KUHN CAPITAL Saturday, February 24, 2018
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Waiting for the Fat Pipe to Sing


According to Datamonitor, in the first half of this year venture capitalists had already invested about $6.9B, $1B more than last year’s halfway mark.

While that’s impressive enough, what’s particularly interesting to us is where the VC’s are placing their bets: Internet television (IPTV), home multimedia products, online advertising, broadband and online social networks.

What all these sectors exploit is the ability to push megabtes of content through high-capacity (“fat”) pipes. For example, the largest recipient of VC largess so far this year is Amp'd Mobile, a broadband cell phone/content company that piggybacks off Verizon’s speedy network and that snagged $150M from the VC arms of Intel and Qualcomm.

Another big winner was Current Communications, a broadband-over-power lines (BPL) company that took in $130M from an eclectic group of financiers and relevant industry players: TXU (an electric utility), Earthlink (an ISP), GE (hardware vendor), Google, Goldman Sachs and newspaper publisher Hearst Corp. While still embryonic, the business of delivering Internet services through the home’s power cable is looking increasingly viable.

Finally, we’ve noted before the telecom industry’s scramble to pump IPTV through its millions of customers’ phone lines. (See our recent Video-on-Demand [VoD] piece). Bottom line: the phone guys have no alternative. They must spend billions on IPTV delivery technologies or abandon their market to their cable guy nemesis who, like Comcast, is now beginning to offer phone service.

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