm for voice- recognition, voice-activation and browser technologies, spurred by rapid advances in recent months, and for wireless. Voice innovations present means to attract the 75% of U.S. population that doesn’t use Internet regularly, he said. Separately, active messaging will push alerts on everything from home emergencies to flight delays and traffic conditions, based on thorough user profiles, he said. -- Louis Trager

SuperNet Notebook…

SBC is testing switched optical Ethernet equipment in its local network with unidentified large company and plans to deploy such gear in 2002’s 2nd half, SBC Technology Resources CEO Frederick Chang told SuperNet conference session in Santa Clara Tues. He said SBC was impressed with cost-effectiveness of technology, first used in long-haul networks.

Commerce Dept. Deputy Asst. Secy. for Communications and Information Michael Gallagher said Tues. he was impressed to learn businesses believed existing technologies could deliver ultra-high-speed data access to rural areas economically. He said executives meeting with him at SuperNet told him 50-100 Mbps service could be provided with technologies employing repeaters or long loops. Innovations should help promote universal-service goals at much lower cost, Gallagher said. SuperNet conference session was closed to media.