Seidenberg’s Folly


What is a folly?

A folly is the ruins of a great accomplishment that never gets finished. The English landscape is dotted with disused and crumbling monuments. Many of the follies were made by industrialists who spent the wealth generated by textiles mills, shipyards and heavy industries. A more modern day version of this would be the expensive shower curtains purchased by L. Dennis Kozlowski during the recent Tyco scandal in the U.S.

Who is Ivan Seidenberg?

Ivan Seidenberg is head of Verizon, a U.S. telecoms company based in New Jersey, they jointly own one of the U.S.’s largest mobile phone operators with Vodafone and are provide landlines to Americans living on the eastern seaboard. They are a direct descendant of the Bell Telephone Co. a former telecoms monopoly rather like BT prior to privatisation. Verizon was one of the baby Bells made by the break-up of the previous company. It was originally called Bell Atlantic but has grown beyond its roots by acquisition and joint venture.

What’s the SP?

In January, at the Consumer Electronics Show in Las Vegas, Seidenberg laid out a plan to spend two billion dollars digging up and replacing the copper cables that lie between the customers house and the telephone exchange, replacing it with strands of glass called optical fibre.

This is interesting because:

– Verizon until now has been very focused on creating shareholder value, broadly that means working the business in such a way that they keep paying a dividend and the share price keeps going up. In order to do that you need to avoid ‘bet the farm’ type moves, or anything that may unsettle institutional shareholders. One of my frustrations working as a PR consultant agency-side with Bell Atlantic mobile was trying to get my spokespeople to say anything daring, visionary or forward-thinking. We struggled to send out news,even issuing press releases about mobile phones donated to battered wives shelters in New Jersey

– Verizon, historically has made more of a mess in providing value-added services over broadband and wireless services than other carriers like Deutsche Telekom or BT, there is no indication of how Verizon is likely to be able to make additional value out of the investment. Capgemini did a survey of 100 CEOs in the telecoms, media and technology sectors in 2000, which I helped to promote. One of the summary conclusions that came out of it was that everybody knew they wanted broadband, but they did not know what it would be used for, or how they were going to make money out of value-added services. I still believe that to be the case, I have seen nothing that has convinced me otherwise

– Online and digital entertainment is very much up in the air, no one is sure how the market is going to pan out

– Content providers will rob you blind, Apple recently said all the 99 cents a track from iTunes Music Service went on credit card transaction costs and record company royalty payments, How will there be room for someone like Verizon at the table?

– Selling fibre to consumers would disrupt the market for business data communications, driving prices down and causing a corporate bloodbath unlike anything we have seen in modern times. It could annihilate companies like WorldCom who are in the final stages of bankruptcy protection and Comcast who sell broadband DSL services. This very disruptive process while in theory of some benefit to consumers, could still be loaded with many anti-trust issues

– The economics of putting fibre into the ground are very complex. Putting fibre in the ground is no more difficult than putting in cable. Optical fibre has its own challenges, water must not be allowed anywhere near the fibre, otherwise it will get between its plastic skin and the glass causing a kink that greatly reduces its ability to carry a signal, Despite the best efforts of the likes of Corning this process happens by osmosis, because of this optical fibre is very likely to decay to uselessness in less than ten years; potentially a much shorter lifespan than the copper cable it replaces

– Generally the denser the population the cheaper it is to wire them up, you don’t have to go miles from one house to another. Verizon covers some of the densest population on the planet and the high rise living of Manhattanites presents its own engineering problems with added expense

– The biggest barrier to putting fibre into the home has been the cost of the electronics at either end of the cable, these have come down in cost, but not as fast as the cost of computing power or electronic storage. This would still be substantially dearer than a cable box, broadband satellite receiver or DSL router

– Providing consumers access to huge amounts of bandwidth means that you need to ensure that there are no bottlenecks in the core of the network. Verizon like most carriers are still carrying the billions of dollars already spent in the core of their network as high value assets. Will this have to be scrapped and made over to allow for the new fibre world? How would this affect their balance sheet?

– Verizon like many carriers relies on declining numbers of traditional voice calls to finance new services including this ambitious plan, how would it finance it and how would this affect shareholders?

– In order for Verizon to even make their money back on the fibre installation they need the regulators cut them some slack on forcing them to rent the lines to alternative carriers at cost. A practice currently in place to encourage competition in telephone and broadband services

If Verizon are successful, it may encourage other telcos to do the same thing, they may not be so lucky….

Seidenberg and the False Prophet

Seidenberg’s bet reminds me of George Gilder a strange mix of techno sage and right-wing evangelist that America is good at putting out. He foresaw a golden age for the information economy brought about by photonics and charged many business executives a whole pile of money for a newsletter about companies that he felt was at the vanguard of the revolution.

George’s vision hasn’t come to pass, yet Seidenberg’s plan sounds like something straight from the Gilder playbook including the lack of profit imperative.

Return of my Watch


Its been almost three months but my old Submariner has been serviced by Rolex in London. The watch is immaculate and I see no reason in ever buying a new one.

The service and a new brezel cost almost 200GBP, but the quality of the work done to make it look literally as if it had just come off the factory line is worth it.

I understand now, how they can afford to have offices that would not be out of place in a Bond movie as the arch-villian’s sitting room.

If you are interested in getting a secondhand Rolex, I would recommend the Vintage Watch Company who have rare models including the Turn-o-graph – a forerunner of the Submariner dive watch and the Thunderbird.

Yes, yes, y’all; to the beat y’all

Put on your Adidas First track suit, dust down your pair of Superstars, fix your Kangol and pop some d-cells in that monster Sharp boombox you got in the attic. Have we got an electric bugaloo-tastic posting for you. First off check out this Transformer breakdance Flash animation – the soundtrack is back to the 80’s block rockin’ electro. Thrill at the robots uprock and floor work, gasp as they change into a ghettoblaster (that any Cazal wearing homie would have been proud of) and back again.

Beasties back on another microphone rampage

The Beastie Boys return with their new album To The Five Boroughs and a first single Ch-Check it Out – a wholesome slice of fresh b-boy goodness for y’all. Cold slammin’. Great single – classic material with funk, beats, lyrics and infectious rhymes. Their website has a DiVX encoded video (Mac OS X users need to go to VideoLAN.org to get a suitable freeware player), e-cards to spread the gospel, lyrics to sing along and quarter of an hour interview with all three of them in the studio (Real Player format video)

Definitely one for the birthday list!

Tablet PCs are Crap – its official

From the ‘I told you so’ school of journalism. A while ago on AlwaysOn Network I wrote about the limited appeal of Tablet PCs and many disagreed with me. Now The Register have posted comments from an Acer spokesperson talking about the fact that the concept is years ahead of acceptance in the marketplace (that’s saving face speak for commercial disaster). Acer is trying to bring this to fruition by trying to cull the cost of a TabletPC right down

The business case for the tablet PC will be even harder prove when devices like OQO come out and more of the PDA market moves towards smartphones (something I think is more to do with telecoms operators subsidising handsets rather than the wisdom of an all-in-one device – but thats another discussion all together).

Dating the Hi-Tech Way

The New York Times ran an article in its fashion section about how Wonks (thats people like Rob Lowe and Co. in the West Wing for all our non US readers) meet prospective patners to strategise wtih and admire the diamond patterns on each others Pringle cardigans and aspire to be real Eurotrash. Why these people should be allowed to breed is beyond me, but they are now taking advantage of the ubiquitous nature of RIM Blackberries (email pagers) in Washington to flirt and organise dates. Some funny bits in the article about ill-thought out drunken emails sent via the Blackberry. Makes the sex-starved staffers of Bush’s neo-puritan regime sound more like Jimmy Swaggart than Billy Graham.

Reminds me of when I worked on the Palm PR account, one of the gimmicks we had was a spoof ‘Gaydar’ application for Valentines day.

Why doesn’t invent some useful dating technology instead to get you over when the conversation becomes awkward, stilted or a bigger effort than bench pressing a truck axle?