March 21, 2011

More Rubber Stamping

So the FCC finally rubber stamped the merger between CenturyLink and Qwest, making them the 3rd largest telecom in the industry. But who is really going to benefit from this? The customers, the employee's or the shareholders?

Just a couple of insights from articles and reports around the net. Upon recent approval, the FCC stated that the new company, what ever it is going to be named, needs to offer broadband to low income houses for $10. And it also needs to give these low income houses a new PC for $150. I see a lot wrong with this.

First, $10 broadband? that should amount to nothing more then a 768kb connection. No video streaming, no on line gaming. How well groomed will the lines be? How many issues will occur that will keep these people calling into the help centers? Most households today are going toward on-line tv services and video for entertainment. That's great, as it gives the cable companies competition. But you can't do that on a $10 a month broadband. And we know that it won't be $10 a month. They will find new fee's and taxes to hike that up to cost the same as other tiers they offer, in other area's. Just not in those select areas. And yet they have to offer download speeds of at least 4mb to at least 4 million subscribers. With their current structure, 4mb DSL is a lot more then $10.

Secondly, new PC's for $150? I think it's kind of absurd to tell an ISP they have to give away pc's to customers that buy their product. I mean Ford doesn't give away vehicles to consumers just for buying their extended warranties. Also, where is the money going to come from? CenturyLink is known for cutting out a lot of expenditures to save money. They've taken a lot away from it's employees to save money. They've recently just outsourced an entire PC repair department to save money. 

So let's do some basic math. Let's say that all CenturyLink has to do is give out 10,000 of these $150 PC's. That comes out to $1.5 million dollars of expenses. Again, where is this money coming from? Centurylink has already stated they are increasing their 2011 budget to $1 billion. But this was before the FCC rubber stamped the merger buyout. Out of this one billion, it is said to be used for fiber lines to cell towers. They also stated, that they did not include and costs for merging Qwest into the company into this budget. So here is another, where's the cash coming from? What other cuts are they going to make, to make all this happen? The timeline I saw in the FCC statement was a 5 year period. But that was on the $150 PC's. But how long before they think they are loosing money and someone else goes.

A company who's sole purpose is to make it's shareholders money at all cost, at what seems to disregard the employees and customers, is doing just that it seems. they have a set of founding principles. But yet those only seem to work one way. From the employees stand of view. So now the question(s) remain, who else is going to loose a job in this recent merger buyout?



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