SOURCE: Pike & Fischer

July 06, 2006 14:07 ET

Municipal Broadband Will Pose Growing Threat to For-Profit Operators

SILVER SPRING, MD -- (MARKET WIRE) -- July 6, 2006 -- Cable operators, DSL providers and other incumbent broadband service providers could eventually see their revenues fall by as much as 48% due to competition from city-run broadband networks, Pike & Fischer's Broadband Advisory Services posits in a newly published research paper.

In the report, Pike & Fischer, a BNA company based in Silver Spring, MD, notes that the competitive threat from municipal networks (muni nets) is unknown given that they are only now beginning to emerge. But the report presents a simple model that provides a rough sense of the impact muni-broadband projects could eventually have on incumbents' market share and revenue.

The analysis concludes that muni nets -- depending on the type of broadband technologies used -- could grab up to 35% of the market share for video, fixed voice and high-speed Internet services, and up to 20% of the mobile-services market.

"The competitive impacts of municipal broadband will be especially threatening to incumbents to the extent that muni nets can be cost-justified by increased efficiencies, cost-savings and other 'internal' or 'social' benefits captured by local governments, schools, and other public institutions," the report states.

The report also details the various business and technical models being employed by cities around the country.

In conclusion, the report says that even though muni nets, and their impact on incumbent service providers, "remain largely speculative, there is a real possibility that even a modest realization of [their potential] could add significantly to Wall Street concerns regarding the financial prospects" of those providers.

"Municipal Broadband: The Economics, Politics and Implications," is available through Pike & Fischer's Broadband Advisory Services. To learn more, visit www.broadbandadvisoryservices.com, email: customercare@pf.com, or phone 1-800-255-8131, ext.248.

Pike & Fischer, a BNA company, is based in Silver Spring, MD. A limited number of copies of this report are available to the media. Contact Carol Bray, at 301-562-1530 x222 / cbray@pf.com. For inquiries about the contents of this study or to schedule an analyst briefing, contact Jonathan Wentworth-Ping, at 212-576-8741 / jping@pf.com.

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