NNSquad - Network Neutrality Squad
[ NNSquad ] WSJ: Cash Is Turning Into a Hang-Up for Verizon
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Cash Is Turning Into
a Hang-Up for Verizon It
is one of Wall Street's worst-kept secrets: the challenge Verizon
Communications faces in financing its generous dividend beyond next year. http://online.wsj.com/article_email/SB10001424052702303491304575188223191833124-lMyQjAxMTAwMDEwOTExNDkyWj.html
-- available for 7 days. 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. |