Telco investment being forced by cable
Cable is forcing telco investment and could risk losing its competitive advantage over the next five years, according to the latest research from Goldman Sachs.
Tim Boddy and Hugh McCaffrey of Goldman Sachs European Telecoms/Cable Investment Research argue that cable forces the incumbents to invest in fibre-based Next Generation Access (NGA) technologies losing cable its competitive advantage over a five to seven-year period, however, they add, cable should gain in the all-important pricing power as the infrastructure market re-consolidates, squeezing local loop unbundlers.
Writing in Cable News, the analysts say that high-speed internet brought by DOCSIS 3.0 coupled with an increasing interest in on demand video is causing operators to seek investment opportunities, with particular focus on the cable market. “We believe it will take most operators at least five years (and potentially longer) to deploy fibre-to-the-home [FTTH] given a limited supply of construction engineers and time-consuming local planning consents. If consumer demand for bandwidth jumps before operators are ready to respond, market share losses could be large and value destruction substantial given operators’ high fixed costs and significant financial leverage."
In addition, Goldman Sachs has predicted that it could cost in excess of €41bn for incumbents to deploy FTTH across the European cable footprint/
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