Business Week’s Olga Kharif suggests investors may lose patience with Verizon’s FiOS and other Telco TV initiatives. To back up this contention, Olga cites a forecast by Convergence Consulting Group that “By 2007, 12% of residential consumers will be buying phone service from cable outfits, vs. 4% now [while o]ver the same period, phone companies will have signed up only 2% of TV-service subscribers.”
That’s far below the 20% to 25% share that telcos will need in order to make money on the service, says Mitch Mitchell, an analyst at strategy consultancy A.T. Kearney. As things stand, telco TV providers might not break even, on an annual basis, for 10 to 15 years, says Albert Lin, an analyst at American Technology Research.
[A]s price wars ensue, the breakeven date could be pushed out further still, analysts say. And investors are likely to grow impatient, says Phillip Swanni, CEO of industry researcher TV Predictions. Some may urge the phone companies to pull the plug altogether, he warns. “My prediction is, two years from now there won’t be a TV offering” from Verizon, SBC, or BellSouth(BLS ), he says.
Verizon and others reckon their own TV services will include bells and whistles they can’t offer through a partnership with a satellite provider…Yet for Verizon and the others, the hardest part of satisfying the customer may be keeping investors happy at the same time.
Mitch Shapiro at 7:16 PM|Comments(0)
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