Goodbye Telstra, Hullo ACTEW (FYI)

[George Michaelson]

  Question: can pay tv support the network, or do the numbers only work if
  data/telephony are part of the package taken up by the customer?

The per-household cost of installation has been put at figures of between
$700 and $1500 variously. I *think* I've seen Mr Fist say it had to earn
around $1200 p.a. to cover its install costs in a year, which is a reasonable
return on investment time. If you divide the year by the 12 months we seem
to use (personally I think we should decimalize, or go lunar, or better yet
use the French Revoloutionary names. I always wanted to eat Lobster Thermidor
in Thermidor, except I'm allergic to Lobster. Maybe Chicken Thermidor.) you
get $100 p.m. and according to what I understand, pay TV is more like $40 so
you've got a problem right there. If you add telephony, the average bill is
probably around $120 a quarter, so you'd pick up another $40. Looks to me
like the two together can get close to payback, but any one is inadequate.


  Here's a hypothetical for you.
  
  HFC goes belly up on data, so does pay tv.  Nothing is ON the ugly cables
  in the streets any more.  Will local councils press for removal?  Telstra
  stops laughing quickly...as does Optus.  Or will the telcos compete by
  reducing prices on services to recapture the market? 

The costs of removing them would be less than installing, but non-trivial.
I ernestly hope that as part of the fire-sale the installation debt would
be written off to history, maybe a few direct investors loose their shirts,
we all loose 10c a month in our pension plan, but some smaller fish get to
lease capacity and provide service without the backload of debt. 

But its not going to happen. Once people get over the initial shock, they
actually wake up to investment in utilities being a 5-10-15 year window and
on those timescales, whats happened so far is really no big cheese. What 
counts is how they can hold on to existing takers, and grow them at some
sane rate (not the 10-20% per month, which is a bitch on the helpdesks and
install cycle, maybe less than 1% a month would be a good target) until there
is some critical mass. 

If somebody makes a $2000 PBX for small local telcos, its not impossible
they could franchise out the support/maint/install costs and back-end the
central billing management and interconnect. Geoff Huston (bless his cotton
socks) used to talk about how you could have *thousands* of ISPs using a
central utility for interconnect, all offering the local support which a
big monster can't do. I think this is also what Kerry Stokes was at in his
Boyer lecture model of the utility cable leased to content providers. Actually,
maybe not. I think he just wanted channel-7 to get rights to sell ads with
none of the overhead costs of installing the damn thing.

Data is good, I guess data could tip the balance and get above the critical
$100 p/m figure but then an awful lot of data is on-costs (new head-end gear,
new service overheads, internet connect/transit fees to the USA) so its not
pure profit.

The model is fundamentally bust. Data wants to be free. Its hard to make
a shitpot of money selling something as ephemeral as a one or a zero. Now
if you can impart some *meaning* to the one or zero, make it be the most
exiting, interesting SEXY bit of all bits, you can put a premium on it. Thats
about content, not delivery. Unfortunately, what most people seem to want
in content isn't what the current providers can make money from.

I learn a lot of this kind of crap from taxi-drivers (who as we all know
are the one true elect, freemasons and space-aliens combined. Certainly they
seem to know a lot about what fat balding bores do during non-driving hours)
and very few of them think darts competitions and endless stock-car racing
is very much fun. Whilst I understand the need to watch endless Gilligan
and reruns of I love lucy, its also not really high on my list. The only
Pay-TV equipment owners I know did it during a free install window, and 
after one month promptly cut if off (they leave the plant to the house 
installed) -They did it as a cynical exercise to increase any resale value
on the house.

This doesn't sound like a recipe for success to me.

-George
--
George Michaelson         |  connect.com.au pty/ltd
Email: ggm@connect.com.au |  c/o AAPT,
Phone: +61 7 3834 9976    |  level 8, the Riverside Centre,
  Fax: +61 7 3834 9908    |  123 Eagle St, Brisbane QLD 4000