Wednesday, May 24, 2006

IPTV Math by at&t

"AT&T Inc. is spending $4.6 billion to make television available to 19 million homes in 41 markets by the end of 2008, AT&T Spokesperson David Moessner told the St. Louis Business Journal." That comes to just $242 per home passed. Ridiculous numbers. Try 10 times that. The real figures are more like $1800-2400 per home passed, depending on neighborhood density. (Unless they consider an aprtment and a condo a home and they are planning lots of MDU projects, like Verizon Avenue). ___ Let's pretend the fuzzy math is real. Let's say the take rate is 20% (which experts agree is high). Each IPTV customer will cost 5 times $242 or $1210. During the current price war I am observing between VZ FiOS and TW-BrightHouse, prices are dropping. So a triple play is going for about $120 dollars. Right now, a home with phone and DSL is paying SBC about $30 for phone plus maybe $25 for LD and $25 for DSL, not including the necessary $16 in fees and taxes. That leaves $40 for TV. The $120 doesn't include taxes either (the bill will be closer to $150). Sweet bundle, huh? Where's the profit?

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