Tellabs Survey Reflects Competitive Landscape and Margin Threats

Implications: Tellabs commissioning a broadband survey based on respondent’s perceptions instead of deployment metrics indicates their competitive threats for market share and equipment margins.

Analysis: Tellabs’ survey commissioned for broadband services does not measure actual availability, but instead is reporting the respondent’s perceptions.  The survey is responses from a sample of readers of U.S. telecom publications rather than end users that have or intend to deploy broadband.  The over 80% of respondents advocating the importance of broadband are expressing how they “think” instead of the business impact.  Although Tellabs alludes to the importance of productivity from broadband services, the survey does not measure the productivity gains.
Tellabs points out how the U.S. is lagging in broadband penetration.  Tellabs appears to be trying to use the survey results of perceptions to show demand.  The decisive factor is whether the demand is cost justified to individuals and enterprises.  Factors such as English Language Learners (ELL) and corporate health benefits might have a higher priority in education and business.  Tellabs might be trying to justify the pricing of broadband services for telecom and cable providers.  Tellabs faces competitive pressure in equipment margins and for its dependency on the U.S. market.  Tellabs is competing against the larger telecom companies with global alliances such as Nokia Siemens Networks, Alcatel-Lucent and Cisco.  Tellabs has expanded globally with contracts to Japan’s NTT, Australia’s Telstra and Telecom Italia.  But the Tellabs survey is pitching American broadband availability and appears to be a tactic to spur bundling initiatives from former U.S. cable partners like Time Warner and Comcast.