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From GP: > ...or if you connect your smart thermostat to their API In a way, this sounds like a car insurance company lowering your rates for keeping their se

From GP: > ...or if you connect your smart thermostat to their API In a way, this sounds like a car insurance company lowering your rates for keeping their sensor device in your car. Comcast is getting into the home automation/security/IoT business too - ISPs haven't been profitable for decades, which explains why they (1) keep squeezing their existing customer base for more money, and (2) keep expanding into new - possibly unrelated - markets like stadium ownership. Anything to avoid lowering the dividend price.

intended 9y ago
ISPs havent been profitable? Wow. That would be nuts - Since when? this is America, where ARPU is measured in its native currency of the dollar without a conversion cost, in a nation where they have some of the worst competitive landscape, subsidized roll out, and yet incomplete roll out of infrastructure. And they are still not profitable ? Sorry, for the request for a source, since it may come across rude- but I’m damn surprised. I evens recall most telecom operators being positive about their growth and numbers overall. Perhaps the parent poster is right and America would be much better off with nationalized internet infrastructure.
- stephengillie 9y ago
  Centurylink's CEO has been having to defend their dividend in the face of a slipping stock price and questionable profit. Our local road infrastructure and our highway road infrastructure are both largely government-operated. Many local and municipal governments operate their own ISPs. Yet people illogically fear their government more than their ISP.
- rayiner 9y ago
  Telecoms are profitable for the most part, but rates of return are low in comparison to other industries: https://www.mckinsey.com/~/media/McKinsey/Business%20Functions/Strategy%20and%20Corporate%20Finance/Our%20Insights/A%20long%20term%20look%20at%20ROIC/PNG%20037_A_longterm_look_at_ROIC_Exh_2.ashx https://www.mckinsey.com/~/media/McKinsey/Business%20Functio....
  - intended 9y ago
    The comp is against other telcos though, not other industries So for example pharma rates of return would be irrelevant. Saw that chart - that’s exactly why you never use a chart like that, it’s effectively prejudicial without context.
    - rayiner 9y ago
      If you’re reliant on private capital to build and upgrade internet infrastructure, what matters is rates of return on other potential investments that are competing for the same sources of capital.
      - intended 9y ago
        But you are not - as I recall there are subsidies given to the telcos and telecom spectrum and rights of way are on public grounds. So from the get to it’s not comparable to other industries. A specific weakness of your argument - Your position holds for a certain kind of investor but has nothing to do with running a business of building a business- nothing to do with Operations. The risk profiles and returns on telecom are known, and so investors in it know what they are getting. So telcos can raise debt, with maturity and interest rates suitable for them. And financiers spread risk. If black stone doesn’t want to invest in telecom, some other firm or telecom focused fund will invest. At the end of the day, there are only so many above average or average returns you can get per billion of dollars - so people invest in multiple industries. And when they invest - they examine (comp/compare) the firms against the others in their market. I know because i saw the models and the comps.
        rayiner 9y ago
        > But you are not - as I recall there are subsidies given to the telcos and telecom spectrum and rights of way are on public grounds. Mostly not true. In rural areas, telcos receive subsidies. Those subsidies are paid for with taxes on telecom services. Telcos based primarily in urban/suburban areas bear a net tax, not a subsidy. Telcos pay for both spectrum and rights of way, such as rental charges on utility poles. > The risk profiles and returns on telecom are known, and so investors in it know what they are getting. We’re in an environment right now where a huge segment of telco revenues, for video, could evaporate due to cord cutting. The percentage of high income households which have cut wireline service entirely (in favor of wireless) has grown from 6% to 15%. People have been reluctant to switch from cable to faster technologies like fiber, with FiOS struggling to clear 40% uptake rates. Investing in a telco today (or a wireline project specifically) is not like investing in a electric or water utility (or the phone company back in the day)—there is real risk.

intended 9y ago

ISPs havent been profitable? Wow. That would be nuts - Since when? this is America, where ARPU is measured in its native currency of the dollar without a conversion cost, in a nation where they have some of the worst competitive landscape, subsidized roll out, and yet incomplete roll out of infrastructure. And they are still not profitable ? Sorry, for the request for a source, since it may come across rude- but I’m damn surprised. I evens recall most telecom operators being positive about their growth and numbers overall. Perhaps the parent poster is right and America would be much better off with nationalized internet infrastructure.

stephengillie 9y ago
Centurylink's CEO has been having to defend their dividend in the face of a slipping stock price and questionable profit. Our local road infrastructure and our highway road infrastructure are both largely government-operated. Many local and municipal governments operate their own ISPs. Yet people illogically fear their government more than their ISP.
rayiner 9y ago
Telecoms are profitable for the most part, but rates of return are low in comparison to other industries: https://www.mckinsey.com/~/media/McKinsey/Business%20Functions/Strategy%20and%20Corporate%20Finance/Our%20Insights/A%20long%20term%20look%20at%20ROIC/PNG%20037_A_longterm_look_at_ROIC_Exh_2.ashx https://www.mckinsey.com/~/media/McKinsey/Business%20Functio....
- intended 9y ago
  The comp is against other telcos though, not other industries So for example pharma rates of return would be irrelevant. Saw that chart - that’s exactly why you never use a chart like that, it’s effectively prejudicial without context.
  - rayiner 9y ago
    If you’re reliant on private capital to build and upgrade internet infrastructure, what matters is rates of return on other potential investments that are competing for the same sources of capital.
    - intended 9y ago
      But you are not - as I recall there are subsidies given to the telcos and telecom spectrum and rights of way are on public grounds. So from the get to it’s not comparable to other industries. A specific weakness of your argument - Your position holds for a certain kind of investor but has nothing to do with running a business of building a business- nothing to do with Operations. The risk profiles and returns on telecom are known, and so investors in it know what they are getting. So telcos can raise debt, with maturity and interest rates suitable for them. And financiers spread risk. If black stone doesn’t want to invest in telecom, some other firm or telecom focused fund will invest. At the end of the day, there are only so many above average or average returns you can get per billion of dollars - so people invest in multiple industries. And when they invest - they examine (comp/compare) the firms against the others in their market. I know because i saw the models and the comps.
      - rayiner 9y ago
        > But you are not - as I recall there are subsidies given to the telcos and telecom spectrum and rights of way are on public grounds. Mostly not true. In rural areas, telcos receive subsidies. Those subsidies are paid for with taxes on telecom services. Telcos based primarily in urban/suburban areas bear a net tax, not a subsidy. Telcos pay for both spectrum and rights of way, such as rental charges on utility poles. > The risk profiles and returns on telecom are known, and so investors in it know what they are getting. We’re in an environment right now where a huge segment of telco revenues, for video, could evaporate due to cord cutting. The percentage of high income households which have cut wireline service entirely (in favor of wireless) has grown from 6% to 15%. People have been reluctant to switch from cable to faster technologies like fiber, with FiOS struggling to clear 40% uptake rates. Investing in a telco today (or a wireline project specifically) is not like investing in a electric or water utility (or the phone company back in the day)—there is real risk.