Large telecom firms will have the capacity to sell video service ...
Large telecom firms will have the capacity to sell video service to as many as 20% of existing customers by the end of 2006, Moody’s Investors Service said. But despite the huge investment they are making in fiber to…
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do so, incumbent local exchange carriers (ILECs) “will be challenged to generate industry average returns on the capital invested to support their fiber build out strategy,” said Dennis Saputo, Moody’s senior vp, in a statement accompanying 2 reports by the credit rating agency. Competition from cable operators, with 73 million customers, and a potential for price shrinkage will challenge ILECs, said Moody’s. AT&T plans to spend $5 billion on Project Lightspeed to offer IPTV, while Verizon is expected to spend about $8.4 billion in 2006 on its FiOS fiber network (CD Jan 11 p1). That upgrade is a “transformational event,” Verizon CEO Ivan Seidenberg said this week. Microsoft, in tandem with AT&T and Verizon, said it’s trying to help them save money. “Driving the costs of set top boxes down, as low as they can go, is obviously a huge benefit to everyone in the equation,” Ed Graczyk, Microsoft TV mktg. dir., told us Wed. “The flexibility doesn’t stop there.” Telecom firms “will benefit to the extent that cable companies hold off the pace of their market launches” of VoIP, said a Moody’s report. ILECs may target DBS providers’ 25 million customers since satellite is “not likely to offer comparable product offerings or bundled pricing,” it said.