[opendtv] Re: NY Times: In Verizon Strike, Blue-Collar Stress Hits the Sidewalks
- From: Craig Birkmaier <brewmastercraig@xxxxxxxxxx>
- To: opendtv@xxxxxxxxxxxxx
- Date: Sun, 17 Apr 2016 09:06:24 -0400
On Apr 15, 2016, at 4:16 PM, Manfredi, Albert E
<albert.e.manfredi@xxxxxxxxxx> wrote:
How strange. This is just the sort of market distortions that you have to
expect from the MVPD business.
Market distortions?
How about labor market distortions?
I can hire college graduate engineers for less an the $15/hr minimum wage New
York just passed. By the way, that increase in minimum wage will automatically
give the Verizon union employees another raise.
It's hard to feel sorry for guys making $130,000 a year...this is a legacy of
the "rotary phone era," not unlike the way the auto worker unions pushed the
U.S. Auto industry to the brink, as the article points out. It is also
noteworthy that foreign auto manufacturers are assembling cars -mostly in the
South - creating tens of thousands of middle class jobs, albeit non-union, but
still at much higher wage rates than the now vanished textile industry was
paying these workers.
Much of this article is about supporting "middle class jobs," but it should
instead be on supporting a sensible, undistorted market. Here are some key
points that are just superficially mentioned:
"Over 99 percent of the striking employees work on the so-called wireline
side of its business - that is, the traditional phone landlines and the fiber
optic network, called Fios, which offers subscribers Internet, voice and
video service. It is a business where growth is slow or declining, as more
and more consumers give up landlines and traditional subscription television."
BS, right? You can't conflate land line telephone service with cabled
broadband service.
Why not. It is what has allowed these union employees to drive up their
compensation rates over the years, thanks to the government monopoly that saw
no effective competition until VOIP. Wireless has transformed the way we now
communicate, leaving wireline as an ancient and dying legacy.
Verizon even goes to the extreme of justifying itself by talking about
"nostalgia for the rotary phone era." How disingenuous. Demand for cabled
broadband is going up, and remains strong. Not just strong, but stronger than
demand for legacy MVPD service. We've seen this fact stated from many
sources. No one is crying over rotary phones, for pete's sake. And wireless
is not yet priced where it becomes a replacement for cabled broadband
service, and more people want broadband than want traditional MVPD service.
Yes demand for "cabled" broadband is strong. But Verizon and AT&T are not
capturing significant market share. Most of the demand is going to the cable
systems, another monopoly that is now being propped up by the threat of Title
II rate regulation. And the cable/DBS industries rely heavily on outsourced
labor for construction and installers - their labor rates are significantly
lower.
It is the combination of broadband AND MVPD service that makes overbuilding the
cable monopoly with FIOS financially attractive. You keep telling us that the
MVPD business is threatened by streaming video via the Internet - there is more
than a grain of truth in that. But there is also a reality pointed out in the
article: the content owners keep driving up the cost of content, while the
MVPDs are already suffering from the sky high cost of a MVPD subscription.
You need to look at this from the perspective of the execs at Verizon. They pay
higher wages than their cable competitors, margins in the MVPD business are
declining, and the cable systems have a major cost advantage in broadband.
Not exactly the ideal conditions to risk spending billions to deploy FIOS.
*And yet*:
"Ian Olgeirson, an analyst at the media research firm SNL Kagan, said one
reason for this reluctance to expand is that the rising price of television
programming has put pressure on margins for video, which makes the economics
of the entire fiber optics investment less attractive."
How is this not absurd? The rising price of a declining service impacts a
service sector that is growing, and in greater demand than that declining one
with rising costs?
It is absurd you do not get it. The growth of FIOS overbuilds was driven first
by selling MVPD service, then broadband as demand increased. Obviously demand
is increasing for broadband, but the cost to build networks just for broadband
is a major concern, especially having to pay high labor costs.
Most of the Google fiber deployments have taken advantage of low cost
acquisition of failed municipal fiber projects.
Instead of waxing eloquent about "good paying jobs," why didn't the NYT pay
attention to this?
Also mentioned is Verizon's lukewarm interest in FiOS and their overly
lucrative wireless business. Combined, it becomes impossible to make Verizon
the good guy, eh?
Or maybe Verizon sees a path to competing in the broadband business using its
wireless infrastructure rather than building out expensive FIOS networks?
Regards
Craig
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Other related posts:
- » [opendtv] NY Times: In Verizon Strike, Blue-Collar Stress Hits the Sidewalks- Manfredi, Albert E
- » [opendtv] Re: NY Times: In Verizon Strike, Blue-Collar Stress Hits the Sidewalks - Craig Birkmaier
- » [opendtv] Re: NY Times: In Verizon Strike, Blue-Collar Stress Hits the Sidewalks- Manfredi, Albert E
- » [opendtv] Re: NY Times: In Verizon Strike, Blue-Collar Stress Hits the Sidewalks- Craig Birkmaier
- » [opendtv] Re: NY Times: In Verizon Strike, Blue-Collar Stress Hits the Sidewalks- Manfredi, Albert E
- » [opendtv] Re: NY Times: In Verizon Strike, Blue-Collar Stress Hits the Sidewalks- Manfredi, Albert E
- » [opendtv] Re: NY Times: In Verizon Strike, Blue-Collar Stress Hits the Sidewalks- Craig Birkmaier
- » [opendtv] Re: NY Times: In Verizon Strike, Blue-Collar Stress Hits the Sidewalks- Manfredi, Albert E
- » [opendtv] Re: NY Times: In Verizon Strike, Blue-Collar Stress Hits the Sidewalks- Craig Birkmaier
- » [opendtv] Re: NY Times: In Verizon Strike, Blue-Collar Stress Hits the Sidewalks- Manfredi, Albert E
- » [opendtv] Re: NY Times: In Verizon Strike, Blue-Collar Stress Hits the Sidewalks- Craig Birkmaier
- » [opendtv] Re: NY Times: In Verizon Strike, Blue-Collar Stress Hits the Sidewalks- Manfredi, Albert E
- » [opendtv] Re: NY Times: In Verizon Strike, Blue-Collar Stress Hits the Sidewalks- Craig Birkmaier
- » [opendtv] Re: NY Times: In Verizon Strike, Blue-Collar Stress Hits the Sidewalks- Manfredi, Albert E
- » [opendtv] Re: NY Times: In Verizon Strike, Blue-Collar Stress Hits the Sidewalks- Craig Birkmaier
- » [opendtv] Re: NY Times: In Verizon Strike, Blue-Collar Stress Hits the Sidewalks- Manfredi, Albert E
- » [opendtv] Re: NY Times: In Verizon Strike, Blue-Collar Stress Hits the Sidewalks- Craig Birkmaier
- » [opendtv] Re: NY Times: In Verizon Strike, Blue-Collar Stress Hits the Sidewalks- Manfredi, Albert E
- » [opendtv] Re: NY Times: In Verizon Strike, Blue-Collar Stress Hits the Sidewalks- Craig Birkmaier
- » [opendtv] Re: NY Times: In Verizon Strike, Blue-Collar Stress Hits the Sidewalks- Manfredi, Albert E
- » [opendtv] Re: NY Times: In Verizon Strike, Blue-Collar Stress Hits the Sidewalks- Craig Birkmaier