Fitch Report: UNE-P Use Will Decline in U.S. Telecom Industry.
As interim and final policy proposals regarding UNE-P are developed, Fitch believes there are several industry developments that appear certain. UNE-P will experience material rate increases both on existing and future line deployments that will reduce the competitive attractiveness of this vehicle. Competitors will change focus from UNE-P deployment to superior technologies such as voice over the Internet protocol (VoIP) to compete for customers.
While the regional Bell operating companies (RBOCs) could experience some near-term benefits from UNE-P changes, Fitch's long-term industry outlook remains unchanged: that the most successful telecom companies will be those that can provide most complete service bundles, the ability to service the broadest customer set with the most favorable cost structures. The report finds that the RBOCs could experience some immediate cash flow improvements due to price increases and a slowing of retail to wholesale service migration. However, over the long term, VoIP and wireless services will continue to exert significant pricing and substitute-service pressure on local exchange service, leading to lower prices and margin compression.
For the full report, see 'The Effect of UNE-P Decisions on the Telecom Industry,' dated July 22, 2004, on the Fitch Ratings web site at 'www.fitchratings.com'.
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|Date:||Jul 26, 2004|
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