February 5, 2005

The New York Times > Business > MCI and Qwest Still in Talks, but the Air Cools

I'm waiting to see what Verizon's play will be. Verizon is a healthy company with a good reputation. Neither MCI or Qwest has that advantage with customers or regulators.

Will Verizon place its bets on wireless and building last-mile fiber broadband to its present customer base or do they think they need more long distance assets and the large enterprise customers? Perhaps they will wait to buy the result of the Sprint-Nextel merger. The wireless technologies used by Sprint Wireless (CDMA) are the same that Verizon Wireless uses. Gaining these wireless customers while simultaneously building fiber to the home and letting the traditional circuit-switched long distance business atrophy may be a good alternative. Meanwhile, if they bought Sprint , they could invest their capital in rolling out EVDO (3G wireless) and expand the broadband revenue from a very large base of wireless customers.

The wild card is the rate enterprise customers adopt VoIP. The profits in long distance continue to shrink because of the price wars and the looming technology change out. Why would a company want to buy switching assets when the world is changing rapidly? With VoIP, enterprise customers become less dependent on the circuit switched network providers.

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