Foot Dragging on the Stimulus? Opportunity!

March 18th, 2009 by · Leave a Comment

There is an article in BusinessWeek today stating that large telecom operators like Verizon (NYSE:VZ, news, filings), AT&T (NYSE:T, news, filings), and q are dragging their feet on the stimulus.  They are grumbling and complaining that the regulations may be too onerous, that they might be forced to open those new networks to competitors.  After all, free money is supposed to be free, right?  What they’re doing of course is trying to affect the final form of those regulations to their advantage. Besides, they don’t actually need the money.  Sure they want the money, they’d be glad to spend it, but they generate so much cash flow already.  Besides, they don’t actually care much about expanding broadband coverage and everyone knows it – those customers are already theirs via copper anyway.

Meanwhile, opportunity knocks for competitive telecoms of all stripes! Usually, bidding for government funds alongside the incumbents is sort of like going one-on-eleven against an NFL all star lineup, but for the moment, the field may be clear.  The large telecoms hope the threat of not using the stimulus fast enough will buy them better terms, but what if everyone else manages to spend it first?  The problem for competitive telecom has always been funding the buildouts, not finding places to do it – especially with government funds to improve the economic case.

Zayo Group (news, filings) has already hit the ground running trying to put together a team, and I’ve heard of several others looking to tap the stimulus money.  Dave Rusin from afs left a comment on my metro fiber update suggesting that an open access platform be required for all government funded fiber projects.  That would likely preclude all ILECs and MSOs  and I’m sure he’d love it if the big guys sat out the entire process.   I’ve never been a big fan of this sort of government spending, but it’s here and they want the money spent and spent now as part of the stimulus.  So let’s spend it! Back in the bubble, this sector proved it knows how to spend money with wild abandon, surely we haven’t forgotten how?  Haha…

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