The Aristocrats(tm): Market Dogs Message Board

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Strategies & Market Trends : The Aristocrats(tm): Market Dogs

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To: CusterInvestor who wrote (29)	3/6/2012 12:37:42 PM
From: sense	of 30

I've been engaged in a discussion of FTR with a couple of others over on IHub. The process is useful, and has led me to a couple of additional realizations about the company and its markets that give me serious pause. Each of them do tend to show FTR management... sort of bumbling into the future blindly... at a point in time where an apparent lack of vision is likely to become a cash cow killer... Not least among them is that there is a discussion occurring in Congress now about universal access and making telecom linkage a "right" of sorts. The reason Verizon is shedding rural focus and concentrating on urban areas appears it is a conscious element of decision in focus... tied to making choices about what "problems" they want to have. In the rural areas, delivering copper wires to everyone who wants one... is expensive. That expense may become significantly more onerous when or if there is a requirement imposed that alters the relationship that exists now between supply and demand for services delivered over wires. You might think the political advantage in the Senate related to representation of rural areas vs. urban might provide some cover... but, look at the history of telecom provisioning in rural areas in relation to the rural political interest... and what you come away with is not exactly a vision of a free market utopia. If they can require "free" services and require companies that deliver them to pay for them instead of others.. they will. And that will dramatically alter the cost/benefit of providing services in rural vs. urban areas. Verizon is making the choice on purpose... to choose to have the problem of bandwidth limits in urban areas... that might be resolved by an expanded use of copper wires in an already densely wired grid... while shedding the inverse problem of being forced to generate a more densely populated wire grid in what is, and will remain relative to urban areas, a very widely dispersed and sparsely populated grid. FTR management appear to be wholly blind to the competitive imperatives... living quarter to quarter... hoping to make up for shrinkage in the customer base... by adding more and more of what Verizon desperately wants to get rid of over time. That model is one that masks the problems... and can succeed in masking them... right up until the model collapses on itself due to its own weight. That likely means that the primary market support you see for FTR... is coming from Verizon... who clearly stand to benefit more than anyone else from preserving the blind sink into which they're disposing of the crap they don't want...

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