What I think is a credulous risk, is that CLEC's and RBOC's are burning cash like crazy trying to meet insatiable demand for services.
FWIW, John, where I think your hypothesis takes a wrong turn is concluding the spending is based upon "insatiable demand." More appropriately, I believe the spending is all about market share, either securing a position in the case of the CLECs, or maintaining & growing a dominant position in the case of ILECs. He who fails to spend today, regardless of the near term implications to the bottom line, will regret the possible top line numbers to be realized in the years looking forward.
The demand is there. It took the ILECs sometimes to realize it, mainly due to initial inroads by competitors, i.e. CLECs & MSOs for a chunk of their business, voice as well as data. And the demand has grown due to aggressive pricing by the ILECs. But the demand, at least at the consumer end, while arguably insatiable, not insatiable at any price. Where would DSL be today if the lowest monthly subscription rate were $150 month.
The "insatiable demand" has been created by aggressive pricing in the effort to build market share in what will prove to be a huge market for data services. JMO. |
