Hi Eric,
Whether I think RMII is fairly valued has not been paramount on my mind during this discussion. I was only testing Hanson's comparison of RMII to that of ABOV's from an architectural and business model standpoint, although I did suggest in passing at one point earlier that due to the differences involved between their models, perhaps they should not be valued along the same risk criteria and revenue metrics.
I like Hanson's asking why they should be classified as an ISP, or a CLEC, or whatever. He said:
"...Why do we have to be a CLEC or an ISP?" asks Doug Hanson, president and CEO of Rocky Mountain Internet Inc.(RMI). "Why can't we just be a communications company? Then, whatever the customer needs, whether it's Internet access, or data, or voice or whatever, they can come to us and get it."
It goes to highlighting the absurdity of pigeon-holing emerging service providers at the present time. IP is negating such distinctions at this time, and will continue to do so with uptake of emerging capabilities.
Witness how some established players (and startups alike) have re-classified themselves as integrated communications providers (ICPs), others are calling themselves Internet Telephony Service Providers (ITSPs), and still others regard themselves as CLECs, DLECs, DSLs, ASPs, hybrids of all of the above, etc.
To some extent, Hanson's point is well taken in this regard. One inadvertant consequence of asking such a question, however, and this is only my opinion, is that it tends to take some of the inter-nutsy luster off of RMII's profile, almost in a self-deprecating way - if one believes in the ultimate supernatural kind of magic that is normally associated with the 'net - it could be argued, depending on one's perspective.
"Do you still think RMI is fairly valued at 3.4x sales?"
For the record, I have not delved into RMII's valuation, whether it is fair or comparable to any of the others. That has not been my primary focus. What I see as a result of this pleasant exchange, however, is this: RMII seems determined to penetrate and grow share in as many ways as they can. Almost signaling a precarious or urgent state. The danger I see here is dilution of mission, and maybe taking on too much too soon, in a landscape that is rapidly changing.
I don't argue that taking this approach has worked out very well for some others, institutionally speaking, i.e., momentarily, and even longer term, boosting their stock prices. Bernie Ebbers comes to mind here, among a select group of others.
This rise in stock profile comes about despite the sometimes longer-term negative effects which are felt years after the deals are signed... after mixing too many dissimilar platforms from different players' architectures into a digestible kind of Mulligan Stew. And while I cannot prove it in definitive terms, to some extent I believe that this kind of integration strategy is at least partly responsible for the recent 10-day Frame Relay problem which MCI WCOM encountered. But like I say, I have no immediate way of proving this.
Regards, Frank Coluccio |
