It's begun to move switch, router, and optical network equipment companies, and will soon revolutionize the service business. Covad will find ways to keep the price the same and deliver more and more capacity, as opposed to telcos who say 'I'm giving you more so I can charge you more,'' he says. When you are in a market driven by Moore's Law, it doesn't pay to be out of step. In other words, customers prefer to buy the higher performance versions rather than spend less money. For the carriers willing to seize the opportunity, it's apparent that demand for data bandwidth is elastic too - in fact, it's outpacing Moore's Law.
Demand is high, and they hope to maintain profit margins without dramatically improving service.
Some argue that the Bells have no need to feel out of step, that connections from the home to the Internet are fifty times faster today than they were a decade ago. But that's not because phone service has improved. It's because modem manufacturers abide by Moore's Law. The teleopolies are stuck in a culture built for single digit growth. One piece of legacy they carry is customers - even if they figure out how to offer service at half price, it's hard for them to make a decision to cut revenue in half.