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[ NNSquad ] WSJ: Cash Is Turning Into a Hang-Up for Verizon
The FTC isn’t the only organization that should be taking a hard look at telecom practices, the SEC should also be asking hard questions.
I’ve long been saying that today’s telecom business is not viable and will soon have to face up to the consequences of profligate spending on redundant and costly infrastructure. As with the mortgage debacle the math is simple – what is missing is our willingness to suspend our disbelief. When there is a superabundance of bits how can they keep the price above cost? And today we have 2 or 3 or more broadband suppliers in each community and most of the capacity is used to emulate faux-broadcast. You only need the VoD technology and that runs over the IP that comes through my router. How long are we going to sustain spending large amounts of money when we already have 100x capacity in the physical infrastructure? There’s only so much video to fill up the pipes and that’s not where the value is.
As the article points out there still cash in cellular but how long with that last as the competition shifts to pure data with less ability to create services beyond the raw bits and pressure to turn every device into a router. Already people are realizing that they can turn their 3G connection into a IP access point to avoid having a separate account for their iPad and even then the iPad is month-to-month.
The money is no longer in owning the network – it comes from using networks. Note the plural – you can’t be limited to your networks. In fact owning a network becomes a liability as there is no special advantage in owning your own network when you don’t need QoS in order to make applications work at all. The story continues to get worse – VoD is giving way to direct relationships with content providers such as HBO. The only role Verizon and Comcast play is a broker for billing.