[ Motivation for RBOC to go ADSL]
Pat,
In most of the posts (and news releases) that I have read,
the main 'gripe' against ADSL appears to be the speed of introduction
which observers attibute to:
1) RBOC hesitancy
2) product development speed.
We seem to take it as a given that the RBOC's may , being risk
adverse, delay introduction of ADSL. Here's a straw man counter
example:
Assume that RBOC cost per ADSL line ~
leasing of ADSL modem at CO + maintenance + overhead = $50/month. 33% margins from ADSL line. I think
these are reasonable premiums given the novelty of the technique.
So at $75/month for ADSL fees, you make this margin. Now, can all
costs be covered for $50/month? Your normal telephone service is
about $15/month, so there is probably $12/month fixed cost for
a line. Now, when you add in ADSL, you are giving yourself 3 lines
for the price of 1--but I doubt the costs go up 3x for
the RBOC's. Say $25/month for ADSL + equipment lease costs.Can the
RBOC's lease a CO-end ADSL modem for $25/month? W/useful life
of 2 years CO-end modem must cost (in quantity) less than $500.
So--if consumers will pay $75/month for phone/internet access/VOD,
and if equipment costs telco's less than $500/line, it makes sense.
Basic rates for 2 phone lines and internet access right now are
about $45. Add in VOD at about $5/month, and you have competitive
costs of about $50/month. My guess is this is the price that the
telco's must fight, which means they arent going to deploy en masse
until ADSL modem costs go down to $350/modem. Not too far off, but
we're not there quite yet, which is why the RBOC's arent ordering
yet. Sorry for the rambling. |
