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.