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Msg  182611 of 183601  at  10/17/2022 7:56:04 AM  by

enron-hubbard


 In response to msg 182609 by  from6454
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Re: 40%?

<<if cable video is no longer what consumer wants, why consumer will stick with cables?>>
A few reasons:
 
-- Cable provides decent internet service and have improved their networks so that many customers can receive up to 800 mgps downstream and 30 upstream. Right now, this is more bandwidth than most consumers require
-- The large providers have begun bundling mobile service at very competitive prices (ie two lines for $30 each) if you are also a data customer. Service is good because they are wholesaling the Verizon or TMUS networks. Not many people are aware of this, but Xfinity is run on the Verizon network. Comcast and Charter are rapidly increasing mobile subscribers
-- The is a great degree of inertia at the consumer level to switch
-- A consumer probably needs to be willing to go to streaming for video product and older customers are often unwilling to do this.
 
<< Why stop at 40% penetration rate?>>
 
Obviously, that is not their intent. However, for the above reasons cable customers are sticky. Fiber will NEVER even approach 80%-- the goal is to split the market. Cable will also compete on price if a customer threatens to leave. Customer retention is a priority for cable and I believe you saw this from Charter when you switched to FYBR-- this is the reason FYBR offers next day install. It is generally accepted that a 45% penetration is a great result for fiber. Also, this simply doesn't happen immediately service is rolled out-- a good performance will be 15% after 12 months, 30% after two years, 40% after 3-4 years. If they are going to achieve this penetration it will require good marketing and a trouble-free network. CenturyLink service has horrible NPS scores (which is one reason they're changing the name to Quantum) and customer satisfaction must improve. 
 
Medium/long term Cable will go through further upgrades to their network. DOCSIS 4.0 promises to provide up to 10 gigs, symmetrical service, and this may start appearing in a couple of years and this is one reason speed of fiber build is critical. An alternative approach to the situation is for a cable provider to overbuild the COAX network with FTTH -- ATUS is doing this but other big providers are not. However, the prospect of dramatically increased competition from fiber and FWA is what has crushed Cable valuation over the past year. I was a dope for not selling my CMCSA stock
 
<<So the penetration rate should go up all the way to 80%>>
 
For the reasons above, this just won't happen. The highest penetration I have ever seen is a 50%+ penetration for mature markets in California abut 5 years after FIOS was rolled out by Verizon.
 
So, this is not as simple or easy as you believe, and for that reason the numbers I have seen you produce for LUMN AND FYBR are just wrong-- but that's ok-- it's a complex subject. I will try to answer your other questions later today. I don''t want to appear as a know-it-all but I have been looking at the situation for a couple of years and TMT investing is what I did for 30 years.


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