Originally posted by bbv91258
Well that is really disappointing to hear. What's the point in them offering their own video service when it is so below par. They might as well just let Adelphia supply the cable service like the rest of the county.
What's the point? Here's my view.
Money for the developer is the point. Ongoing, guaranteed revenue, with no churn, even after build-out is finished! Providing best value and service to the homeowners seems to be a secondary consideration at best. From the developer's viewpoint, having Adelphia come in means leaving money at the table, especially in an upscale community like this one.
The FTTH vendor is likely not the only party that profits from contractually-mandated ongoing revenue tied into HOA fees. From several prospectuses I have read lately, I would assume the developer is in for a major piece of the action. I would assume that long after build-out, when the HOA becomes homeowner-majority and the new home sales stop, the developer will likely be splitting recurring revenue with the FTTH vendor.
This is a profit center for the developer, the gift that keeps on giving. And indeed, I wonder if this is a conflict of interest, as the developer negotiates the initial contract with the FTTH vendor, but does so in a way to maximize all revenue, both current and future, not necessarily to look out for homeowners interests into the future, after build-out, when the homeowner-majority HOA gets saddled with long-range contracts put into place by the developer-majority HOA.
This would appear to be the "Achilles Heel" of the arrangement from the standpoint of the homeowner, i.e., who is looking out for their interests?
I am not going to name any names here, but anyone involved in investing is seeing more and more of these kinds of prospectuses which all talk about the future gold mines of mandated recurring revenue for the FTTH vendors and Developers involved. No one I see is talking long range benefits for the homeowners themselves, the ones stuck footing the bills and putting up with whatever grade of service they get. This is the model of the industry, as I am aware of it. Caveat emptor.
What concerns me about these arraignments is the developer making long term contracts with FTTH vendor that future homeowner-majority HOA will be stuck with, long after the developer moves on elsewhere.
The beauty of this arraignment for the developer is the guarantied recurring long-term revenue, post build-out. And unlike other Telcos (i.e., Adelphia, Verizon, etc.) in the open marketplace, this is revenue with 0% churn, as it is mandatory for every home. It seems pretty clear to me that these arrangements appear to be one-sided, with the homeowners getting the short end of the stick. Stop your payments, loose your house. As far as I can tell, there are no similar corrective measures that apply to the FTTH Telco vendor.