telecom

Report predicts 12% drop in broadband subs in 09

Pete Wylie — Thu, 08 Jan 2009 15:32:47 -0500

Market research firm Pike & Fischer released a report this week predicting a 12 percent slide in broadband sign-ups in 2009. The report said approximately 5.7 million U.S. household would sign-up for broadband services in 2009, with roughly 75 percent of the new adds going to incumbent cable companies.

Pike & Fischer cited the poor economy and decreasing job security as leading indicators that the broadband market was due for a slowdown. But the report's authors were also quick to note that its predictions would need revision if the Obama administration makes broadband buildout part of the stimulus initiative. In a speech given Thursday urging swift action on a stimulus package, Obama maintained that broadband expansion initiatives would be a central part of the plan to stabilize the economy.

"Government initiatives, such as tax incentives and loan guarantees to help expand broadband infrastructure into underserved areas, could enable service providers to bolster their customer counts," Scott Sleek, director of Pike and Fischer's Broadband Advisory services, said to MSNBC. "In addition, policy-makers are likely to support training and education programs aimed at increasing customer adoption of broadband. These steps could offset what will be an inevitable slowdown in subscriber growth."

Thursday's announcement of Rich Boucher as the next chairman of the House Telecom Subcommittee could also prove to be a boon to broadband companies, as he has supported the Obama administration's pledge to build broadband in rural areas.

For more:
- see the msnbc.com article here

AT&T may get Supreme Court win, pension plan relief

Doug Mohney — Thu, 11 Dec 2008 16:57:00 -0500

Times are tight, but AT&T may get some unexpected relief on its pension liabilities from a favorable ruling in the U.S. Supreme Court.

On Wednesday, the court was leaning toward AT&T in its policy that lowers pension benefits for female workers who took pregnancy leave prior to 1979, when a federal law was passed barring job discrimination against pregnant women.

At issue in the case is if AT&T's seniority system is a violation of the pregnancy discrimination law, but the case could affect workers at other parts of the former Bell phone system. If AT&T's pension plan is forced to recognize the pregnancy leave time, extra benefit payments could be between 0.5 and 2 percent of the overall value of the pensions. Liabilities in additional benefits would be in the millions of dollars.

Scheduled to be decided in the first half of 2009, the lawsuit covers AT&T employees filing claims in 1994 who want uncounted pregnancy leave to count toward their retirements and benefits

For more:
- Latest reports on the AT&T Supreme Court Case. Article.

Biz Week: AT&T layoffs start telecom downturn

Doug Mohney — Thu, 04 Dec 2008 08:43:50 -0500

As if we didn't have enough bad news to worry about, Business Week asserts that cutbacks in consumer spending means that telecommunications service providers will have to do the same, causing a ripple effect that will impact equipment makers as well. We're not so sure to blame it all on the economy.

AT&T is used as the poster child for this theory, since the company has said it might cut back on the amount of network upgrades next year as it cuts 12,000 jobs - about 4 percent of its current work force. Verizon cut 2,700 people in the third quarter and Sprint has cut 4,000.

Before we ride the doom parade, we'd like to point out two factors: 1) Sprint has been a wounded duck for quite a while. 2) Just how much of these cuts can be attributed to the rapidly declining landline businesses of AT&T and Verizon is not really clear. But poor economic news makes for good cover. (Hard-core economics wonks may remember that the airline industry was bleeding money back around 2000-2001 and 9/11 provided the final straw/trigger).

Analysts are lining up to predict that more staff reductions and capital spending cuts are on the way, so equipment makers may see issues down the road. With people economizing by dumping landlines and even web connections, less seems to be more, but-

At the same time people are trimming, they are buying new wireless services (cheers from our sister pubs in the FierceWireless division). According to ComScore, the fastest growing segment of buyers for the Apple iPhone is people who earn less than $50,000 a year. Biz Week concludes this is because of belt-tightening; we would argue that this is the Millennial just-out-of-college/landlines-are-so-unhip crowd buying iPhones because they're never going to touch a wired phone if they can help it.

Predictions for growth next year are minimal at best, and there's a suggestion that even the cash-cow wireless service providers may need to cut prices in order in order to retain customers. Wireless ARPU has risen for 9 out of 10 years over the past decade.

Needless to say, capital spending on equipment is being predicted to drop anywhere from 10 to 20 percent just at AT&T alone, so suffering is predicted for everyone from Cisco and Juniper, to already-suffering Nortel and Alcatel-Lucent.

For more:
- Business Week speculates on the impact of a slowing economy upon telecom. Article.

Microsoft shoots CSF telecom service provider product

Doug Mohney — Tue, 02 Dec 2008 00:27:42 -0500

Even Microsoft is shooting some of its lame horses these days. The company has informed its telecom service provider customers that it is pulling the plug on the Connected Service Framework product, taking it out of the market and stopping development of new features. Guess this explains why so many Microsoft telecom people were bailing to greener pastures.

Microsoft has decided to call it quits on CSF because the product required a much higher degree of customization and integration than it expected; CSF is currently deployed in 30 service providers around the world, including AT&T and BT. In bailing out of the telecom service delivery platform (SDP) business, it will leave the arena to systems integrators while it focuses more on the delivery of web services.

CSF legacy customers will still get ongoing product support and will continue to be able to support the services they are currently delivering through the platform. Microsoft's partners will continue to provide IT and system integration support.

Who's to blame here? It could be equal parts of Microsoft's failure to understand the depth of customization service providers want and the reluctance of phone companies to fully embrace a Telco 2.0 style initiative. There's also the not-so-little matter of the SDP playing field being crowded with the likes of Oracle, BroadSoft and MetaSwitch - among others-- all targeting the service provider market with different flavors and business models.

For more:
- Telephony tunes in the Microsoft CSF story. Article.

New Zealand outage leaves 500,000 without broadband

Dan O'Shea — Sun, 30 Nov 2008 22:43:54 -0500

New Zealand national telco Telecom experienced a broadband network outage late last week that caused service disruptions to about 500,000 customers on the telco's national network. The Friday night outage reportedly was caused by a power fault at an exchange in Auckland, and service was out for at least seven to eight hours for some customers.

The company's customer service policies do not call for customer compensation unless an outage lasts for more than 24 hours, but you can bet Telecom will be hearing from some customers who want to challenge that policy.

For more:
- New Zealand's National Business Review has more

Infonetics: VoIP equipment down, capex spending not so much

Doug Mohney — Thu, 20 Nov 2008 23:13:36 -0500

A pair of reports by Infonetics Research reports that large carriers are scaling back on VoIP equipment purchases by 8 percent in 3Q08, with total capex spending expected to be down around 2 percent in 2009.

Even as service providers spent $816 million on VoIP marketing spending in 3Q08, sales for high-density media gateways experienced a steep decline, and the softswitch market dipped as well in the quarter. The good news is that sales of SBCs and media servers are both up, with softswitches, SBCs and media servers seeing year-over-year growth from 2007.

U.S. carriers were always slowing down their VoIP spends after completing major projects, while in Western Europe and some parts of Asia, inventories were already high. Infonetics predicts that new VoIP projects will be postponed or canceled as more consumers ditch their landlines. The research firm expects a two year pause in the overall carrier VoIP space, with a pick-up coming in 2011.

Turning to the worldwide service provider capex report, sales are on track to reach $275 billion in 2008, up 10.5 percent from the previous year. However, most of the growth is anticipated due to currency appreciation against the U.S. dollar, which peaked back in July. Overall, Infonetics sees a 2 percent downturn in worldwide carrier capex in 2009, led by big cuts by service providers in the Asia Pacific region. The following year - 2010 - is expected to be flat with a slow return to growth due to the start of a new investment cycle.

The good news is most service providers have clean balance sheets, having already adjusted their books after the dot.com binge died and forced deep "double-digit" capex cuts. This time around, North America, EMEA and CALA are expected to have low to mid single-digit cuts, while there's likely to be "steep" double-digit capex cuts in Russia and Asia Pacific.

For more:
- Infonetics talks about service provider VoIP and carrier capex.

Hail Britannia! (on the Internet)

Doug Mohney — Thu, 20 Nov 2008 22:57:51 -0500

UK communications regulator Ofcom says the country leads 12 industrialized nations when it comes to embracing digital technology, offering the cheapest mobile, basic pay-TV and broadband rates. Further, the country spends more time on the Internet than the rest of Europe.

Broadband take rates are at 60 percent, while half the UK uses social media sites such as Facebook, Bebo and MySpace. Uploading photos to the 'net is the most popular networking activity, with 43 percent of the population participating, according to the report.

Advertisers can take heart (or fear) that nearly a fifth of advertising spending is now online, but it doesn't appear that there's cannibalization of traditional broadcast media ads to the Internet.

A poll found that of UK residents who watch online TV, 81 percent do so at least once a month, 54 percent do so weekly or more often, and 6 percent get their fix daily.

We Yanks can take comfort that we spend more minutes online per week (913) than our British cousins (839). The Brits have us beat in social networking (50 percent vs 40 in the U.S.), and Ireland has everyone beat when it comes to text messages sent per person per month - 154.

For more:
- TheTelegraph dials in UK net usage.

An increasingly cloudy outlook

Doug Mohney — Fri, 14 Nov 2008 10:54:37 -0500

You're going to hear a lot more about cloud computing, but the marketing people seem to be determined to - ahem - fog up what cloud computing is and what it means for businesses large and small. More importantly, cloud computing is going to have an impact upon a wide range of telecom-businesses over the next five years.

Part of the problem is that cloud computing has some of its marketing muddling roots in the original concept of grid computing. Grid computing realizes that a lot of computers large and small have idle cycles, so if you have a bunch of desktop and servers sitting around late at night doing nothing more than warming the building, you can use software to harness all that excess compute power to work on big complex problems, like looking for new drug combinations, searching for ET or cracking codes. Very high geek, very boring stuff.

Meanwhile, we had the Internet - the "grid" writ large. Folks like Amazon are building large server farms for ecommerce and getting them powered up in the six weeks leading to December 25, which will be followed by a significant drop-off in capacity needed. In engineering diagrams, the Internet is a big "cloud" and you don't know - or want to know - what's behind the curtain. Instead, you just want the services to work when you need them.

Amazon (and to be fair, others) figured out if you had to build web services to scale up and down, you might as well do it in a relatively generic fashion, so you can put whatever you need up and have the ability to scale capacity to peaks and demands.

Tada! Cloud computing!

Put more simply in <ahem> my definition, cloud computing provides a platform/service for hosted applications that can easily scale up or down. Hosting on steroids, basically. Annnd, you're able to sell the services to others. If you're operating a solution in-house, it's grid computing in my book, but you'll likely call it cloud computing because you want to use the latest buzz words.

Why is this important for telecom? Three reasons:

1) Big companies running hosted services now will likely offer cloud computing services in the future. They already have the data centers and the infrastructure, all they need to do is to start off with a row full of racks and "scale" upward. They can squeeze more money out of existing hardware and infrastructure while (potentially) being able to drop prices for more attractive SMBs.

Expect AT&T and Verizon to offer cloud computing services. Maybe IBM and other services establishments.

2) Companies running hosted applications (i.e. they rent servers in a machine room from the guys in 1) and throw their apps on top) will want to look at cloud computing services if they have peaks and valleys in the demand for their applications; in other words, either seasonal events (Christmas) or major activities (elections, Super Bowl, Final 4) that result in heavy demand for their services - but not all the time. Companies currently running stock applications with a fairly predicable and steady rate of growth will stick with what they know.

Color your typical CDN as looking at cloud computing

3) Start-up companies and other new ventures will tend to drift to cloud computing, because it allows them to buy what resources they need when they need it, rather than having to plunk down either large capital expenditures to build their own servers or buy a hosted-server-at-a-time step function without a way to scale up and down more easily.

We're starting to see telecom apps appear on clouds already. Sylantro has its apps running on Amazon's Web services and Microsoft's Tellme division operates its own in-house cloud. Hosted UC and call center service will most likely have a cloud engine driving them.

It's not going to happen overnight, but the clouds are coming.

- Doug

Cogent Communications

Dan O'Shea — Thu, 23 Oct 2008 09:15:02 -0400

Location: Washington, D.C.

Why it's so cutting edge: A 2007 Honorable Mention goes big-time. Not long after Forbes singled out Jack Cassidy as honest, it labeled Cogent CEO Dave Schaeffer as "one of the most hated in men in telecom". Is it because Cogent is so darn aggressive in setting the Ethernet price bar lower, or because Cogent is quick to see its own weaknesses and correct them? Cogent's tactics continue to keep the rest of the market, especially the big telcos playing the Ethernet game, honest.

But can it keep its edge? Could "lumpy" Internet traffic patterns affect Cogent's future success? Cogent has been leading the charge on price, but other service providers continue to expand their Ethernet market reach, and get more creative with their services than they had been in earlier phases of the market.

A month after Ike, Galveston telecom restoration continues.

Doug Mohney — Tue, 14 Oct 2008 09:58:37 -0400

A month after Hurricane Ike rolled over Galveston and much of Southeast Texas, thousands of residents are still waiting for electricity, and some are still without landline phone service, cable or Internet.

Local utilities AT&T, CenterPoint Energy, Texas Gas Service and Comcast met at Galveston City Hall on Monday to give updates on service restoration and the challenges that remain.

AT&T reports it had completely restored services everywhere except on the barrier islands, including Galveston. The company's infrastructure on Galveston was "heavily damaged," and officials aren't sure how many people need service restored. AT&T is prioritizing the restoration of service to buildings that are occupied, have power and are "ready to receive service."

Comcast reports it has restored service to about 50 percent of its island customers; the number may be higher, but some people have not returned to their properties to turn on their TVs and computers. Comcast's underground infrastructure sustained "severe damage" from the storm and lack of commercial power in some areas is also a problem. The company is running generators at 50 places on the island where the system needs to draw power, and generators must be manned at all times to prevent theft or other incidents.

Comcast projects full restoration of its Galveston network in three weeks, except for some "isolated cases of outages" where a cable drop from pole to house is still not repaired.

For more:
- The Galveston County Daily News reports Galveston telecom restoration after Ike.

Etisalat takes big stake in Swan Telecom

Pete Wylie — Tue, 23 Sep 2008 10:26:23 -0400

Emirates Telecommunications Corporation (Etisalat) announced Tuesday that it will buy a 45 percent stake in India's Swan Telecom for $900 million.

The UAE-based Etisalat will now have an entry way to a gigantic emerging market, which is the world's second largest in terms of subscribers. Broadband penetration is limited in India, and many experts predict a rapidly growing middle class will increasingly turn to mobile products to meet their communications needs instead. Swan, now valued at more than $2 billion, will benefit from Etisalat's experienced merger team, which has already set up operations in 16 other countries; Etisalat gains a presence in a huge market, as Swan already holds 13 licenses (hard to come by in India) and is in the process of getting two more. Sounds like a win for both.

For more:
- see the business-standard.com article

Broadband services market to near $1 trillion by 2012

Jim O'Neill — Thu, 04 Sep 2008 23:36:34 -0400

A trillion-dollar market. That's what telecom prognosticator Yankee Group says the broadband segment will be by 2012. And, it says there will be at least one broadband connection for each person on the planet, an "anywhere" environment that will continue to blossom.

The market - which includes revenue from services and the amount spent on equipment for the underlying infrastructure -- currently is worth $590 billion.

"The Anywhere revolution is gathering in steam," Emily Green, president and chief executive of Yankee Group, told Dow Jones Newswires.

The bulk of revenues come from consumer fees, and that's likely to continue to be the case, she said. Green said the projections don't include add-on services like navigation on cellphones, or entertainment content riding over the network.

For more:
- see the article

Related articles
U.S. broadband growth slows. Broadband report
Verizon prez Denny Strigl defended U.S. broadband at NXTcomm. Verizon report
Leichtman Research Group said broadband growth is the slowest in five years. Leichtman report

Cablevision makes nice with Wall Street

Jim O'Neill — Thu, 14 Aug 2008 10:04:17 -0400

Cablevision took its dog and pony show to Wall Street for three days this week to try and schmooze investors who’ve become increasingly disenchanted--and more militantly vocal--about the direction the high-profile cableco has taken in recent months. It was the first time King, er, CEO James Dolan has tried to charm investors in recent memory.

The big surprises? One, Cablevision’s junta appeared willing to listen to ideas on how to maintain recent increases in the company’s mercurial share price. Two, after a $650 million deal to acquire fellow Long Island media heavy Newsday, Cablevision plans to put its merger team on hold—for awhile. In addition to the Newsday buy, it also dropped $500 million on the Sundance Channel.

Cablevision management spun both buys as "unique opportunities,” one investor told the Wall Street Journal. “The company indicated they don't plan on making further forays into the news business or other large acquisitions.”

Cablevision’s largest outside shareholders include: Gamco Investments, Mario Gabelli’s investment firm; ClearBridge Advisors, which is a unit of Legg Mason; and T. Rowe Price. Gabelli has been after Dolan and Cablevision to spin off some of its assets. Prime candidates include its Rainbow cable network and Madison Square Garden. Management now says it will consider selling either or both assets, along with declaring a dividend, buying back shares and spinning off other assets.

For more:
- Check out the Wall Street Journal story

Related articles:
Cablevision surprised investors with plans to actually TALK to them. Cablevision report
Cablevision added 81,000 voice customers. Cablevision report
Cablevision announced a WiFi initiative in May. Cablevision report
Cablevision's Newsday buy is unlikely to start a trend. Cablevision report

Burlington Telecom keeps Al Jazeera in line up

Jim O'Neill — Fri, 25 Jul 2008 07:01:20 -0400

Bowing to pressure from the city’s telecom advisory committee and the local citizenry, Burlington Telecom has reversed its controversial decision to drop Al Jazeera English from its channel line up. The battle had generated international press coverage as the Vermont city—and its residents—turned the flap into a fight for free speech.

For more:
- See the Burlington Free Press story

Related article:
Burlington's local connections. Burlington report

Broadsoft telco APIs get more 'Webby'

Dan O'Shea — Sun, 29 Jun 2008 23:40:23 -0400

VoIP platform vendor Broadsoft is releasing versions of its service application programming interfaces in representational state transfer, the software language common to Web-based applications development. So-called REST APIs can help telcos move toward quick service development that is more in the style of Web mash-ups. Carriers such as BT have started to move in the direction of service mash-ups, and though the term is still new in telco circles, it could be overheard quite frequently on the NXTcomm show floor in Las Vegas earlier this month.

Broadsoft's move will make the mash-up migration easier for its carrier customers, but look for more REST adoption to come among other vendors and carriers.

For more:
- read this story at Telephony

Related articles:
Service mash-ups have been a hot topic in telecom this year Mash-up report
Microsoft has been trying to support telco service mash-ups Microsoft report

Bell Canada sets for high court showdown today

Jim O'Neill — Tue, 17 Jun 2008 07:38:34 -0400

Canada's Supreme Court is expecting an overflow crowd today as Bell Canada gets its day in court to appeal a Quebec appeal's court decision that so far has blocked a $52 billion leveraged buyout--the largest ever--of the telecom.

The appeals court said Bell was unfair to its current bondholders because the value of their shares was likely to fall after the takeover, because the group--led by the Ontario Teachers' Pension Plan--needed to borrow an additional $34 billion to complete the purchase. The Bell deal is a complex one, and Canadian law hasn't had to deal with anything quite similar.

For more:
- Check out this blog in the New York Times

Related articles:
Bell Canada takeover ruling heads to high court Bell Canada report
Bell Canada fights time, financial challenges to deal Bell report
Bell Canada bondholders became riled up last summer, and eventually sued Bell Canada report
The Bell Canada deal was stalled by credit market worries last week Bell Canada report

Bell Canada takeover ruling heads to Supreme Court

Jim O'Neill — Tue, 03 Jun 2008 01:36:04 -0400

Hopes for the $52 billion takeover of Bell Canada’s parent company, BCE Inc., have revived after Canada’s Supreme Court agreed to hear an appeal of a lower court’s ruling that an investor group’s LBO was unfair to bond-holders. The court will hear arguments June 17.

Bond holders contend the privatization deal devalues their shares by adding $34 billion to BCE’s debt. BCE and the buyers had asked the Supreme Court to hear the appeal because the lower court decision would “destroy billions of dollars of value” in the company for shareholders. The company said it already had lost $5 billion in market share since the ruling.

For more:
- Read the CanWest News Service story

Related articles:
Bell Canada fights time, financial challenges to deal Bell report
Bell Canada bondholders became riled up last summer, and eventually sued. Bell Canada report
The Bell Canada deal was stalled by credit market worries last week. Bell Canada report