Wednesday, February 10, 2010

Google Wants A Piece Of The ISP Market

Google wants a piece of the ISP market and could build a distribution platform that competes with cable. Or as the article speculates, it is a ploy to force cable operators to put more capital investment into their infrastructure. "Building out pipes and delivering bits is a lousy business. It's hugely capital intensive -- Verizon is spending ~$20 billion just on the first phase of its FiOS buildout -- and hugely focused on manual labor, customer service, etc. Add low margins and increased competition, and it makes no sense for Google to do this on a broad scale."

The cable platform will be replaced by IP and the financial model will be changed to take in more revenue from higher speed connections and less from cable subscription. And IP would enable more direct relationship between the content creator and consumer; the pipeline will simply follow traffic control and hopefully not turn into a toll collector.

Madison Square Garden Splits From Cablevision

The unraveling has begun; MSG is separate from Cablevision. While it helps to unlock the value to Cablevision shareholders, separating out MSG also enables the Dolan family to concentrate on sports and music and sell off the rest. And the rest means Rainbow Networks, including AMC, WE, IFC and others, and their cable system serving homes in NY, NJ, and CT.

How much value is unlocked we must wait and see. But what the Dolans do next is always a mystery. That they actually followed through on this plan to separate the two companies is amazing. Tracking stocks have been announced and withdrawn, sale rumors continue to surface intermittently. Can two companies with such an interwoven cast of characters really work independently?