Tim,
I am still trying to sort out the last mile conundrum, but it sounds to me like the RBOCs will probably not be major players in these early stages because of the stranded investment problems that Ray mentioned and the penetration problems WTC talks about. [To paraphrase WTC: "This is a business, not a science fair."]
The cable guys [MSOs] seem to have the advantage (as Geo Gilder suggested all along) of much simpler upgrade path to advanced HFC, which gives them many more channels of video, interactive video (whatever that means), extremely fast internet, and a window into telephony. This prospect of a competitor providing all 3 services (especially telephony) with one bill (sent by e-mail, of course) should jolt the telcos enough to loosen their purse strings a bit, but they don't yet apparently feel sufficient threat to their telco cash cow that they are willing to analyze the investment any different than any other along traditional ROI lines and it doesn't pass the test. Perhaps when the threat becomes a bit more real we can expect M&A activity to pick up as they scramble to outbid one another for these lucrative HFC franchises.
In the meantime, the surprising thing to me is why those who have most to gain are so slow in catching on since they have some of the deepest pockets and could do much to speed deployment. I am thinking of content providers like Disney and, of course, Wintel, who want to extend their franchises into videospace. Why don't they lend some of their considerable financial muscle to the cable operators to help them convert the last mile? There is certainly a fabulous potential payoff and none of that "stranded investment" to worry about protecting.
Can someone answer a couple of question about municipal cable franchises? How are these deals structured? What leverage does a local municipality typically have in "negotiating" an upgrade at the next contract renewal discussion? If they can't reach an agreement, what power does the municipality have over cable that is already in the ground? I assume the cable belongs to the monopoly franchisee and the municipality can't simply turn the cable over to another party who may be more compliant with its desires? Does just compensation enter into the picture? Do any municipalities retain control over their telecom destinies by having simply given up the operation of the cable for fixed period of time, but not ownership of it?
SC |
