The Trend Toward Global Expansion

Peter : On Rad's Radar?
| Peter Radizeski of RAD-INFO, Inc. talking telecom, Cloud, VoIP, CLEC, and The Channel.

The Trend Toward Global Expansion

We are seeing an interesting trend. The ILECs are going global. AT&T, Verizon and CenturyLink are looking to other global markets to make up for a decline in revenue in the US.

AT&T made acquisitions in cellular in LATAM. CenturyLink has announced the opening of a data center in Singapore. "Notably, the company's public cloud platform is available in nations like Germany, United Sates, United Kingdom and Canada," writes Zacks.

Even the cloud comm players like RC and 8x8 have gone abroad. 8x8 made an acquisition in the UK. RC has carrier partners in Canada and the UK.

It is a smaller world, I know. However, if you can't crush it locally - in a national market that you were born into - what makes you think you have a shot to make it in a foreign market?

Zacks reports that "CenturyLink announced the availability of 1 Gbps (gigabit per second) fiber-to-the-premises (FTTP) connections in 17 states to provide symmetrical gigabit services to nearly 490,000 small and mid-sized businesses (SMB). The SMB segment represents a massive growth opportunity for the telecom industry. Significant improvement in business data and video traffic is expected to act as a catalyst for the industry. Several industry researchers predict that the SMB segment holds a long-term market opportunity worth $20--$30 billion." The market isn't small. It is just that the cable giants are pretty much running over the telcos, who neglected the SMB space for better looking pastures in cloud, data center, enterprise and government. Oh, and acquisitions mucked up the vision and leadership, because bankers were pointing them toward bigger pay days. [Lesson 1: Bankers make lousy visionaries and business leaders. You need to measure more than the stock price.]

The ILECs have faced declining legacy voice and access revenues. Some of that is again due to neglect. When Frontier is the leader in how to capitalize on copper, Ma Bell should hang her head in shame.

Maybe everyone thought wireless substitution was the answer. Didn't turn out that way. Plus spectrum is hard to come by and at $10 Billion for just the spectrum, the other costs quickly add up to billions as well: radios, tower rental, backhaul, installation, small cell deployment, labor, etc.

Latest stats indicate that everyone has at least one cellphone and more likely 2 devices. Some households have between 7 and 25 Internet connected devices. I'd say that the market has flattened, because while more devices may be purchased, there aren't many more dollars available to be added to the ARPU.

While AT&T buys DirecTV and CenturyLink rolls out PRISM TV, cord cutting has finally been accepted as reality and worry for the MSO industry. Sling TV, HBO Now and VZ's re-bundling are all responses to not just cord-cutters, but folks who never paid for TV.

Price compression and price stagnation is causing problems for the telcos as well. It is an expensive prospect to chase cable for the SMB market after years of neglecting it. Labor, support and the technology upgrade cycle -- in cable, telco, cellular - is a risky balance for these public companies beholden to Wall Street. They may just be going abroad at Wall Street's request.

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