On Rad's Radar? - duopoly Archives

Duopoly Now Offering Home Automation and Security

2012-05-07T19:21:50Z

Comcast, Bright House Networks, Cox, TWC, Verizon and now AT&T are offering home automation and security service. BHN and VZ are competing in the Tampa Bay market for all consumer services - voice, TV, broadband and now security.

"Bright House Networks' system does provide home security, it also helps users manage and monitor their energy, lighting and home appliances via the touchscreen. The security cameras connect to the touchscreen via Wi-Fi, while the rest of the peripherals in a home are connected to it via ZigBee." [CED Mag] BHN has a similar system as Cox, Comcast and TWC. These cablecos sure know how to volume buy this stuff. Home automation touchscreen, wireless security cameras, lighting modules, thermostat, motion detectors, window/door sensors, key fobs, and more, all available from your mobile apps. Notifications are available via email or text. "AT&T's technology comes from Xanboo, a company it bought in late 2010."

I guess this becomes the next playground for the Duopoly, competing against Tyco's ADT (which is a roll-up of Broadview/Brinks and ADT).

What Competition?

2012-05-01T20:19:21Z

In this article about independent ISP's fading away, CenturyLink talks about competition of ILEC DSL - from cellular 3G/4G, muni Wi-Fi, and cable. There's also fixed wireless in some ares from independent ISP's, but that is mainly in areas without competition.

But competition is a myth today. VZ is co-marketing with cable now. The Duopoly isn't even competing any more!!!

According to Akamai's State of the Internet report, "The U.S.'s average connection speed is 5.8 Mbps -- a 14 percent increase from the previous year." That's thanks to FTTX and DOCSIS 3.0 mainly.

BTW, Customers prefer flat-rate pricing in study after study.

"In other words, the broadband cap may have less to do with managing congestion on Comcast's data network than with making over-the-top video services like Netflix and Hulu unattractive for heavy television users who are the most lucrative customers for Comcast's paid video services."

Would we even have a cap if we had true competition? Probably not.

With consolidation in the telecom industry, there aren't many players left. In many markets, it's ILEC versus cableco, except where they are co-marketing! Lots of OTT (over-the-top) but I'm not sure how much longer they are allowed to survive.

In the B2B space, lots of consolidation, but cablecos are buying up market share with cheap pricing. It's interesting, because I'm not sure how much longer the nationwide CLEC will be relevant. Everyone is competing for the same dollars: federal and state government, Fortune 5000 and Enterprise, and the multi-location customers. These are a limited supply - maybe 110,000 customers??? But in the small business space there are 5.2 million businesses with under 20 employees! Who services those accounts? That's where all the growth and opportunity is. Unfortunately, broadband and VoIP have cannibalized the pricing structure in this market. It will have to be a bundle of more than data and voice that wins here.

It's also expensive to market and sell to this space - and to support this space. That means it has to be more than voice and Internet, so that the monthly recurring is high enough to rate the work required. We'll see who steps up there.

US Government Suing AT&T for Fraud

2012-04-26T14:49:58Z

Is Fraud rampant at Ma Bell?

ARS wrote an article titled, AT&T collected millions from taxpayers in fraudulent charges, US says. "AT&T improperly received millions of dollars from a government reimbursement fund by ignoring fraudulent use of the IP Relay call system provided free of charge to hearing- and speech-impaired US residents, the US government alleged this week."

Another item ripped from the headlines:

DOJ Sues AT&T For Not Keeping Scammers Off Deaf Phone Service

CRN reports, "The Justice Department this week filed a lawsuit against AT&T on the grounds that the carrier did not do enough to keep international swindlers from abusing a government-mandated service that allows deaf people to make free calls to hearing people via text message over the Web, Reuters reported this week.... The FCC reimburses carriers for the service, to the tune of $1.30 per minute. However, the Justice Department claims that the vast majority of callers using the service were fraudsters in other countries, and that AT&T did not take measures to stop this from happening."

"This claim was initially made in a whistle-blower lawsuit against AT&T brought by a former call center employee, according to Reuters".

Too big to fail also means too big to know what is going on.

This is but a symptom of how poorly managed these big companies are. It's all about the stock price. When you have $64 Billion in debt, you need to watch the stock price or your debt starts costing more. One percent is $640 million extra. But you can be a slave to it or everything else falls apart.

AT&T is facing competition from VZW and the cablecos. If the SpectrumCo deal gets approval from the FCC, VZW will be co-marketing (read colluding with) three MSO's to take revenue from AT&T. All the mass markets are flat: voice, TV, cellular and broadband. It's a game of take-away now. That's expensive. So customer acquisition costs increase. Subsidies on cell phones go up. Everything goes up except ARPU! Do you see the problem?

If any other cellco - T-Mobile, Sprint, MetroPCS or even Tracfone - could get its act together, it would add pressure. The MSo's have their act together and are winning the battle for the SMB space under $500. The CLEC's used to own this business, which meant wholesale revenue for the ILEC's (Qwest, VZ, ATT), but even that revenue will start to decline as less T1's are sold by the CLEC's.

Wireline revenues, especially DSL, are in decline. Where does the new revenue come from?

Windstream and CenturyLink made big moves to counter their wireline shortfalls. What have the RBOC's done? Mainly gone cellular including spectrum acquisitions. Comcast bought content (NBCU). It's a race.

Short note for CLEC's: if wireline is declining and the sub-$500 customer is going to cable, what are you going to do?

One last note: VZ already had a union strike and had to settle. ATT is in the midst of negotiating a CWA union contract. How does that help or hinder future growth? For VZ, VZW and FiOS are non-union shops.

Get Off the Agents' Back

2012-04-12T21:48:50Z

These were my thoughts on the 2011 CPZ that I was a panelist on. These are my thoughts as a reaction to the latest CPZ.

Surprisingly, not everyone read my post about how the whole telecom eco-system is shifting. Agents, Masters, Carriers and Cloud Providers are all going to experience a Shift.

Did you ever see Shift Happens?

Considering all these factors - Quota, Debt, declining revenue, pricing pressure, and flat markets - the future does not look bright.

Most of the people who were talking on the CPZ 2012 video about transactional agents are not actually agents and to my knowledge never have been.

Does a subset of Agents shop masters? Probably. On the other hand, I know masters who shop to sub-agents with "I'll give you another point or two to go with me." Part of this is due to the weight of quota on the Master Agency business. Master Agents are under a tremendous pressure to hit quota to keep the support level and sustain the commission revenue at its current level. So don't get mad at the Sub-Agent when Masters are doing it too.

Value and Telecom

The whole Industry talks about VALUE, but can they describe it? No. Our Industry has been a series of me-too, arbitrage bandits selling the same thing: UNE-P, Integrated T1, SIP Trunking, and today it is MPLS. It's all just similar looking and sounding services. How does an Agent or a Prospect tell the difference?

Branding is non-existent in our space, except for the Duopoly of ILEC and MSO. You create value with branding. Other value comes from benefits and differentiation. We are lacking the Differentiation.

Without value, it becomes a commodity. Commodities are price shopped. Tell me the difference between any two Internet T1's or any two SIP Trunks.

Carriers are Unhappy with Agents

Just because Agents don't act like you want them to doesn't mean they are all in the wrong. You built this current eco-system. Now you want the ship to turn on your say so. Easier said than done, pal.

Truthfully, have you done all you can to give Agents the tools they need to sell your product? Not to be repetitive, but have you established your value statement? Do you know who the target market is? Do you know what triggers the sale? Who is the actual buyer? Answer those questions first.

The Industry wants the Channel to go upstream, except they don't. By that I mean, the carriers want revenue. Period. It's all about quota. While they might want an Agent to sell MPLS, they aren't turning away T1 business either. However, they want the Agent to turn away from that business to go upstream. Yeah.

Keep in mind that it might be that the marketplace doesn't want to go upstream either.

Right now, Cable is doing an excellent job of disrupting the market and stealing business with cheap loops.

At a CLEC training, it was stated that cable would own the sub-$500 business. It sounded like they were conceding it. The cablecos will become the de facto ILEC's. I have no idea what the ILECs are going to do. Only the 2 RBOC's have a cellular business. And CLEC's will probably run into too many problems to continue to sell network access.

In that same training, the CLEC stated they wanted Multi-site, multi-access business. Unfortunately, everyone wants that business. Masergy, Smoothstone, EarthLinke, Megapath, Netwolves, Wind, CenturyLink - just to name a few. To hear carriers talk, I guess, MPLS is the new Integrated T1 (in every way). They say there is more margin in it. No there is not. There is more revenue per customer, but they will have to give away margin to (A) hit every site and (B) win the business in a hyper-competitive marketplace.

No one buys the way most service providers sell either. That's why the carriers are always searching for Consultative Sales Professionals. The whole industry sells what they want - and it is followed up by a series of me-too. Just because one CLEC is selling Managed Security does not mean that the marketplace wants it or will buy it or that it will want it delivered that exact way. It also doesn't mean that the next eight CLEC's or service providers need to market that same offering. Do we know what the marketplace is expecting?

How Things Can Shift

One thing that could cause a big shift is if Tech Data becomes a Master Agent. With TDMobility, they already have the platform and are selling cellular in a Master Agent model. Plus by offering mobile device management, TEM and all that hardware, they have caught up to the big Masters. CDW could become a Master Agent if they wanted to - and they might have to in order to sell more hardware.

Dell could become a Cloud Provider. As it stands now, they are an MSP Enabler. And Dell is selling CDN now! It will be interesting to see what Ingram and SYNNEX - both betting on cloud services for their future - do to not have to compete with Dell head-to-head, while also competing with Tech Data.

I don't think that most telcos will make the shift to managed services and cloud successfully. It's labor intensive. It doesn't scale like telecom. They think they can automate everything, but that only works for cookie cutter stuff. Plus they can barely deliver telco services without a headache. I think MSP's will win this war. Any company that can integrate apps (like CRM and invoicing with Exchange and Sharepoint) will be successful. If they partner with VAR's who can handle the on-going maintenance and support that all this technology will require, they win big.

Can the Channel change to become Trusted Advisors? Probably not all of them. Selling Cloud is different than selling telecom. Period.

The Channel basically sells replacement services. Here are some examples: VoIP for POTS: SIP Trunk for PRI; Ethernet for T1. Each transaction is replacing like for like. Even MPLS is just a replacement for Frame Relay, ATM and IP-VPN.

That is why selling Hosted PBX and other cloud services are so challenging: It is not a simple replacement. It's not like for like.

The sales process for selling replacement services is pretty easy. When the sale becomes about business process change or fork-lift upgrades (like Hosted UC or Virtual Desktop), the sales skills are different. The sales cycle is different - and longer. Provisioning takes longer. Ultimately, commission payments are much later.

This is really important to remember.

Selling Cloud and Managed Services will not just be more of a challenge, but it may be less satisfying. Why? Transactional sales types are motivated and driven by quick hits and a lot of ink in a month. Extended sales cycles are less motivating to this type of sales person.

Moreover, as commissions decline with the price decreases, agents have to sell more and more to maintain their revenue goals. Shifting to new products, new sales skills, and a different sales approach will be a huge leap, especially without training, a financial cushion, a deep desire for change, and vendor support.

Agents are not FARMERS! They are Hunters! They do not do Account Management, cross-sell or upsell to the base. Smart agencies will higher a couple of farmers to work the customer base and perform account management.

All of this makes me wonder who will be the Agent of tomorrow, who will be grooming accounts and performing consultative selling of complex solutions to their customers?

Comcast Versus Netflix

2012-03-20T18:01:27Z

IN a Fast Company article, titled "Why Comcast Will Crush Netflix". Comcast will be launching a Netflix killer soon. Why? "The battle to own the "digital home" has been waging for years." The Duopoly does not want to be relegated to being just dumb pipes. The money is in Layer 7. The Duopoly is tired of a static ARPU, while Google, Apple, Amazon, Netflix and others make money over-the-top.

The Duopoly has spent big money on TV distribution - AT&T on U-Verse, VZ on FiOS - and do not want to lose revenue due to cord cutting.

Content providers are already offering shows on their own websites plus online TV sites like Hulu, Amazon, Apple iTunes, Netflix or Epix. This competes with cable TV and DVR.

Hollywood doesn't know what to do. It sided with Blockbuster over Redbox and Netflix on access to titles. "Netflix will lose its rights to carry Starz video content." It's all about the content. Period.

"Cable companies have historically played the tortoise to high-tech innovator hares. They adopt a predictable pattern--they let someone introduce a new service, watch the market grow, and much later step in and take away the opportunity. This is how cable companies beat out TiVo (which introduced the world to the DVR) and Vonage (which convinced Americans to embrace VoIP)."

This is an important lesson for service providers.

It's a good read.

BTW, cablecos are really pushing into Business TV, even allowing the Channel to sell it. That's one way to increase TV revenue. I would guess that DBS (DirecTV and DISH) are losing accounts here. MSO's are even chasing hotel/motel TV business.

Has Verizon Stopped Repairing Copper?

2012-02-17T21:08:18Z

Over and over, I am hearing that Verizon has given up on copper. From repair issues to DSL to stripping copper out when FiOS is installed, the story seems to point to VZ looking to forget its copper plant.

in a discussion on LinkedIn about SLA's, one agent had this to say, "The absolute WORST cases I have seen have all been in the northeast where Verizon's copper is concerned. Verizon seems to have made the decision to put all efforts and funds behind their fiber build out (a good thing) but have completely sacrificed the quality behind their copper services such as T1. If your copper T1 goes down in New York, you might has well throw your hands up in prayer, because that's the only thing that will get it fixed."

Another commenter wrote, "Verizon in some places is actively ripping up copper as they lay fiber because they are not required to resell fiber to CLECs and ISPs at wholesale rates." This has been widely reported, because VZ doesn't want the expense of running to networks - copper and fiber. Plus the fiber doesn't have to be shared and the copper does. The copper means competition. Fiber means they just have to worry about cablecos, who quite frankly are kicking their butt.

Wholesale used to be a healthy business for ILEC's. Today, neither cablecos nor ILEC's want to wholesale anything. In fact, clients of mine in VZ regions have a lot of issues.

For example, "We had an outage about 3 weeks ago that lasted more than three days. This also affected [another local ISP] as I spoke him last night about the current outage. We [both have] a bunch [of customers still] out of service as well. They have been out of service since Monday. The last outage caused an exodus of customers and this one will do the same. Our guys have put in tickets, called to escalate many times. .... no one at VZ will listen. Ever. They simply close the tickets that we open."

It's a systemic problem - widespread - from the C-Suite down - the story has been that every company -- even wholesale customers - are the enemy and the Union and on-union workers must do everything they can to make it uncomfortable unless you are a direct VZ customer.

We have the case of a BK CLEC who had recorded conversations with VZ employees soliciting a customer who was down saying that it wouldn't happen if they were with VZ. [This has been a problem with both RBOC's since I got into telecom in 1999.]

Verizon faces up to $400,000 in fines after New York's Public Service Commission accused the company of not making service repairs in a timely fashion.

What do you do when the RBOC doesn't want to wholesale, doesn't want to repair, and just looks at the bottom line and the few metrics that Wall Street analysts can understand??

Many states don't even regulate the ILEC any more, so what do they do? It becomes the job of the FTC, the FCC and the court system. Talk about a deck stacked against the customer!

When our underlying telecommunications structure suffers, so too does our economic growth.

here's 2 problems with a fiber only strategy for an ILEC:

One, fiber goes out with power, so no 911 or dial-tone when the lights go out.

Two, the installation period for fiber is wicked long. Copper can be installed within two weeks. Fiber takes months. That hurts businesses. I have one moving in 3 weeks and to get 20MB of bandwidth he has to wait months. That won't work.

Ever think that just nothing in this country makes sense any more?

In the discussion about SLA's, the conclusion is to convince your clients to buy redundancy: 2 pipes. That's nice in theory but not in reality. The thing is that you have to set the expectation that if Internet or VoIP is integral to their business operations, no SLA is going to save them, redundancy and business continuity planning will. Otherwise, an outage will be a disaster that they have not planned for. It is not IF, it is WHEN.

Verizon Puts the Move on Video

2012-02-06T15:26:03Z

After Verizon's CFO sais that FiOS was a poor economic decision for the company, I would think video would not be on the VZ radar. The FiOS TV service is so expensive to deliver that Frontier raised rates over 70% when it took over former VZ FiOS territory -- and then decided to switch all the TV over to DBS.

Comcast buying NBCU was a little different, but cablecos have owned channels before, especially sports channels (MSG, YES, BayNews9).

Maybe the TV-cord-cutting crowd is scaring the cablecos, despite the rhetoric to The Street. Content is expensive to license and to deliver. And getting more expensive all the time. Meanwhile more video is being delivered as bits and bytes by Netflix, Amazon, the networks (USA, Comedy Central, ABC, CBS and CW - all have shows that can only be seen on-demand from thier website) and apps (HBO-on-the-Go and TWC Anywhere, for example). This means that TV revenues WILL decline.

How does the Duopoly make up the money and pay off the $250 Billion in debt it has accumulated????

Metering is one way. It increases the ARPU.

BTW, I find it interesting how the RBOC's have basically given up on DSL.

So VZ is now partnering with the Coinstar subsidiary, Redbox, to launch a video streaming service to compete with Netflix, Amazon, and Hulu.

This means that ATT will HAVE to go after DISH. Why? The wireless spectrum primarily but also DISH owns Blockbuster, satellive TV service, and Slingbox. Telco is a me-too industry. Unless ATT is going to abandon theh consumer space, relinquish it to the cablecos, it will have to make a move soon.

While Echostar owns Hughes Communications, the DISH company bought up spectrum from DBSD and Terrestar that DISH plans on utilizing to offer a hybrid satellite/terrestrial mobile broadband service. Today, DISH has a market cap of almost $13B, while Netflix is at $7B. Since spectrum is finite and like real estate, the extra $6B seems like a steal. Consider that AT&T bought spectrum from Qualcomm for $2B. That spectrum, which, according to Huffington, "Qualcomm stands to make a handsome profit on the spectrum. It paid $38 million for one slice of nationwide spectrum - the former UHF channel 55 - in 2002, then another $558 million in 2008 for UHF channel 56 over New York, Los Angeles, Boston, Philadelphia, and San Francisco." Qualcomm was using that spectrum for FLO TV, which failed. It consists of six D-block and five E-block licenses in the Lower 700 MHz band, giving AT&T post-transaction holding between 6 and 80 megahertz of spectrum below 1 GHz. Holding is key, because, like all cellcos whining about spectrum, AT&T HAS spectrum it has not deployed.

AT&T says it needs the spectrum, especially if VZW gets the SpectrumCo deal to go through whereby VZW buys all the AWS spectrum from the cablecos. So do the Rural Cellular Carriers. Makes DISH a big target for acquisition. However, Charlie Ergan still owns 51%.

Another Hosted PBX Merger

2011-07-09T19:38:09Z

Tampa-based Telovations acquires North Carolina based FeatureTel, combining two Broadsoft providers. No financial details were released. Could this be a sign about the viability of the US Hosted PBX space?

Many of the Cloud Comm companies haven't grown as fast as their backers would like. Mainly it's a sales problem. As I mentioned yesterday, it's sold on price in many instances. There aren't that many ITSP's with a notable value statement or with a chief differentiator. This leads to a commoditization.

It's expensive to run a sales organization - paying sales people even when they aren't closing enough business to cover their expense. It's also expensive to brand your company nationally (as many have tried to do). Still others don't really do any marketing, marketing that might establish at least a regional reputation, which makes sales easier. Even better would be a marketing campaign that produced inbound sales calls, but let's not get crazy.

The funny thing is that the worst examples of VoIP IMO - MagicJack, SunRocket and Vonage - did spend on marketing and branding successfully. The marketing even overcame their customer service issues and quality.

Just as Unity Business was acquired by Telesphere and Geckotech was acquired by M5, there will have to be more consolidation of this type for a few reasons. The Broadsoft providers can merge almost seamlessly (at least on the customer side). The Broadsoft providers have huge amounts of cash invested in the softswitch, the complex licensing and their current customers - which doesn't leave a lot of cash for acquisitions and marketing campaigns.

And time is running out. Comcast, TDS, Windstream, and Cox have started rolling out Broadsoft-based Hosted PBX to the SMB market with two notable difference: each has a brand and each is a network operator, which means it controls the voice quality and has the price advantage.

We have seen what happens when the ILEC's enter a market late. DSL was brought to the nation by DLEC's - Covad & Co. Then dial-up ISP's got into the game. Then the ILEC's came in and grabbed it all up. The ILEC's were not just the vendor for the ISP's and DLEC's, but their chief competitor, who dropped retail pricing below wholesale rates (and caused the CLEC and ISP expensive challenges through its usual games of billing, install and repair problems). I fear that Hosted PBX will be the next DSL as the Duopoly marches in and takes the lion's share of the market.

Are VAR's the New Agent?

2011-05-27T20:11:31Z

The Channel seems to be turning their back on the traditional telecom agent. All eyes are on the VAR space. Even Master Agents are out chasing the VAR's. (For example, Telephony Partners has a white paper out to explain why VAR's should work with a master agent like TP.)

From talks with cable execs, it appears that the traditional telecom agent scares the C-suite at the Duopoly. The fact that AT&T and Verizon are constantly pulling away from the Channel with antics like this and this and this.

Usually the reason for this is the corp wants more control over what is sold, to whom and for how much. The traditional agent act of bringing in a bunch of quotes and picking the lowest just rattles most sales organizations. (To be fair, it's not like there is much differentiation or value proposition to allow for a comparison other than price.)

As things move to IP, The Cloud and apps, the thinking is that the VAR is better suited for this new world. Considering that many VAR's stop at the router and only deal with the LAN makes me think otherwise. There's the whole control issue (that both ISP's and VAR's have). VAR's usually run their own boxes and have as much control over that as they can. Moving to the Cloud means less control and more risk.

VAR's don't like the uncertainty of telecom. Having heard or experienced the horrors of on-boarding, provisioning, repair, and MAC's that go with telecom, would you as a VAR want any of that headache to tarnish your brand?

The VAR's are a big ocean of prospect for carriers for two other reasons: they can talk tech with the prospect (while most agents sadly cannot); and the VAR world seems like an opportunity despite that many VAR's already have some kind of telecom relationship as a referral or lead swap or other arrangement.

To me, like everything else, it's going to be a hybrid solution. Mixing VAR's with telecom agents will be the best scenario because telecom is so very different from dealing with IBM, HP, Dell, Cisco or Microsoft. How so?

There are a bunch of user groups for Microsoft, Cisco, VMware, etc. And even partner conference. Each company has co-marketing support departments. Each company has a mature certification program. So a VAR gets a good amount of support from its partner.

Meanwhile in telco, Partner is a misused word. Cableco certainly wants a better handle on the brand in the marketplace and who is selling their services. But which carrier will follow the blueprint of a IBM or a Microsoft?

Until then, everyone may be courting VAR's just to add to the herd of channel partners selling their stuff.

A Little Anti-Trust Rant

2011-03-30T15:35:02Z

A CLEC filed suit against VZ for anti-trust this week. For those of you unfamiliar with operating a CLEC, ISP or OTT VoIP company, let me explain what I have seen over 11 years of servicing this industry.

Ma Bell has long standing promotions to compete against any quote from TWT. So long standing that by now they should be tariff rates.

Tariff is what the employees of the ILEC's consistently blame everything on. Tariffs are written by the ILEC and can be changed at will. Most of the ILEC services today are unregulated. Let me say that again: in most states even dial-tone is unregulated.

The ILEC's have systematically lobbied (read financially supported state and federal legislators) for de-regulation since 2004.

The ILEC's bill incorrectly in so many cases. Most CLEC bankruptcies result from billing controversy with the ILEC. In one case, a CLEC is routinely billed 10% wrong every month and the account exec doesn't even want to be bothered with fixing it. (It would be too difficult.)

I had a customer who had bought a frame circuit. It was in repair for a week. The ILEC tech told the end user that this would not have happened if he was a direct customer of the telco. How can that be? The line was down and the ILEC was having trouble fixing it. It was the ILEC's fault! (Unless the repair was caused by the ILEC.)

Often the repair tech would tell the end user to move back to the ILEC. Apparently, the CWA doesn't understand that the ILEC receives more revenue from Wholesale than from Retail.

Take the case of DSL. ILEC's only have to offer it to ISP's and CLEC's if they want to through a commercial agreement. The price that an ISP pays for a DSL loop in much of the 22-state footprint of one ILEC is the same as the retail price. The ISP also has to pay for an Aggregation circuit for DSL plus the Internet bandwidth, the router, etc. Yet the ILEC can offer all that for less than the wholesale rate.

Metro Ethernet at the 10MB speed is priced at $720 as a Layer 2 service offering. With Internet, it is less than $900.

DSL loop qualification is funny as well. At Ma Bell there is the wholesale LQ system and the internal LOOPY2 for account reps. They give different results.

When VZ turns up a customer to FiOS, they cut the copper. This is because VZ doesn't want to maintain two outside plant facilities, but it also eliminates that customer from getting CLEC services. It is similar when a customer gets U-Verse; they are removed from the DSL database.

At least one MSO sells metro ethernet to CLEC's and ISP's, then goes to the end user and undercuts them to go direct. Why? I have no idea. They just lost revenue!

Over and over again, there are true stories about ILEC anti-competitive tactics over billing, repair, and CPNI violations. COMPTEL should have been collecting these violations over their 30 year history. Imagine how much data they would have for Anti-Trust? In 2004, when I and others founded II4A and worked with the WBIA, we were trying to establish that database. Many of the independent ISP's didn't want to contribute to the database because they didn't think it would go any where. We used to file CPNI complaints with the FCC but they were ignored. (The FCC does not understand the word enforcement unless it's to fine someone for not filling out the right form on time. Again why do we spend the money for this Agency?)

Agents have had their own stories of woe with the carriers. Direct reps get better pricing. Dorect reps see the quote coming in and call the customer. Commission cuts. Yadda yadda.

AstroTel's anti-trust will be an uphill battle that will take years, sweat, stress and much, much money. The 3 cases that I have read about where an agent won a battle against a carrier took at least 6 years and close to $1M in legal fees, so good luck, AstroTel!

Local CLEC Sues Verizon for Anti-Trust

2011-03-30T15:13:57Z

AstroTel, a local CLEC in Sarasota, FL, filed the complaint in federal court in the Middle District of Florida against Verizon Communications, Inc. and Verizon Florida, LLC for repeated violations of the Sherman Anti-Trust Act, the Lanham Act, and the RICO Act. The complaint was filed in the context of AstroTel’s Chapter 11 Reorganization which began four months earlier. The reorganization itself is the result of ongoing contract disputes between AstroTel and Verizon Florida, LLC.

As I understand it, VZ repeatedly used CPNI information that by Federal law they are required to protect to market to AstroTel customers. The Duopoly as a whole does it. One MSO laughs about it and says, "If you don't like it build your own network." That may be good advice, except for Federal law and the reputation you get for being like that. Also, and its a big also, these companies make more money on wholesale but are too stupid to see it.

Good luck, Mike! I hope you win millions - although VZ CEO Ivan's pay last year was just over $18M, so you need to win $100M to even make a dent. Better yet, hold out for structural separation.

2 Questions for Kevin Martin

2011-01-27T20:07:46Z

Image via Wikipedia

As you may know, one of my two favorite FCC Chairmen, K-Mart will be speaking at ITEXPO. I'm not certain I'll get to ask these questions to him, since that restraining order may still be in effect*.

1) How come before you were Chairman of the FCC you were pro-competition, but as soon as you sat in the big chair, became anti-competitive? (Kind of like Commissioner Powell, who was pro-competition during his employment at COMPTEL, but who has been on the other side since appointment.) My understanding is that your appointment to Chairman was a deal with Karl Rove through partners like IMPACT with a promise for a Senate run. Is there truth to this?

2) How come the 9/11 Commission fixes to the Public Safety architecture in America had to wait until 2011 to be implemented for First Responders? See FCC notice today.

*joking about the restraining order.

The Future of Bell DSL

2011-01-27T19:43:59Z

AT&T announced that they "nearly" hit 3 million U-Verse TV customers. In comparison, Bell added 2.8M new wireless customers in the 4th quarter and sold 4.1 million iPhones. Bell has 95M wireless subscribers. [see PDF]. Wireless ARPU is $62.88. Total wireless churn is at 1.32%. Ma Bell is now a $120B wireless and Internet company.

This is a misnomer: "Consumer wireline broadband connections include DSL lines, U-verse High Speed Internet access and satellite broadband."

AT&T has approximately 7.8 million DSL subscribers, but that is not their focus. Neither is Voice or PSTN or TDM.

Over at Pa Bell, err, Verizon, according to Telecompetitor, "FiOS services now account for 53% of all of Verizon consumer wireline revenue. No doubt that Verizon is a FTTH and wireless company. Its copper legacy has never been in more doubt." And 'Verizon lost a whopping 564K DSL subscribers in all of 2010, 145K of which were lost in the 4th quarter alone." in comparison, in 3Q10 Comcast, which has 16.7M broadband subs, added 249K in one quarter! Comcast has a broadband penetration of 32.6%. FiOS is at just under 30%.

This doesn't bode well for wholesale DSL customers of either company. It also should have OTT (over-the-top) companies (VoIP and TV) to start reflecting on a strategy for dealing with port blocking, metering, and other fun and interesting ways that FiOS will want to keep all of the revenue.

Here's something else to make you scratch your head, VZ has partnered with Google for a specially branded Google Apps and Gmail for Verizon for small and medium business.

What's It Take to be a VoIP Winner?

2010-12-13T20:33:03Z

What does it take to run a successful VoIP services company? According to Report Linker, "the biggest VoIP providers are ostensibly run-of-the-mill telecom companies. This means smaller providers must innovate and take the role of pioneers whose marketing strategy doesn't rely only on offering the lowest price, since that's a game they can't win."

Lowest price is about scale. And as we have seen, just getting to 10K customers has taken most providers a long time (like 6-10 years). So lowest price - and the accompanying we-are-going-to-save-you-money speech - just won't cut it today. It isn't about revenue. It's about margin and profit.

A&P Grocery chain filed for BK today. It has been around 150 years. It ran on 2% return since 1998. It had bonds out there paying 8%. That won't work.

You would expect a 150 year old to know that. Apparently not. But they aren't alone. Many telecom/ITSP companies just want to book revenue and subscribers. That's like counting Facebook fans. What does it get you?

Some of your newer ITSP companies are doing unique things.

Alteva is betting on Microsoft with its Hosted OCS/Linc/Sharepoint/Exchange offering. It is so betting on that Hosted UC type offering that Alteva is wholoesaling that option to other ITSP's. Alteva thinks video will be disruptive, especially what comes out of the MS LINC integration. At the same time, Alteva is also betting on Broadsoft Hosted PBX and software integration. "Apps are stickier" is what Alteva CIO William Bumbernick told me during an interview. He also told me about some big college wins of 22K and 65k seats - without naming the colleges. The bonus was that these were agent sales, which ties in with Bumbernick stating that the ideal agent had bigger customers/connections. Hosted UC isn't for the small business, which is why they target more than 100 seats.

Hosted UC, especially video, needs more bandwidth. (See latest FCC report about broadband speeds.) Companies now looking for Hosted UC are medium sized according to AMI-Partners. Likely that means they have a CIO-type person who can roadmap the integration required for Unified Communications.

In other sectors of VoIP, we have Google Voice testing Call Recording. Sure, it has limitations, but then Google Voice has it's own impediments for many business. But Call Recording that is integrated into the Hosted VoIP offering, like PBX-Change offers through its CTI equipment, is what businesses are looking for. Plus it is that feature that becomes advantageous - and sticky.

Leasing is another advantage. Cisco has its program where it is helping ITSP's that use all Cisco products. (And Cisco Capital is telling VAR's that this is the new normal.) PAETEC and Tele-Pacific are CLEC's touting their own leasing programs.

Other areas of VoIP that can lead to a market advantage are zero-touch provisioning that Cbeyond and IBM are working on; translation service that Telcentris is rolling out; and SMS Integration (that's text integration), so your inbox looks more like your smartphone inbox, is something Telcentris is also working on.

What else are buyers looking for?

Basically, integration and simplicity. By that I mean, Google Apps integrated with Salesforce and other apps that the user needs.

Security. McDonald's customer data was hacked this month. Customers expect that data will be secure - until it isn't. That could be the cloud over cloud -- How reliable and secure is that Cloud Provider?

The one thing that will be a liability for ITSP's and VoIP Providers: not owning the network. We are knee deep in the Net Neutrality debate and it doesn't look good. Plus the Duopoly has stated that if the CLEC's don't like the pricing deal: Hey, go build your own network then!

It's more than just the pricing. Without owning the network, providers have to pay extra for quality of service. That raises the rate or takes away from margin. We'll see how this plays out, because unless the ITSP is integrated into the business processes of its customers to the point that the ITSP is a technology partner, pricing will be a factor - and network operators will win more deals, albeit with thinner offerings.

To win against cablecos who are fast becoming very large providers of digital VoIP, customer service and integration with marketplace advantageous features will be required.

Broadband Numbers Fall

2010-12-13T19:00:07Z

Broadband deployment numbers will fall. Why? The FCC has re-defined broadband as 4MB x 1MB and most DSL and 2.5G/3G do not provide that kind of real bandwidth. In the FCC report titled "Internet Access Services: Status as of December 31, 2009," 68% of connections in the US advertised as "broadband" can't really be considered as such because they fall below the agency's most recent minimum requirements." Oops!

TechSpot notes that 'over 90 million people in the country are using a substandard broadband service. To make matters worse, 58 percent of connections don't even reach downstream speeds above 3Mbps." BTW, cable leads the way with 70% of the high-speed bandwidth market (over 3MB). TechSpot goes on to state that this report reflects what consumer Purchased, not what was available. Much of that has to do with bundled packages and pricing, not just availability.

When you consider that faster speeds mean more usage - in other words, if I am buying faster bandwidth, I am going to use it - the Duopoly doesn't want to become a dumb pipe. Check out these bundles: triple play is $100; TV+Internet is $95; and TV+Phone is $85. I can't even find an Internet only plan. The Duopoly has a minimum spend per household -- and they don't care how you spend it.

That doesn't bode well for cord cutters or economically distressed households because there will be a minimum spend.

It used to be that the marketing message for the upgrade from dial-up to DSL was so you could do it faster (save time). Now that message is gone, because the amount of time consumers spend online is increasing. That results in more bandwidth usage - especially is video is growing. That means that network operators - the Duopoly - has to keep upgrading the network to meet demand. Or not. And just say Too Bad! It's better than the other provoider. What are you gonna do? Build your own? If you do, we will sue you and delay if for a couple of years. You consumers are pests. Just give us our money. Oh, and here comes another rate hike. HA! The C-suite wants a raise.