If they could offer two-way digital communication seamlessly for a flat rate under 20 bucks.... short all local phone carriers, all long distance carriers, cellular phone companies, cable, direct Tv, all paging and other such carriers...
Why should I short those companies? They are the ones who are going to figure out how to do it. Interestingly, Motorola and Sun today announced their entry into this arena:
briefing.newsalert.com
The point is that CDRD's value does not lie in the programming. That is a secondary issue. Their value, if any, is in their delivery system. This system is a proprietary one-way channel which will inevitably become obsolete. The economics for a common carrier of wireless internet are too compelling for it not to happen. It may happen sooner or it may happen later, but it will happen, and once it does happen CDRD's proprietary infrastructure will be worthless. And unless it takes a real long time, this will destroy all those CDRD NPV models going out ten years which have been developed by Unterberg, Lehman, and the like.
For a CDRD investment to be a long term winner, two things have to happen. First, CDRD will have to overcome all the technological challenges it faces and deliver a reliable service by the beginning of 2001, at the latest. Second, when all of the companies you mention above spend billions of dollars in an attempt to deliver ubiquitous and affordable wireless internet service, they must fail in that effort for at least the next few years.
FWIW,
Mark |
