Monday, July 10, 2006

The Phoney Debate On Net Neutrality

It never was about Net neutrality boys and girls. It was about gaining more money, cash to be able to buy up the competition, and overcharging for broad band is the way to get that cash. In the meantime how much will Nortel go for, and will Canadians even care. Doubtful after having lost money in the greatest fiscal crash since Enron.

This continues to be a simple question of market integration, the move towards monopoly capitalism or at least a price regulating cabal, and oligopoly, in telecos.

We have seen the return of ATT and now we see the wireless cable phone companies in merger mania. Only because capitalism knows no other way to capitalize technology or use technology to benefit production. Aimed soley at making profits it is only incidental that progressive technological change is made at all.

Nortel proves that. As does Motorola, two basket cases in the industry. And the industry is dominated by the Northern EU countries Finland and Sweden. Nortel fits into this as another example of a high tech company destroyed by the short term goal of the quarterly bottom line.

A Mania in Telecom to Merge

As Nokia and Siemens announced plans to merge their telecommunications equipment businesses — the third major industry deal in less than a year — the big unanswered question was not if, but when, the remaining giants would team up.

Many financial analysts expect Motorola and Huawei of China to pursue Nortel Networks, which is widely viewed as the most valuable but also the most financially troubled of the remaining companies that make the building blocks of the world's phone and data networks. A smaller group of analysts see Motorola and Huawei joining hands, leaving Nortel alone.

Whatever combination emerges, the logic behind the deals is not unlike the thinking that drove Ericsson to buy Marconi or the pending merger of Alcatel and Lucent Technologies, which was announced in March: As carriers like AT&T and Sprint-Nextel turn into one-stop communications providers, equipment vendors must expand if they hope to continue serving them.

They must be able to integrate wireless and traditional networks so customers can, say, check their e-mail on their cellphones and have single voice mail accounts serving a variety of phones. They also need more financial firepower to cut prices and keep up with low-cost competitors overseas.

With their broader product lineup and deeper pockets, Ericsson-Marconi, Alcatel-Lucent and Nokia-Siemens would be in a stronger position to win contracts to provide those services. For Nortel, the weakest of the remaining equipment makers, merging may be the only way to keep up, analysts said. "If you look at financials, Nortel is the No. 1 target" for a takeover, said Edward Snyder, an industry analyst with Charter Equity Research in San Francisco.

Any deal for Nortel, though, must overcome hurdles. Nortel has been plagued by accounting troubles, operating losses and management shake-ups. As the company was busy sorting out these problems, its potential suitors were merging.

If the merger of their equipment units is approved, Nokia and Siemens would become the third-largest equipment vendor in terms of 2005 sales, with 18.3 percent of the global market, according to the Dell'Oro Group. Ericsson-Marconi is the leader with a 21 percent share of the market, followed by a combined Alcatel-Lucent, with 19.6 percent.

Nortel, on the other hand, has just 10 percent of the market, while Motorola has only 5 percent. Huawei has about 4 percent of the market.

These companies would not only lag behind in total sales, but would also lack the full complement of products that their three larger rivals will have.

They would also face more pressure from Cisco, which in February bought Scientific-Atlanta, a leading maker of television set-top boxes. The deal gave Cisco, which makes the digital switches used to route traffic around the Internet, access to cable companies, which are building networks that compete head-to-head with those of big telecommunications companies like Verizon.

It also could give Cisco a foot in the door at Sprint-Nextel, which is working with Comcast, Time Warner and other cable companies to introduce wireless services that dovetail with their landline and video businesses.

Also See: Monopoly

Telecos want to Monopolize the Net

NARUS Is Big Brother

The End of State Monopoly Internet

Big Brother Bush

Google Censorship China

Inclusive Internet

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