I agree with almost everything you said... except the "triple play" revenue... Qwest is doing a triple play system (Qwest DSL, Qwest VoIP and DirecTV) for $99 per month with $0 install.
Their introductory price is $99 per month, but they are most likely counting on people bumping up a tier in DSL service and TV packages...
Also, I don't have a problem with 30-50 year ROI for fiber... but ClearWire is wireless... all the equipment will have to swapped out in 5 years.
True enough, and that makes wireless somewhat an oddball. In this case, there is some analogy to their use of licensed spectrum, which is analogous to an extent to a physical medium. Does anyone know off the top of their head what platform they are using? I know Intel is partnering with them, but I've not followed them very closely. I'm kinda curious what their technology cycle will be.... -Clint
Travis Microserv Clint Ricker wrote: > Just some general thoughts on large corporations, financing, and > business. While Peter's analysis about silos and funding sources is > right on, I'm going to skirt that discussion because it isn't a > meaningful discussion on a superficial level. > > How do they make money? (Well, if they do make money--some don't). > > 1. Long term investments: While, in some respects the thirty year > cycle doesn't work for Internet, in other respects it does, especially > when you are talking transport. True, the equipment may need to > change--but, fiber invested in now will be monetizable for the next 50 > years. > > While I don't think that 10-20 year ROI is practical (or smart) for > most smaller companies, many smaller players do hamstring themselves > by only looking at models that can be profitable in 3-6 months. > Financing may be needed, but it is often worth it. A good example to > this is CLECs that took the easy money for several years and never > made any long-term investments (I'm sure Peter can supply some details > about the networks that were never built, despite billions of dollars > that came and went). > > 2. Long term loans: I'm seperating this out, but it is tied into the > long term investments. Sure, fiber layed today may take 5 years to > pay for itself. But, if it is paid for out of a 15 year loan, it can > be "profitable" from day one. > > 3. Better monetization: (More upsells). Take a look at your phone, > cable, and cell bills, and think about how much of that is upsold from > "basic" service. Basic cable costs $20; yet most people have packages > costs $50 or more. Basic cell phone service is $35-45, but many pay > closer to $100+. In other words, they get 2x-3x the revenue for > additional services that don't really cost them anything. > > A good example of this is Verizon's FiOS buildout, which I gather > Peter is quite sceptical of. $23 billion dollars by 2010; but only > 200,000 customers by the end of 2006. On the surface, this does seem > to be a little unprofitable for the next few years, but I'm not so > sure... > > A good triple play customer can net a company an average of $125-$150 > per month in revenue. This means, over the course of 10 years, that > customer is worth $15,000! Those 200,000 customers, by 2015, will > have paid Verizon a total of $3 billion dollars; given the reach of > Verizon's buildout; those 200,000 customers are just a drop in the > bucket. Given that Verizon can get long term loans on these projects; > it can be "profitable" pretty early on. It may blow up in their face, > given competition--but, I actually think they are in good shape > considering how versitile fiber is; their network expansion will serve > them for decades to come with only hardware upgrades necessary to > squeeze more out of the fiber. > > Anyway, I digress :). I just know the Verizon numbers a little > better, so it makes a clearer example. But, given that Clearwire is > hoping to squeeze more than $50 ARPU from this ($600 per year) > (combined voip/data), will eventually have more or less nationwide > service with the ability to truly take on cellular networks in a big > way, and so forth, $180 customer acquisiton cost is not a bad deal. > Vonage pays more than that per customer acquisiton and only gets $300 > ARPU at best--but then, they are also not doing so well financially :) > > -Clint > > > On 3/29/07, Travis Johnson <[EMAIL PROTECTED]> wrote: >> The problem with that is eventually all of those income sources (IPO, >> credit line, investors, etc.) dry up... and then you are left with >> revenue to try and pay all the others (hardware, long term and monthly >> debt, etc.). It can work, but I just don't see it in this industry. With >> $30/month accounts (with little or no add-ons that the cell companies >> used to have like vmail, long-distance, over-minute usage fees, etc.) >> there just isn't that much profit. >> >> The other difference is most telco's (and even cell companies) operate >> on a 30 year ROI. That just doesn't work in the internet world. I guess >> only time will tell. >> >> Travis >> Microserv >> >> Peter R. wrote: >> > I've spent much of this year analyzing the financials of Vonage and >> > other companies. I just finished looking at VZ. >> > (http://radinfo.blogspot.com/2007/03/vz-spending-billions.html) >> > The numbers make no sense. But then under GAAP accounting its all >> > about putting your numbers in the proper silo and never changing. >> > >> > Where does the money come from? >> > Some of it is debt. >> > Some of it is hardware financing. >> > Some of it is IPO money. >> > Some of it is a credit line. >> > Some from investors. >> > A little from revenue. >> > >> > George Rogato wrote: >> > >> >> I think it's the money raised from the sale of stock. >> >> Because if the 180 doesn't leave any profit, what about all the radio >> >> and tv advertizing they do? >> >> >> -- >> WISPA Wireless List: wireless@wispa.org >> >> Subscribe/Unsubscribe: >> http://lists.wispa.org/mailman/listinfo/wireless >> >> Archives: http://lists.wispa.org/pipermail/wireless/ >> > > -- WISPA Wireless List: wireless@wispa.org Subscribe/Unsubscribe: http://lists.wispa.org/mailman/listinfo/wireless Archives: http://lists.wispa.org/pipermail/wireless/
-- Clint Ricker Kentnis Technologies 800.783.5753 -- WISPA Wireless List: wireless@wispa.org Subscribe/Unsubscribe: http://lists.wispa.org/mailman/listinfo/wireless Archives: http://lists.wispa.org/pipermail/wireless/
