Comcast and Verizon (VZ) are dying a slow death…
Investors who realize this fact early could cash in on a brand new tech boom that could produce a new generation of high-tech millionaires not seen since the 1990s.
Comcast, Verizon and other government-protected duopolies won't be around for your grandchildren to enjoy — at least not in their current forms. You see, companies like these are selling outdated services. And they're more than reluctant to change their business models.
First, consider the home telephone. This beast is becoming scarcer by the day. In fact, mobile phone-only households are becoming the norm. Yet despite huge increases in wireless sales by traditional telecoms, it's the wireline segment that keeps these blue chips in the black. More than half of Verizon (VZ) and AT&T's (T) revenue comes directly from wireline sales.
For the old-school telecom giants, it's all about infrastructure. They want to milk the cable and phone lines for all they're worth. After all, it took decades — and millions upon millions of dollars—to create these vast systems that pump TV and telephone service into our homes.
But the communications landscape has changed. We don't need separate wires to connect our homes to world. Now, it all comes back to bandwidth.
The technology is ready. Wireless dominates the landscape, and the old-fashioned telecoms and cable providers can only desperately hang on to their antiquated services. Even the government—which normally favors any out-of-date and/or irrational business model — is coming around.
We've said before that the Federal Communication Commission's stranglehold on our nation's airwaves is not only hopelessly out of date — it's downright counterproductive to the agency's goals.
However, the FCC is slowly stumbling toward opening up the airwaves once and for all.
Earlier this year, the president dedicated billions of dollars toward rural broadband development in the economic stimulus package. There's also a mandate that requires the FCC to create a national plan to bring broadband to everyone in the country.
The FCC has also approved proposals to use white space devices to provide broadband access. These devices would utilize analogue television frequencies recently freed up during the digital television conversion.
Of course, telecom giants aren't going down without a fight. The National Association of Broadcasters has already filed suit in federal court regarding the white space decision, claiming it could interfere with television signals.
It's a desperate move to save its empire. But in the end, it won't work. Technology will win, and media convergence will open the door to new data service packages for customers that will provide phone, television, gaming and internet service through lightening-fast, reliable wireless connections.
It will be the beginning of a new tech boom. Companies such as Limelight Networks Inc. (NASDAQ: LLNW), a content delivery network (CDN) provider provides a variety of services, including live Internet video feeds for major events such as the U.S. Open, Oprah's book tour and the Beijing Olympics, will thrive. In fact, Limelight's lucrative contracts with heavy hitters like MSNBC have helped the company grow its revenue more than 500% over the past three years.
More small companies like Limelight will surely emerge in the near future, providing ample opportunities for early investors to cash in on a new age of content convergence.
