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All of the IXCs, especially fibre carriers, are being hit especially hard now that the perception of business data’s growth has slowed..

Now Level3 is facing difficult questions about whether or not they’ve actually built something that people need. While re-tooling their company away from Service Development towards Sales and Marketing can be interpreted by some as a reasonably positive move, that’s only the case if what they’ve already developed is golden and meets a real demand.

There is indeed a serious glut of bandwidth on the horizon and not too many avenues of escape. Among the many missed hurdles is the fact that consumer broadband growth is way behind projections. Video-on-demand Over IP, as a result, has failed to materialize. Voice Over IP is running only on closed, purpose-built IP networks, which further stifles the demand (Jeff is working on this).

These two applications alone accounted for what companies like Cisco, and their customers, believed would be the drivers of bandwidth into the future.

All of which leads one to wonder — what application, or what as-yet-unserved market, is going be data-hungry enough to pull these guys out of their nose dives? And how is it, in turn, going to make money?

Answer that and any VC will give you $20M.

In the interim, expect a lot more consolidation to start happening.

-Ian.

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