Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Technology Stocks : LAST MILE TECHNOLOGIES - Let's Discuss Them Here -- Ignore unavailable to you. Want to Upgrade?

To: MikeM54321 who wrote (8496)	9/14/2000 11:31:48 AM
From: justone	Read Replies (1) \| Respond to of 12823

Mike: You wanted me to clarify this admittedly terse question: "A large part of the business case for broadband is to assume voice revenues for mult-line services: is this a valid assumption?" The cost of upgrading cable networks, buying equipment, and creating a new service, must be amortized from revenue streams over a 2-5 year period in such a way as to make sure that you get a decent return on you investment. A rough rule of thumb I once heard at a seminar once in this area (and later found to be correct) is that the initial capital investment should be no more than 20 times the monthly revenue. My cable company, for example, charges ~30 month for broadband access. That means that the cable upgrade and installation should be no more than $600. I believe they spent more than that: some numbers I've seen put the investment at $700-800. On the other hand, if you also assume that you will get ~$100 per month in voice related revenue, you can justify the capital investment easily. This is true even if you just use a cableheadend with TR303 to a CO which has about a $200 per line investment cost. With voice bundled with data bundled with cable tv, you basically end up with a really great ROI and revenue stream. Without voice, you still will do OK in the long run, but not really great. This are obviously rough numbers and no more than a first order approximation. But they tell me that it is better to buy ATT stock than AOL or Cablevision, for example, since only ATT can bundle wireless in (ignoring such issues like management competence, company culture, and wall street opinion!). On the other hand it tells me that AOL should be on the lookout to buy a national wireless company: I would bet they buy one within a year. Any ideas? Mind you, the voice over cable revenue is probably safe from wireless replacement in the US at least for five years, so my concern is for the long term.