The article doesn't really answer why the services cost so much. The higher fees aren't going to the margins of the telecoms. Verizon has a revenues of $39.14 per share and earnings of $2.31 per share for the past year.
I show $2.89 in earnings for CY2011 and $2.00 in dividends paid for a total of $4.89 on $38.57 in revenue per share, dividends + earnings = 12.6% revenue. That is very high for a mature company in a competitive market. I'll use WalMart as an example -- $132.91 revenue per share, $1.53 in dividends, and $4.74 in EPS for 4.7% of revenue.
Dividends are paid out of earnings so adding dividends to earnings is not an accurate way to understand a company's finances.
Revenues last year were $110,875.
Earnings (profit after expenses including depreciation): $2,404
Profit margin was 2.16% for 2011.
Walmart did about 3.5% for 2011.
Aleyan has a very valid question which is much more interesting than the original story. I would love to hear some people's opinions on why it is so expensive to provide highspeed internet.
12% is high but, if I recall correctly, French telcos are way above that. Some news report from a year ago claimed something about 30%, but I don't remember if it was average or one of the trio. This was about the time the trio lost the fight to prevent government from allowing a fourth competitor to enter the market.
"The article doesn't really answer why the services cost so much."
The video ends with the author explaining that it is due to a cartel of 5 or 6 companies getting together to fix prices with "non-compete" agreements. Where is the government? In bed with them. There is your answer.
Doesn't explain then what the telecoms are doing with their alleged ill begotten gains. Burning benjamins in their furnaces? They are certainly not making out-sized returns for the shareholders.
