“SmallTel” Independents will Increasingly Become “MediumTel”

Implications: 1.      Eventually, access line losses at independent telephone companies will start to significantly slow down because of the growing dominance of usage on the far side of the generational divide and the continuing need for reliable communication by a sizable number of people. 2.      It is not even out of the question that some residential subscribers will in the long term be willing to pay a premium for five nines reliability. 3.      The source article does not take into consideration the future consolidation of these independents as well as the continuing purchases of attractive landline assets from the RBOCs.

Analysis:  Many people in the industry found it hard to fathom that Verizon would ever sell meaningful landline assets.  The RBOC cried wolf over the matter one too many times.  Of course in addition, to the northern New England lines sold to FairPoint, huge portions of Verizon’s western territory are up for sale.  To believe that AT&T and Qwest (especially with its financial straits) will not do likewise in much of their territories would not be reasonable. 

That means while the larger independents are losing lines in less attractive rural areas,  they will be able in the Verizon territory alone to gain a Tier 1 city like Pittsburgh, as well as lines in Tier 2 and Tier 3 metros including Buffalo,Rochester, and Syracuse. 

Most importantly, telcos like Embarq, SureWest, Citizens, Century Tel, Windstream, and FairPoint will gradually come together to be in a better financial position to serve these acquired areas.  

It is doubtful that the source article is correct in that wireless is going to be that critical in the future prospects of the independents – and certainly not WiMAX.  

There is also a lot of people in all areas of the country that work in sectors like security, medicine, finance, government, etc., who will want as a bare minimum as much diversity/redundancy at home as possible.  They cannot afford to rely on just wireless and VoIP.