The TiE-Boston met on Monday, July 21st at the Burlington Marriot to discuss Federal Communications Commission's (FCC's) Triennial Review: Is it the Beginning of a New Telecommunications Revolution? The panel consisted of Dan Smith, Vice-President, Goldman Sachs, John White, Executive Director, Verizon Communications, and Bill Cadogan, Partner, St. Paul Venture Capital. The event was moderated by Raj Alur. There were about 250 people in attendance. TiE Charter MembersDesh Deshpande, Adi Guzdar, Puran Dang, Prahant Fadia, Vinit Nijhawan, Triveni Upadhyay and others were present at the event.

On February 20, 2003, the FCC adopted new rules for network unbundling obligations of Incumbent Local Phone Carriers. Raj set the stage rolling by defining the key terms used in the Triennial reviews for the audience, such as, UNE - Unbundled Network Element (are a requirement mandated by the Telecommunications Act of 1996. They are the parts of the network that the ILECs are required to offer on an unbundled basis. Together, these parts make up a loop that connects to a DSLAM or a voice switch (or both). The loop allows non-facilities-based telecommunications providers to deliver service without laying network infrastructure (copper/fiber)); UNE-P - UNE Platform (is a combination of UNEs (loop + port is SBC's definition, port involves switching which is bought per minute at a "cost" rate from the RBOCs) that allow end to end service delivery without ANY facilities); ILEC - Incumbent Local Exchange Carrier and RBOC - Regional Bell Operating Company.

Dan discussed the issue from the point of view of the investors. There is lot of capital but investors are very cautious about investment. The services offered need to generate cash flow before one can expect second round of funding. FCC is clearly bifurcating in two directions - old copper wire technology (highly regulated) and the new broadband network (open to investment and state reviews).

John talked about where Verizon is headed and focused on the topic of FTTP - Fiber To The Premises. He talked about the architecture where the fiber would connect to a 32-line splitter, where each customer will get the same information but pay independently. In this case the utilization factor will drive the profitability. Some of the FTTP challenges include:

- getting the systems that can work with the new technology and work with the legacy systems.
- get the economics to work and solve all the operational issues around an overbuild or an overlay.
- figure out how do you place (fiber), and what are the challenges in placing an aerial plant (where there is none).

Bill gave an excellent view of the industry from the perspective of a venture capitalist. FTTP is a $10-15 B industry over 5 years and signals the end of the telecom 'nuclear winter.' Is FTTP a 'Baby Step or Giant Leap'? Bill feels that the Winners will include:

- ILECS
- IXCs
- Fiber Optics Medium of choice for non-mobile
- Packet service/technology enabled broadband application

and the Losers will be:

- CLECs
- CATVs
- Narrowband copper
- TDM Services

However, for the ILEC solution to succeed will require a fundamental re-architecting of the network from CORE to EDGE at a potential cost of $200B to overcome the current challenges of:

- Transport margin continues to erode
- Lack of economical scalability to support
- Continued deterioration of ILECs business model and cost structure
- Current skill set not appropriate for tomorrow's business (higher level protocols, marketing skills)

Finally Bill presented The Entrepreneur's Dilemma which states that at current $150M exit value, a 10X return for VCs, and a 20% equity for management and employees, leaves the entrepreneur with about $12M of investment capital to develop a 1st generation product. Only those who can deliver will succeed. According to Bill, the Investment Opportunities exist in:

- Optical food chain
- Packet Transporting
- Next generation broadband access
- Software controlled terminal equipment and zero touch networks
- Service creation/management software
- Long-term Voice over IP (VoIP)

The questions focused on consolidations where the eye is on big mergers, which will determine the market and narrow the field down, and in the long run - enhanced service.

Overall, the speakers were effective and focused. Bill was definitely the highlight of the evening with specific do and don't, case studies and The Entrepreneur's Dilemma.

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