<won't the baby bells be the dominate DSL providers in the future? What about some of the smaller players?>
This is a tough question. If you believe broadband
access is a requirement for doing business, and DSL is a viable and economical form of BBand access for business/small business - then you gotta believe that the VZ/NPNT model is in an expanding (rapidly) market. The
question is "when" do some of the smaller players create enough value that they become a major acquisition target, or can demonstrate reasonable return on equity.
The answer to the former, is a) market share in a specific region that threatens a specific carrier, or significantly expands the penetration of a carrier, b) when other competitors get acquired - their value will rise.
With respect to the CLECs position in all this, in effect they are partaking in the whole process right now through re-sale of their facility connections which the likes of NPNT and COVAD hook up to in the central office. The threat to the CLECS is loss of direct customer contact (wholesale model), and the ensuing loss of upsell opportunity. The DSL guys gain a toehold into the customer which they can expand to capture more and more of the business' telecommunication services, potentially eliminating services that the CLECs are currently providing. The other side of this coin is, the CLECs can in fact provide DSL service directly to the customers. As the CLECs/Ilecs (incumbent local exchange carrier) become more focused and threatened, they may indeed move to a strategy where they "buy" the DSL customers - the difficulty for them is manpower, --having enough skilled people that can get DSL sold and deployed directly to a large number of customers - integration-, it's not easy, and the current DSL guys (npnt, covad & the likes) are getting good at it, and have teams that can do it.
In summary, there are no clear answers - except, DSL offers broadband access, broadband access is very important and strategic, and in 2 years from now will be a requirement for doing business. - the important numbers to focus on are : a) customer acquisition rates relative to competitors, b) change in acquisition rates, c) retention rates, d) change in retention rates, e) footprint of market share. DSL will be the mainstream method in 1-2 years. DSL deployment is a hot sector, the leaders will make money, the question is, is are some of these smaller players really leaders, and do they have some underlying problems, indicated by a variance of their acquisition rates relative to the other leaders.
If they appear overvalued, significantly reduced possibility that they will be acquired, so in fact, they become more valuable as their stock price drops. Again, I haven't looked at the numbers in enough detail to determine how they will all be perceived relative to each other in this segment.
Sharck |
