> ("Comcast, supposedly the greatest cable monopolist, has averaged just a 4.5% ROIC over the last five years. Time Warner Cable’s 5-year average is -1.3%. Compare those with Apple (32%) or Google (16.1%).")

You can't compare utility companies with tech companies. When you invest in a tech company you don't actually know if they're going to turn into Apple or RIM. Utilities are much more stable investments.

Compare the ROIC of ISPs to other utilities.

Time Warner 9.22%
Comcast 11%
Verizon 13.39%

Consolidated Edison 6.55%
United Illuminating 5.71%
PG&E 6.51%

In other words they're about double what other utilities are making. The article you linked is apparently looking at "the last five years" as of 2013, in other words the recession following the housing crisis. Not exactly a representative sample.

> That's an absurd argument. By that reasoning, every profitable business would have a strong incentive to sell.

They do have a strong incentive to sell. They also have a strong incentive not to sell, because then they get the profits over time rather than the money up front. It's six of one half a dozen of the other. The only way it isn't that is if there is some significant disagreement about what the company is worth, in which case somebody is wrong and the existence of a transaction or lack thereof doesn't tell you who it is.

Selling a business unit doesn't tell you anything about how well it's doing, it just tells you that the seller would rather have the money and the buyer would rather have the business unit. You know a company has failed when they close their doors, not when somebody buys them out.

> Look at the numbers of the recent Verizon deal with Frontier. Yes, it's $10 billion, but Verizon paid $65 billion for GTE in 2000. The states that are part of the deal with Frontier--California, Texas, and Florida, are the biggest chunks of the former GTE territory.

GTE was a conglomerate with among other things a large wireless business with a lot of highly valuable radio spectrum. Frontier didn't buy any of that stuff.

> More importantly, look at the valuation of the deal on a per-customer basis. Verizon is selling 2.2 million high-speed data customers and 1.6 million FiOS customers. Assuming the 3.7 million voice customers are worth nothing, that's about $2,600 per data customer. The estimated cost of building, deploying, and marketing FiOS is close to $3,900 per customer. In other words, the deal doesn't come close to valuing each customer high enough where it'd be worthwhile to build FiOS out to the DSL customers.

That's assuming DSL customers are worth the same amount as FiOS customers, which is obviously wrong.

> But the vast majority of their revenues comes from TV service, because customers won't pay enough for internet service by itself to justify the capital investment.

I still don't understand what makes you think that. Empirically people prefer to pay ~$120 for internet+TV as opposed to ~$50 for internet-only because they want TV. If tomorrow they're paying $100 to Frontier for internet and $20 to Netflix for TV instead of paying $120 to Verizon for internet+TV, they'll barely even notice the difference. And it's not like you can subscribe to Netflix without internet service.

> And if they lose the TV service to internet companies, they'll just divest the wireline network business and double-down on media (like Comcast is doing with NBC/Hulu) or wireless (as Verizon is doing).

That's what they should be doing anyway. Whether the transaction is structured as "Verizon sells wireline business to concentrate on wireless" or "Verizon sells wireless business to concentrate on wireline" doesn't really make any difference. At the end of the day the wireline service provider is only a wireline service provider again, so they can concentrate on providing internet service instead of trying to impede their competitors in ancillary markets.

> What Fiber deployment shows is that the only companies that can justify building that expensive infrastructure (at scale) are the ones that can make money off the content/services side.

What it shows is that a company that can make money off the content/services side can justify building expensive infrastructure. That doesn't disprove the alternative.

> It's really worth asking what'd happen to Google Fiber if, hypothetically, Google lost its online services dominance to someone else.

You're not actually solving the problem. It's like saying, if we don't give OPEC control over what cars people can buy, what incentive will OPEC have to invest in designing cars? They won't, but we don't want them to anyway because the cars they would design aren't good for us.