Minyan Mailbag Collection
...one nuance in looking at both the cable and Telco systems is that both are delivery mechanisms for the Internet.
I really enjoyed your last post. We have been writing about the issue of content vs. distribution a lot. Is distribution (cable systems) commoditizing while content is the valuable piece of real estate everyone wants to control, especially when you look at Microsoft's (MSFT) Media Center and new start-ups like VDC.com? In the end do we get our content (TV) through the Internet thereby bypassing the cable systems all together? Would you mind if I added you to our research distribution list? I work for Rich Greenfield here at Pali. He has been on the Street for a long time and is considered one of the top voices in the media space (bearish on cable systems, bullish on network/content).
First, thanks for the offer on the research. I would really like to receive it if I can.
In answer to what you've outlined, I think the one nuance in looking at both the cable and Telco systems is that both are delivery mechanisms for the Internet. For all intents and purposes, cable television is nothing more than a broadband internet channel. There's a race in the marketplace for distribution and it's playing out as we speak: I bucket it into three areas - data (web sites, text, email, etc.) content (music, TV, film, etc.) and voice (telephone and VoIP). Right now Verizon (VZ) is offering everything but the TV component over FiOS and DSL, as are most other Telcos. Comcast (CMCSA) is offering everything as is Cablevision with their IO offering. I didn't switch to IOP because I heard it's still a bit "crufty." However, because of the service bundle and the fact that the cable companies offer, well...cable, I'm a bit more bullish on Cable than I am on Telco. As far as being bullish on networks/content, I'm very bullish on Time Warner (TWX), NewsCorp and I'm really warming to Disney with the Pixar acquisition.
Fundamentally, an investor has to answer a simple question: does he/she believe people/users are more comfortable speaking through their television sets or through a computer. I really believe whoever gets the VoIP piece of the equation locked is going to accelerate their growth and really build some significant market share.
What do you think of Wimax? I'm not suggesting it replaces existing networks, but curious if you see it succeeding?
It's funny you bring this up. I made an aggressive push to do some business with a company called Terabeam networks in the late 90s. This was a really cool company that was started by the former President off AT&T wireless (T) - Dan Hesse - he now heads a division of Sprint (S). It's still going, but I haven't heard much about it.
Here's my two cents: I think wireless has a place in a very specific market. The mobile market - and I don't mean cellular. I had Dish Network for about two years and I really hated it. If I lived in a mobile home or on an airplane, it's great, but if I lived in a home with a foundation. I can't see any benefit to the service. That's the simplest rationale I can give.
As far as WiMax, I think it's a great technology. When 9/11 took place, many institutions set up a point to point wireless for their networks. It's pretty cool stuff, but unnecessary. They all eventually switched back to hard wired networks. WiMax has its place, but I do not believe it will contest for cable, DSL or fiber for a very long time. If Terabeam had significant traction, I wouldn't be digging through my business cards to remember their name seven years later.
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