Vladmir,
The numbers I gave were really notional. I don't know, what the Alcatel bid was. What I did was pull the two references that we do have to show that the price per line is falling below $1000; perhaps the $300 per line referred to was an average price over the four year period. I certainly would agree with you that cable modems are cheaper than ADSL modems and that will likely continue to be the case for a few years.
However, what is the total cost to the cable company vs. the total cost to the Bells to offer ADSL? While the cost of the ADSL modems may be higher, I suspect that the cost of the CO upgrade will be substantially less than the cost of the coax upgrade. The RBOCs have the advantage of being able to upgrade the COs incrementally as demand increases, while the cable cos have to upgrade entire sections betting that there will be sufficient demand. But the question that we will all be waiting for an answer to is. What will be the end user cost for modem and service vs performance? And what will the end user pay for in large numbers. Does the mass market really care enough to pay differentials for 1.5 Mbps, 3.0 Mbps, 6.0 Mbps, 8.0 Mbps and 30 Mbps?
I have seen a mixture of cable modem services "offered" ... some use existing coax and require a dial-up return and some refer to an upgraded coax that supports 30Mbps both directions (and several in between). In our area, TCI will offer the latter. A friend of mine looked into availability and found out that it would be a year before TCI upgraded the cable. In xDSL we see much of the same, IDSL, ADSL DMT and ADSL CAP starting anywhere from 100s Kbps to 8Mbps. Is 6Mbps ADSL any better or worse than 30Mbps shared cable? Would the subscriber be able to see any difference? If the ADSL feed to the backbone at the CO was an OC-3 is that less or more of a bottle neck than 30Mbps shared?
Both industries want to capture market share as quickly as possible and maximize profit (preferrably obscene profit). I think that the RBOCs are in a better position than the cable cos to win the game; they need to follow the same strategy as Intel. Intel releases and prices their processors in a way that keeps their competitors in business (preventing monopoly charges). To fix one point, suppose the cable co offers access at $300 plus $50/mo and assume that one end of the ADSL line is $500. What pricing plan would result in the greatest market share and maximize profits?
A. $200 plus $50/mo
B. $500 plus $40/mo
C. $500 plus $50/mo
D. $200 plus $40/mo
E. $300 plus $50/mo
Best regards,
Jim
P.S. I believe that the main reasons the JPC went with Alcatel was 1) Price, 2) Price and 3)Price. Since the JPC went with one supplier instead of the far more typical multiple source approach, I suspect that the Alcatel bid was SUBSTANTIALLY lower than any of the other bids. |
