The latest news from the Motley Fool: Who's in the telecom loop? - Business - News - The Independent

The latest news from the Motley Fool: Who's in the telecom loop?

The Motley Fool started as an irreverent investment newsletter and has grown to become one of the most popular personal finance and investment websites. Anyone who follows its philosophy is called a 'Foolish investor'.

With talk of high-speed internet access on so many people's lips, it'd be a very isolated investor indeed who hasn't thought of investing in the telecommunications business at sometime. New and improving technologies have always been a good target for investors (but more risky than some plays, perhaps, as technologies can fail). Internet firms have been a big favourite in recent years but have faltered more than a little these past few months. They are very hard to value at present, as most aren't making any profits yet.

However, telecoms is a whole different game. It's an industry that has been with us for more than a century, and many big players are very well established. But it is still growing fast.

One problem is that it is hard for Foolish investors to work out who's going to be providing the lion's share of all this new telecoms technology. We hear talk of wondrous devices called "ADSL" and "cable modems" and all manner of magic, but how many of us can really find out what this all means without having to delve into masses of impenetrable technical jargon?

In fact what really counts is a basic understanding of what each technology can do, and what are its commercial advantages. The present problem is that ordinary phone lines are very slow at transferring data, when the demand for high-speed data links is increasing rapidly. These are often known as the "local loop" as they connect customers to the local exchange and, having two copper wires, they are, well, loops. There are really only two main ways of improving them. One is to up the speed of the services on copper wires, the other is to replace the copper with something better, such as fibre optics.

The copper local loops are owned by British Telecom (BT) so it is no surprise it favours improving them, not replacing them - certainly possible, as there is a suitable new technology that only needs an upgrade to the equipment at each end of the line, but which will work well on copper. The most popular way to do this is an "asynchronous digital subscriber loop" (ASDL), and it is very fast. "Asynchronous" means it's slower sending out from our homes (but still more than 10 times the speed of current modems), and faster for data coming back (about 100 times faster), which is ideal for the internet. BT plans to start rolling out ADSL within the next few months.

But the cable companies favour the cable modem, potentially more than 150 times the speed of ordinary modems, it's claimed. Cable modems are being trialled, with the intention of rolling them out by year end.

We will have both technologies in parallel for quite some time, but which will win out in the long term? The commercial advantages of the competing companies are very important for Foolish investors, possibly more so than the technological differences themselves.

Despite more cable TV, cable networks are still only accessible to 50 per cent of UK homes, and only 16 per cent actually use them. But BT's local loops are available to every home in Britain, and BT provides 85 per cent of local phone access.

BT's near monopoly might sound like a huge advantage over cable, but that is where the Office of Telecommunications comes in: Oftel requires that BT provide competitors access to their local loops, so consumers who choose to go for ADSL will have a choice of supplier.

So which companies will be leading the industry in the next century, and which should we invest in? Well, that is for individuals to decide, but the Motley Fool hopes this discussion will help you to understand the issues a little more clearly.

n Motley Fool: www.fool.co.uk

News
Paper trail: the wedding photograph found in the rubble after 9/11 – it took Elizabeth Keefe 13 years to find the people in it
newsWho are the people in this photo? It took Elizabeth Stringer Keefe 13 years to find out
Arts and Entertainment
Evil eye: Douglas Adams in 'mad genius' pose
booksNew biography sheds light on comic genius of Douglas Adams
Sport
FootballFull debuts don't come much more stylish than those on show here
News
i100
PROMOTED VIDEO
Life and Style
Kim Kardashian drawn backlash over her sexy swimsuit selfie, called 'disgusting' and 'nasty'
fashionCritics say magazine only pays attention to fashion trends among rich, white women
Arts and Entertainment
TVShows like Agents of S.H.I.E.L.D are little more than marketing tools
Arts and Entertainment
Hit the roof: hot-tub cinema east London
architectureFrom pools to football pitches, rooftop living is looking up
Travel
travel
News
The ecological reconstruction of Ikrandraco avatar is shown in this illustration courtesy of Chuang Zhao. Scientists on September 11, 2014 announced the discovery of fossils in China of a type of flying reptile called a pterosaur that lived 120 millions years ago and so closely resembled those creatures from the 2009 film, Avatar that they named it after them.
SCIENCE
Life and Style
tech
News
ebooksAn unforgettable anthology of contemporary reportage
Arts and Entertainment
Matisse: The Cut-Outs exhibition attracted 562,000 visitors to the Tate Modern from April to September
art
Life and Style
Models walk the runway at the Tom Ford show during London Fashion Week Spring Summer 2015
fashionLondon Fashion Week 2014
News
Kenny G
news
News
peopleThe black actress has claimed police mistook her for a prostitute when she kissed her white husband
Life and Style
techIndian model comes with cricket scores baked in
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

SQL Developer - Watford/NW London - £280 - £320 p/d - 6 months

£280 - £320 per day: Ashdown Group: The Ashdown Group have been engaged by a l...

Senior BA - Insurance **URGENT**

£400 - £450 Per Day: Clearwater People Solutions Ltd: **URGENT CONTRACT ROLE**...

Training Coordinator / Resource Planner - City, London

£35000 - £38000 per annum + Benefits: Ashdown Group: Training Coordinator / Pl...

Data Governance Manager (Solvency II) – Contract – Up to £450 daily rate, 6 month (may go Permanent)

£400 - £450 Per Day: Clearwater People Solutions Ltd: We are currently looking...

Day In a Page

Mystery of the Ground Zero wedding photo

A shot in the dark

Mystery of the wedding photo from Ground Zero
His life, the universe and everything

His life, the universe and everything

New biography sheds light on comic genius of Douglas Adams
Save us from small screen superheroes

Save us from small screen superheroes

Shows like Agents of S.H.I.E.L.D are little more than marketing tools
Reach for the skies

Reach for the skies

From pools to football pitches, rooftop living is looking up
These are the 12 best hotel spas in the UK

12 best hotel spas in the UK

Some hotels go all out on facilities; others stand out for the sheer quality of treatments
These Iranian-controlled Shia militias used to specialise in killing American soldiers. Now they are fighting Isis, backed up by US airstrikes

Widespread fear of Isis is producing strange bedfellows

Iranian-controlled Shia militias that used to kill American soldiers are now fighting Isis, helped by US airstrikes
Topshop goes part Athena poster, part last spring Prada

Topshop goes part Athena poster, part last spring Prada

Shoppers don't come to Topshop for the unique
How to make a Lego masterpiece

How to make a Lego masterpiece

Toy breaks out of the nursery and heads for the gallery
Meet the ‘Endies’ – city dwellers who are too poor to have fun

Meet the ‘Endies’ – city dwellers who are too poor to have fun

Urbanites are cursed with an acronym pointing to Employed but No Disposable Income or Savings
Paisley’s decision to make peace with IRA enemies might remind the Arabs of Sadat

Ian Paisley’s decision to make peace with his IRA enemies

His Save Ulster from Sodomy campaign would surely have been supported by many a Sunni imam
'She was a singer, a superstar, an addict, but to me, her mother, she is simply Amy'

'She was a singer, a superstar, an addict, but to me, her mother, she is simply Amy'

Exclusive extract from Janis Winehouse's poignant new memoir
Is this the role to win Cumberbatch an Oscar?

Is this the role to win Cumberbatch an Oscar?

The Imitation Game, film review
England and Roy Hodgson take a joint step towards redemption in Basel

England and Hodgson take a joint step towards redemption

Welbeck double puts England on the road to Euro 2016
Relatives fight over Vivian Maier’s rare photos

Relatives fight over Vivian Maier’s rare photos

Pictures removed from public view as courts decide ownership
‘Fashion has to be fun. It’s a big business, not a cure for cancer’

‘Fashion has to be fun. It’s a big business, not a cure for cancer’

Donatella Versace at New York Fashion Week