re: T's wireless tracking stock and the need for capital improvements in cable
Dave, I've found it very difficult to answer your excellent upstream descriptions [replies # 149 and beyond] of cable's state of the art, and your reply to my questions concerning when it will be that cable will take on new fully digital characteristics, as opoposed to their prolonging of the analog model.
Instead of trying to cram all of my still evolving thoughts on this topic into a single post (this is hardly the venue for a white paper), I've decided to ask a couple of seemingly (but not really) unrelated questions that bring me to the right proximity of addressing more germane issues. And I'll use some current topical issues to highlight my major points.
Here's the first of them, and others will no doubt follow as the outcome of this first one dictates:
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THE QUESTION:
What structural separations and/or stipulations exist, either in SEC regulations or in the bylaws of T's charter, to preclude T from using proceeds from a wireless tracking stock IPO from being used for the much greater needed improvements, arguably, in their cable holdings?
Posting this question is with some risk of revealing how much I have to learn about SEC regs. But even if covenants are in place preventing this from happening, that's okay, and the remaining parts of this post should not be lost on that account, for they speak more to the underlying issues relating to the future of HC cable, in general.
In comparative terms, the potential for fiber-enabled cable systems is astoundingly high (pointing, conceivably, to a purely photonic based platform at some point in time) next to those of, say, DSL and the much awaited 3G wireless.
This is true if --and that's a big IF-- again, if the cable operators are able to adequately construct deep fiber builds close enough to end users to dramatically reduce the numbers of passed homes per individual fiber node. Along with this, the elimination of the restrictive effects of black RG-x coaxial cable, which tops out at a shared ~ 1 GHz over commonly accepted distances, today.
One should keep in mind that this 1 Gig shared also serves the needs of program video, voice and interactive MSO services, as well, and not only 'net access purposes.
At present, there are still many systems which support upwards of 500 to 2000 subscribers per node. T has targeted something like 60 to 75 homes or less, using the assumption that many fewer than the total 60 to 75 would actually be on line at the same time, thus opening up huge windows of bandwidth to each user.
The related implications, such as protocol- and administrative- factors at the head end (where the cable modem termination systems exist) which come into play are not apparent with such a brief description as I've just provided, but the foregoing should adequately serve to make my point.
[[The need for what I'm suggesting here will become manifest in the next twelve months, no matter how well, or wiz-wow, current systems are working today, as is, under the status quo designs which make up their current HFC architectures.]]
As it stands now, T has funneled roughly $115 Billion into their breakaway cable strategy through acquisitions and announced upgrades (although T refutes a part of this and attributes some of this amount to properties which will be sold off or classified under other allocations).
Notwithstanding, even if it's only $60 Billion as they claim, this is quite a chunk of change to have stuck in the mud if they can't bring cable's true potential to the fore, due to what appear to be some lopsided and unfavorable break-even economics, thus far.
This is why I tend to think that it will be extremely tempting for them to subsidize their cable improvements with wireless IPO proceeds. My question remains, then, what's to stop them from doing this?
Regards, Frank Coluccio |
