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Originally Posted by ianathuth
When you look at something that your competitors have that you don't have, you have to think beyond the cost of providing it but also at the cost of NOT providing it. If you take the view that it is not economically viable you risk the chance of losing a lot of customers to the opposition thereby cutting your own revenue and increasing the oppositions. The opposition, by having gained many more customers for the product recovers the cost of R & D sooner and goes on to other projects that take it even further ahead. Unit prices for the oppositions products also decreases with the larger number of takers so they win again.
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I think this neatly sums up the critical weakness of the original cable TV proposition in the UK (a large number of small providers). NTL and Telewest need to merge and work on a single, coherent and cost-effective answer to the challenges from Sky (and to a lesser extent, Freeview) which have the entire country to market to.
The 'cost of not doing it' is unlikely to impress the banks at the moment, who have a huge amount of cash tied up in the two companies and will be wanting to take profits to pay that off before contemplating any big R&D.