dslreports logo
 story category
ISPs Shouldn't Pretend To Be Content Companies
Should also embrace the wholesale FTTH model, says analyst...
A New Yankee Group study of global fiber to the home claims that U.S. telcos are doing a number of things wrong, nursing copper instead of deploying fiber being chief among them. The report also takes telcos to task for trying to be network operators and content/service developers, despite not being very good innovators. The move also creates competitors out of potential business partners. From Telephony Online:
quote:
"The service providers, for a large part, think they can do it on their own and may even see [potential partners] as competitors, which is ridiculous," Felten said. For example, a service provider could partner with a security company to offer home and business security services over their FTTH pipe. "Or they can crash and burn trying to offer their own security service, after which they would turn to the professionals, who then say, ‘But you were competing with me before,’" Felten said.
Verizon and AT&T certainly aren't making friends with many content companies over net neutrality, and AT&T is also certainly spending a lot of money on developing everything from three dimensional browsers to content portals. Those funds could be put back into the network, which AT&T consistently complains (accurately or not) is facing capacity armageddon. Yankee Group analyst Benoit Felten goes on to cite another major problem with U.S. telcos: their consistent prejudices against offering wholesale services over a FTTH network to improve ROI:
quote:
"Even the financial markets are convinced that if you have to share your network, you are going to make less money. If you look at projects that are financially successful, which I would describe as break-even in five to seven years, these are projects with over 60% take-rate. Today, these are relatively small scale – up to a few million homes past. On the scale of a country or a large region, if you want these take rates, you can’t do it on your own. Wholesale may be a lower ARPU [average revenue per user] business, but it is a higher margin business, because costs are much lower."
Of course Felten is commenting from Paris, where the French took our now-discarded 1996 local loop unbundling plan and made it work. Really embarrassingly well. Their success resulted in a highly competitive fiber to the home market where consumers are the biggest winners, able to get 100Mbps/50Mbps fiber service, VoIP and IPTV combined for as low as $40 a month. Here in the States, a 50Mbps connection alone from Verizon or Comcast (assuming you can get it) runs excess of $130 a month. But hey, don't our portals look nice.