Today's Top Stories Also Noted: Spotlight On... Citizens Communications; A telecom earnings preview; Airwaves auction plan under fire; and much more...
1. Qwest guns for 40 Gigs Qwest Communications, possibly looking to improve its position versus other network operators involved in the federal government's massive Networx upgrade project, has quadrupled capacity on its nationwide fiber backbone to 40 Gbps. Qwest won pieces of both the Networx Universal and Networx Enterprise contracts earlier this year, along with other carriers such as AT&T, Verizon Communications and Level 3 Communications. Denver-based Qwest has had quite a year so far, having made progress on its financial recovery while seeing its former CEO, Joe Nacchio, convicted of insider trading, and current CEO Dick Notebaert abruptly announce his retirement (Notebaert continues to stay on board until Qwest finds a new chief.) Another three executives announced their retirements in recent months, though Qwest did name a new vice president of federal relations, Shirley Bloomfield, this week. Amid all the activity, Qwest says the network capacity upgrade was simply a response to direct customer needs, and not a requirement of the Networx deal, but buttering up the feds couldn't hurt, right? For more on Qwest's capacity boost: And further coverage of the Bloomfield hiring: 2. OPASTCO chairman just dogs it Roger Nishi, the new chairman of the Organization for the Promotion and Advancement of Small Telecommunications Companies, made a memorable entrance during the trade group's annual conference in Anchorage, AK, this week--dressed as an Inuit and riding on a sled pulled by two sled dogs. But, Nishi, who also is vice president of industry relations for Waitsfield and Champlain Valley Telecom in Vermont, quickly did away with any notions that he'll only be doggin' it as OPASTCO's new leader. He suggested in his opening address that the group needs to be more active on behalf of its rural telco constituents, and will continue to fight against proposed Universal Service Fund changes now before the Federal Communications Commission. Still the fight against USF reform may be a futile one. Many small telcos and wireless service providers do need USF money in order to keep from passing significant costs to their customers, but it doesn't help that the process of gaining USF credentials and receiving money is broadly viewed as lacking stringency. Like a presidential election in which the popular vote doesn't necessarily decide the winner, small telcos may vastly out-number larger ones, but the big boys and their lobbyists still have the clout and the FCC's ear on this one. For more about Nishi's OPASTCO appearance: Also: Here's a Q&A with Nishi in Telephony's supplement The Independent 3. Feasting on SunRocket's customer base The creditors of defunct VoIP service provider SunRocket are trying to reach a deal with another service provider to find a new home for SunRocket's 200,000 or so existing customers. Meanwhile, apart from that effort, telcos ranging from VoIP pioneers like Vonage to former Bell companies like AT&T are busily pitching the left-behind customers themselves. So far, SunRocket is offering precious little info about what went wrong, as well as whether or not customers who already paid the $199/year flat service fee so heavily promoted by SunRocket will get any money back. It's possible SunRocket was giving away too much in the way of service capabilities for a low price, but the broader lessons from its demise may be that the VoIP business is no longer one for one-trick ponies, and that the overall window of opportunity is closing as old-school telcos like AT&T and Verizon push further into the market and muscle up against the newbies--whether by legal or purely competitive means. For more on the SunRocket saga: 4. Yipes relies on Reliance investment Following its $300 million bid to acquire Yipes Enterprise Services, India's Reliance Communications may spend an additional $200 million to polish its new gem in the hopes of creating a larger, faster return on its total investment. The money could be used to boost Yipes's annual capex, as well as to hire new staff and expand in markets throughout the world. The Carrier Ethernet market has become a hotly-competitive one in recent years, and Infonetics Research has said it could be a $25 billion market by 2010. Having said that, Yipes is a relative small fry in a U.S. market led by telcos such as AT&T, Verizon Business and Qwest, as well as pure-play aggressors like Cogent. For the time being, its market slot may be that of a secondary choice for enterprises not wanting to award all their business to one carrier. Though, in a market headed for $25 billion, who'd complain? The sideline to this story is that international carriers like Reliance are increasingly taking more than a rooting interest in the U.S. market. BT, Korea's SK Telecom and others have made the plunge, but look for more foreign players, especially from Asia, to make similar moves. For more about the Yipes deal: 5. Deal rumors: Buyer interest in 3Com; Huawei and CAC Telecom vendor consolidation has been continuing at a healthy pace since AT&T's 2006 acquisition of BellSouth--which signaled a shift in the telco universe toward fewer carrier customers and (probably) less telco capex for the time being. Now, comes rumors of two more possible deals. 3Com supposedly has drawn acquisition interest from parties that include private equity firms and Nortel Networks. Meanwhile, another report suggested Huawei may be interested in acquiring Carrier Access Corp. The 3Com possibility is intriguing in part because if it ends up in private hands, it would follow not long on the heels of the acquisition of 3Com competitor Avaya by a private equity firm. Private equity money has been flowing into public telecom vendors and service providers of late, with Alltel having agreed to be bought by Goldman Sachs and TPG Capital, and Bell Canada being the target of a private consortium. What's less clear is how privatization may change these firms. Will the PE guys strip-mine the firms' cash flow resources to realize big, but short-term margins, or will they actually invest to create more long-term value for another eventual sale or spin-off? For more about the 3Com rumors: For speculation on Huawei's potential interest in CAC: ALSO NOTED SERVICE PROVIDER SPOTLIGHT... Citizens Communications > Why the 700 MHz auction plan prompted one advocate to say "AT&T has got to get over this Google-on-the-brain thing." Article (Reg. req.) > Telecom service provider and equipment vendors stand to reap some good news from imminent second quarter earnings reports. Article > Are companies providing prepaid calling cards cheating their customers? Article And finally... The newest trend in online dating is to pick up the phone. Article FierceTelecom is a free daily email service covering the latest news in the telecom industry, with breaking stories and exclusive insights you won't find elsewhere. Editor: Dan O'Shea - doshea@fiercemarkets.com Advertising: contact Jason at jason@fiercemarkets.com or call 202.628.8778x10 You may enjoy our sister publications: New to FierceTelecom? Sign up for free at www.FierceTelecom.com FierceTelecom © 2007 FierceMarkets Inc - ® All rights reserved |
