July 2009 Archives

After dumping New England on Fairpoint and cashing in on that garage sale, Verizon bought Alltel. Now it is dumping more rural lines on Frontier. All of this is just Verizon's way of shoring up its stock report. Without the kickers from the Fairpoint transaction and the spurt from Alltel, my bet is that the company would be showing a loss. CNET reports that its profits are down.

It's pouring money into M&A, FiOS, LTE, 3G, International backbone, and Advertising. Especially Advertising. I get something everyday from Verizon. Even at 50 cents per mailer, that's almost $10 per month on one prospect. 

It's about to dump big bucks in a conversion to LTE for its VZW network to keep saying its the best network. But that is after it integrates the Alltel network. Oh, and after it settles things with the rural cellular companies who are tired of VZW squeezing them. Remember that they just built the 3G network, so that debt isn't paid up yet. And cell phone subsidies are increasing to compete with the fact that folks want the iPhone or the Android. 

The FiOS build out is costly. I read that VZ claims it is under $900 per home passed. No one else in the industry has a number that low. Most are closer to $2000 per home passed. Customer take rate is about 21-22%. How many of those are just upgraded DSL subs? 2.5M FiOS TV subs now - some from cable but some from DISH Network, I'll bet. (Still no mention of the 500K voice lines Bright House took from VZ in greater Tampa Bay).

Lots of M&A activity to hide the fact that its growth is stalled and that it has to be taking on huge debt from Alltel, upgrades and Customer Acquisition.

On Andrew Left's blog, he points to a 100+ page FTC complaint from customers of Cbeyond. Maybe he isn't familiar with telecom, because most carriers have numerous complaints at the FCC. LNP (porting numbers) is a growing concern which the FCC addressed "Simple Ports" in May. If he thinks, CBEY has a thick file maybe he should check out the consumer complaints against wireless companies on LNP, fees, and contracts.

Left also alleges that CBEY is under a law enforcement investigation. Then he makes a comment about how this should be in an 8-k filing. Pay attention Andrew. It may have something to do with the alleged insider trading that the SEC is looking into.

All that noise and then pounds on the stock for being over-valued. Nice.

For those of you who missed it, Nortel is being sold off in pieces.

"Ericsson announced its interest in Nortel's wireless assets late, but it came home the winner, paying $1.13 billion for Nortel's LTE and legacy CDMA business." [Doug]

The Enterprise unit was sold to rival Avaya for $475M. [Reuters]

Radware had previously purchased Nortel Alteon business.

Having sat in a session with Nortel last week, it can't be fun to work there. Worse, it can't be fun to be a Channel Partner. Any residuals are likely gone. Worse is that you can't confidently sell Nortel solutions. How could you? It's bankrupt and being sold off. I wouldn't lend my reputation to a company in BK. Time to come up with a new business plan. We certainly live in interesting times.

This week starts with AT&T being sued and boycotted.

First up is STS Telecom's FCC complaint alleging fraud, discrimination, and unfair competitive practices by AT&T. Apparently, the FTC nor DOJ won't accept any anti-trust complaints against the LEC Giants. We don't want to rewind to 1984 do we?

STS Telecom alleges in the complaint that AT&T failed to comply with Congress's much embattled Telecommunications Act of 1996 in refusing to provide STS fair and reasonable access to various telecommunication services. As a result, AT&T severely restricted STS' access to Florida's profitable residential and small business markets. [press release]

Shouldn't all of COMPTEL be filing these types of lawsuits against the RBOC's?

How about the FCC just enforcing any of the many merger conditions so that consumers (and agents) can have a healthy, competitive telecom environment? Why do you think we need $7.2B in BB Stimulus? Because the LEC's want money to actually deploy broadband across America. (Meanwhile they are throttling economic growth in America). 

In act 2, TechCrunch is reporting that ATT blocked access to 4chan, an imageboard for anime. Apparently, this so angered folks that  "there's pledge up at ThePoint to boycott AT&T and cancel the Internet service with them." Umm, what are you going to do move all those iPhone users to T-Mobile and jail-break them? 

I find it funny that TechCrunch is using the deathstar logo for Ma Bell. When I use it, I get the call from Ma Bell to remove it.

The deal that was supposed to save VOX Corp. (parent company is Pervasip). After Networld World questioned whether the mobile VoIP service could actually work, the company stripped data from its website (as reported by both PC World and Network World).

PC World further reported, "Earlier this week IDG News Service reported that it's unlikely that Zer01 could be technically able to offer the unlimited mobile voice and data service that it is advertising. The service, originally targeted for a July 1 launch, does not appear to be available yet. In addition, it's being marketed through a multilevel marketing program run by a company called Global Verge whose founder, Mark Petschel, in 2005 pleaded guilty to securities fraud. Petschel is currently on probation."

The other issue being raised is that the MLM program has more questions than answers. When Lightyear is selling cellular via MLM, you at least have a very clear picture of who the parent company is and other company transparencies. That is not the case with the Zer01 MLM program. Again PC World, "It's not the only related Web site that has changed since the original report on Monday. The Web site for UTG no longer features executive bios, company addresses, some previously provided telephone numbers or links to related companies such as Yorkshire Investments or the Yorkshire Foundation."  And it goes on and on with PC World checking up on UTG facts. The Consumerist has a diagram of the MLM program.

Even Engadget points out that Zer01 will be undercutting its own MVNO partner - a losing strategy if ever there was one - and using VoIP on AT&T's 3G network, that has already seen issues from too much iPhone traffic, let alone VoIP calls streaming and tunnelling through its network.

I talk with many CLEC's and ISP's that are looking at the BTOP and BIP programs to see if there is opportunity for them. As I said in the podcast with Occam Networks, most of the funds are earmarked for companies already collecting USF funds. Why do I think that? Because it is a safe bet and politics is about safe bets.

I'm attending Tech Data's Technology Solutions Tour. This morning started with TD SVP Pete Peterson discussing how to translate the stimulus spending into technology opportunity. The ARRA (aka the Stimulus bill) will spend about $787B, of which, according to the counter at Recovery.gov, over $75B has been spent. One percent of the ARRA is the Broadband Stimulus spend at $7.2B spread over 3 agencies and 3 different awards. Did you know that $50-60B of the ARRA is earmarked for IT Spending for Education, Healthcare, Energy and Government? That money will go for smart grid, green IT, virtualization, EMR (electronic medical records), video surveillance, Business Intelligience tools and more. It's a bigger pie than BTOP/BIP.

Did you know that the largest spender right now is Uncle Sam? Or as many people like to say - the taxpayer.

Anyway, Peterson told us that some cities and at least one state (Cali) does not allow the deployment of servers on-premise. It's a Green initiative and they are pushing Hosted servers or virtualization. I haven't heard that but it certainly interesting. (Also of note: No on has said Cloud since I have been here).

Another stat: there are 1 million doctor offices. Only 8% have EMR. The government wants it closer to 90%. There are funds and tax credits for that. Funny story: Nortel was pitching their Healthcare Management Programs yesterday, but didn't want to discuss the Bankruptcy nor the way the company is being sold off in slices. Um, tough to sell a solution that may not be there by the time the deal closes. When a VAR or Agent presents a solution, they are lending their reputation out to that vendor. If that vendor fails to deliver, it's a black eye for the VAR/Agent. (Psst: our most valuable asset is our reputation).

B.I. tools are important. Why? It adds productivity and efficiency to the organization that can correctly deploy and integrate it. (It's challenging).

Education will be spending on Broadband, IT infrastructure, Video surveillance, and digital signage. Go get you some From Tech Data, of course. They have SME's (subject matter experts), product specialists, marketing funds and other assistance available to help you take advantage of the current ARRA opportunities. (Including Wireless and other communications infrastructure projects).

Peterson concluded with a few insights:

- This is a Call to Action for service providers and VAR's
- (It is unprecedented in my lifetime and we likely won't see this again. It is a magnitude larger than Y2K and closer to what the US spent on NASA going to the Moon in the 60's).
- Recovery.gov is a great resource.
- Great companies are made in tough times.
- The flexible survive.

Jaduka and StrikeIron announce partnership. Millions of NetBeans, IBM and SalesForce developers can now add voice to their apps in minutes. Here's Thomas Howe's announcement post. Here's StrikeIron's blog post. The press release is here.

NOFA Reactions

July 16, 2009
Speakers: Peter Radizeski, Marketing and Sales Consultant at RAD-INFO, Inc. and  Juan Vela, Occam Networks

Juan and Peter discuss their reactions to the BIP/BTOP NOFA in the second in our series of Broadband Stimulus related podcasts.  (The NOFA is the notice of funds availability for the Broadband Stimulus package. BTOP and BIP are separate programs that both the RUS and the NTIA are in charge of. Each agency will be administering grants and loans for delivery of broadband to unserved and underserved areas).

Click here to listen.

If you have been even slightly following the Broadband Stimulus program, you will notice that there is an increasing amount of acronyms to keep track of - ARRA, BIP, BTOP, etc. Luckily, here's a glossary from the Knight Center of Digital Excellence.

The key words to know are Unserved and Underserved because that is where the money is earmarked to go. But you have to decide if you will apply for the RUS Broadband Initiatives Program (BIP) for broadband projects in rural areas or for the NTIA Broadband Technology Opportunities Program (BTOP) for broadband projects in unserved and underserved areas of the United States.

Each program has separate criteria. On a soon to be released podcast with Occam Networks, we discussed much of this. (I'll post it as soon as it is released). How you have to be very specific in what you can do, will do, and how you will do it to satisfy the requirements:

1.  Are you "shovel ready"? These funds won't be granted until December; meanwhile the industry has been holding it's breath and not doing much. The economy really needs the bang that the first phase will bring. On the other hand, you are granted the money but don't actually get it until the paperwork is done.
2. Are you creating jobs?
3. Are you bridging that elusive Digital Divide? If so, how will you sustain the network after its built? The funds only go towards CAPEX - capital expenditures of the network elements - it does not go for installation, maintenance, labor, or operating expenses.
4. How are you going to keep the sharks out? Already people are positioning to skim as much money off this funding as possible to line their pockets. For many companies, the accounting procedures required for federal money and the strings attached will be overwhelming. It will result in many getting federal room and board for a while. Hoepfully, it will also catch the sharks and put them next to former politicians on the federal golf course at Coleman.

The agencies are holding regional meetings to spell all this out but the window of opportunity will close soon, so  catch up.

 Grande Communications, a Texas-based communications company providing residential and business customers with high-speed Internet, local and long-distance telephone and digital cable services, is being acquired according to a rumor. I don't have any details other than that.

Stacey at GigaOm writes about the data problem for cellular companies. On the one hand, data revenue of $40 to $60 more per month from an account seems pretty good; on the other hand, 70% of the traffic on a tower is from data cards (about 3-4% of subscribers). This seems like they should have known this.

Voice calls take up less than 10K per stream. 3G data takes up to 3MB. AT&T sees how much bandwidth an iPhone pulls off its network (read: a lot!). So are they just getting us addicted to a flat rate service and smartphone access only to charge us per byte later? It would seem so.

Once again they designed a voice network instead of a data network. (Remember the busy signals on dial-up?) And misjudged how people would use it.

With the workforce becoming more mobile and virtual each quarter, cellular data will increase. As households drop landlines, cellular usage will climb. I hope they have a plan for this.

Like terrestrial broadband not having a good enough business model for the network operators, it looks like cellular broadband will have to be re-tooled -- now that folks are addicted to 24/7 unlimited access.

The FCC notified Y Pay More of its Apparent Liability for Forfeiture in the amount of $4,500 for delivering at least one unsolicited advertisement to the telephone facsimile machine of at least one consumer. 

Florida just added a new seat belt law that means law enforcement can pull you over solely for not wearing a seat belt. It's all about the Benjamins. The state gets $35M in federal funds - and the largesse of 200 fines on the first day!

If the FCC can pull in $4500 for a single UCF (unsolicited commercial fax), why not have a UCF month and collect some big dollars?  If only you could fine spam the same way.

On the LinkedIN Group for the Channel Partners Network, Heather Margolis wrote, "Cloud Computing has spurred the need for a new type of VAR and/or partnership elements. Read more here and tell me your thoughts." (That's one way to get traffic to your blog).

My thoughts:

It's not about saving a client money any more. It's about saving them time, making their employees more productive, and adding business efficiency - without the technology getting in the way (which isn't always easy). 

Being the Trusted Advisor today means being able to add Business Intelligence to the solution. Systems Integrators were valuable because they could provision, implement and glue all the parts and pieces of hardware and software together.

Most Systems Integrators had a niche. Well, we call it a niche today but back then, they were in a software silo. The silo was created around the programming language they were proficient in.

 ManyVAR's/Agents/Account Executives have a similar business issue today. They only know one or two programming languages (POTS/PRI/DSL/Integrated-T1). When you only have a hammer, everything looks like a nail. For example, is a Cisco VAR going to recommend non-Cisco gear? 

Understanding Cloud Computing and what it truly means for the Business going forward is an Integration Process, because most often when Hosted PBX or SAAS are introduced into a business, the process changes. The business must be prepared for those changes - otherwise the results will be disasterous.

Then there is the concept of the Cloud itself.  (Do you know how many data center outages we have had in the last year? How many fiber cuts? Lots!)

The Cloud is big because all the vendors are hoping that it will be the Next Wave of Revenue. The truth is that many companies pushing Virtualization and Cloud Computing have zero idea what they are doing; have little security in place; redundancy is phase III of the business plan; and the customer is clueless about what they are buying versus what they are really getting.

This isn't POTS or DSL. It's more like SIP Trunking - a decent spec, but not a standard.  

What happens when the data center is unreachable? No one is working. It is costing the business money. 

There are many questions to be answered: Is the data backed up in real time? Is it saved off-site? Can it be accessed in an emergency? How? Business Continuity Planning is an ugly word that no one wants to talk about, but as Voice, Databases, business life-blood moves to the Cloud, BCP better be in place and many questions need to be answered. That's not a five minute conversation while looking at last month's bill.

In a short article in INC magazine, one entrepreneur explains how he uses Google Voice for his startup business. He is a straddler - he has a full-time job while launching his own business. 

As noted by Ring Central, many of the features in Google Voice have been available for a while from VoIP Providers. However, it's partially the brand (it's Google) and partially the price (um, free). Once Google allows number portability, it will be tough to beat. Why?

For one thing, Raving Fans. Google has a lot of Raving Fans. And those fans tell stories about the service - even better than a testimonial. Who is your storyteller?

For another, easy explanations about what each feature is on the product page, the help pages, and on fan pages. Could your Grandmother understand what youare offering?

Another would be the brand. Most VoIP Providers don't do much marketing, even less branding. The only exception is Vonage. The other might be 8x8. Do the businesses in your local Chamber of Commerce recognize your company name (or product name)?

What are you doing to counter these factors?

Doug Mohney tweeted this morning that Verizon has a 7-day repair window which may be why they are losing landlines. I would suggest that the RBOC have been lobbying since 282 Relief for Forbearance relief as well - at both the state and federal level. For the most part they have won. 

Gone is the regulation for most telecom services in most states, which means the state PUC cannot deem that POTS lines be fixed in 24 hours (the old standard), especially when Digital Voice (VOIP) is dependent on broadband that does not have an SLA or mean-time-to-repair.

After VZ's 6-city forbearance petition was struck down in 2007, VZ legal took it to the court system and won a review by the FCC.

By letting landlines go, the majority of the existing POTS type service will go to cable or other providers, which would almost insure that VZ would get forbearance on a new review. Slick and devious.