Another cable VoIP plays the self-fulfilling ROI pricing game

Edmonton, Alberta is known for the world's largest shopping mall, the NHL's Edmonton Oilers (remember hockey)? and now, the site of the Canadian cable television industry's first VoIP-based deployment.

Sometime next month, Shaw Communications (no relation to the author :-) will offer its Edmonton customers 1,000 minutes of VoIP for $60 a month.

Canadian telecom-tech blogger and journalist Mark Evans notesthat Shaw expects to spend $105 million in capital for the first 200,000 customers. Also the telecom correspondent for Canada's nationwide National Post daily newspaper, Evans adds that he has reservations over the $60 "hefty monthly bill." "Does it really make sense to switch over to a cableco if the price difference is minimal?" he asks.

I agree wholeheartedly. This is Comcast north - a price point dictated by corporate hubris, ego, and a sensitivity to the rapid ROI that pleases the markets.

But this ROI isn't going to happen. Let's do the math. If the substantial majority of customers opt for the $60 package, $105 million in capital needs about 145,000 customers to break even over a 12-month period. If they get their targeted 200,000 customers, that's an approximate nine-month ROI.

Balderdash. Mark Evans has it right when he writes, "At $60, I have serious doubts (Shaw) will be able to achieve the market share gains management has targeted."

Hey, Shaw, get a grip. (Where have I heard that before?) Stop trying to shoehorn pricingmodels into bogus ROI projections designed to please institutional investors, first.