CenturyLink to Buy Level 3?

CenturyLink is rumored to be in talks to buy Level 3. Put me in the camp of those who like this deal for CenturyLink.

I believe that the future for residential services is a dumb pipe to the home with the subscriber deciding what to do with their bandwidth. Netflix, Amazon Prime, IP based security systems, smart utility services, etc, etc. If you own that dumb pipe to the customer's home - you own that subscriber.

The same will be true to a lesser degree for larger enterprise, municipal and other big bandwidth users. This deal will give CenturyLink more infrastructure to connect to these larger subscribers. A much better move than using funds to buy zombie brands like Yahoo! or content creators like Time Warner.

In fact - I wouldn't be surprised if Verizon backed out of the Yahoo! deal, using the undisclosed hack as justification, and instead used the funds that would have gone to that deal to also bid on Level 3.

Google Fiber Presses Pause

Google Fiber presses the pause button. Quite frankly I'm not surprised.

I think Google Fiber underestimated three things in regards to building fiber networks:

1. It is very difficult to make a business case for anyone to build a profitable network that is overbuilding an existing provider.

2. The price point of $70 for a Gig of bandwidth was not realistic. Doubly unrealistic when the existing cable company can drop pricing on a temporary basis while locking in subs to term contracts.

3. The utility company right of way and make-ready process are, to paraphrase Thomas Paine, the times that try men's souls.

An interesting fallout over this pause will be to watch how this affects Corning's stock price in the mid-term. Corning peaked about a year ago when incumbents were ordering glass left and right to fend off Google Fiber proposed builds.