Net Neutrality Friday

A couple of things happened this week that I want to write about.

First, LightReading was sold again. That online publication came about just as the bubble was about to burst. It has been around ever since. It was founded by a gentleman named Steve Saunders. He sold the publication in 2005, when telecom was at its lowest point. He bought back the site in 2014 and has sold it one more time! We shall see how things evolve. The publication started in a much more cheeky fashion and became a more business oriented publication over time. I recall the first time I was quoted there. I was at a conference called "Turning Copper into Gold" and I noted that the State PUCs were more concerned with the costs of telephony than in the deployment in broadband. The quote on the site sounded like I was attacking Grandmothers. I called the author, Phil Harvey. He and I became friends over our time working in Telecom.

The other event was Verizon buying Yahoo! for over $4B. That is added to the purchase of AOL earlier this year. I have done some due diligence in this space and thought I would add what I think is going on. There is a lot of money in the infrastructure of the Internet. Yahoo! has some excellent content (Sports for example). Yahoo! is the default Search Engine for iOS devices and has a significant mail engine. Many of these capabilities are great opportunities for advertising. If you haven't noticed the advertising in Gmail, then you probably just not looking.

These older companies have businesses with significant cash flow if managed correctly and are a lot cheaper than buying Microsoft or Google (the other primary search providers). If Verizon can get Yahoo! to be the default search engine on its phones, I think the purchase will pay for itself. All of that leads to greater advertising possibilities. Advertising has great margins and can be a significant revenue and profit gain. Verizon will have to optimize the businesses to make them useful in its future.

The positive thing for Verizon is that they have recognized that they can not make these businesses organically. The way Telcos work is just not conducive to the way that Internet companies work. Has Verizon chosen good properties to buy and exploit? I don't know if it will work out for them. But I think their head's are in the right place. The future is in content and applications not hardware. You can't turn a Telecom company into one of these new firms. But you can use the money that they make to buy into the right spaces. The question is how do you buy companies and how do you operate them to make them work in your future?

Jim Sackman
Focal Point Business Coaching
Business Coaching, Executive Training, Sales Training, Marketing

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