Even Fairport, acquired by RLEC Consolidated, is upgrading its network for higher speeds. Some of this is due to the fact that cable is winning the broadband war. Some of it is powered by USF Reform whereby broadband is the metric for dollars. Add in the Connect America Funds (CAF) and other federal and state incentives for broadband and middle mile fiber deployment. AT&T, Verizon, Windstream and CenturyLink have all talked about upgrading the broadband infrastructure. (BTW, this flies in the face of the new FCC Chairman's claims that investment went down after Title II.) It comes down to revenue - and DSL was not cutting it.
Fiber deployment is tough (just ask Google). Many providers use a mix of technologies. TPX (formerly known as TelePacific), Windstream, XO and Google Fiber use fixed wireless for broadband. Thousands of WISPs in America have been utilizing wireless to deliver broadband for years. The bigger guys are now jumping on the bandwagon. To be fair, the technology is not only better, but cheaper.
This from DSL Prime: (from Sail Internet in Fremont California) "George Ginis used Mimosa's super Wi-Fi to connect a customer a customer with 435.74 down, 331.83 up, and 4 ms ping. 5 GHz Mimosa is designed like a mmWave network but a heck of a lot cheaper than 28 GHz. Interesting alternative."
DSL Prime has an ad from Sckipio about Virtual fiber. "Extend your fiber with 100-300 meters of single-port G.fast. It can save expensive trenching for cell towers, small cells, basement fiber, commercial customers and others. A very thin management layer allows operators to keep their existing GPON management layer. Sckipio makes it effortless to add G.fast to any GPON network." G.fast uses copper like VDSL2. We'll see if it gets adopted in the US like it is in Europe.
Also on the copper side is trials by ASSIA for Terabit DSL. See here. Companies are at work to extend the life of wireline broadband to satisfy the consumer appetite for downloading videos. On the business side, the same technologies will be used to feed the business appetite for cloud apps - fixed wireless, 4G/LTE-A/5G, DSL/T1, cable modem and fiber. SD-WAN will be layered on top for metrics, failover/resilience and more. Interesting times.
]]>Deloitte acquired most of the assets of Day1 Solutions Inc., a cloud consulting firm to provide deeper cloud expertise. CIO Magazine explains, "Deloitte needs Day1 for the same reason Accenture needs Genfour, Genpact needs Rage Frameworks and Infosys needs Panaya. The problem for Deloitte and for every traditional services company is that their clients do not believe they have the digital skills to lead the digital transformation journey the clients want their business to undertake."
Think about that yourself. Do you provide proof of your digital chops to your clients? Would they be comfortable coming to you for cloud migration plans or strategy or advice?
Item 2:
The Lookout Breach Report: "With over 1.45 billion compromised accounts, emails, social security numbers, dates of birth, and other data types, March was the biggest month for exposed data this year." Yes Cyber-Security is indeed needed. I personally am tired of all my data being hacked from companies that don't protect it.
A 451 Research survey on Security Pain Points and Concerns showed that "User Behavior is a top concern across companies of all sizes - while other issues such as Endpoint Security present a bigger problem for smaller companies. In contrast, Cloud Security and Data Loss/Theft pose a greater threat for very large organizations."
Item 3 is SD-WAN announcements
Coredial and Cincinnati Bell are the latest Velocloud wins. I find it funny that Zero Outages re-branded as the first SD-WAN company at their mostly unmanned booth.
Windstream is wholesaling SD-WAN now. Probably Velocloud. At this rate SD-WAN is already a commodity and Cisco/ADTRAN need to be afraid. The CPE isn't coming from them any more. It isn't being distributed by Tech Data either!
Westcon-Comstor Adds Viptela's SD-WAN Portfolio
Item 4: M&A:
After buying Hunt Telecom and Uniti Fiber scoops up pure-play fiber company, Southern Light to move itself away from just being dependent on Windstream. UNITI also bought Tower Cloud and PEG. Maybe Alpheus or FiberLight will be next.
Item 5: More M&A:
Broadvoice bought a company to add in analytics and user experience. "XBP's core strengths is in deep reporting and analytics integration, enabling customers to better understand user behavior. For example, tools like Advertising Analytics allow users to measure and follow through on outreach campaigns, from local to nationwide. Other tools like voice recording on-demand and voice-to-text conversion provide solid, searchable data that enhance successful client relationships."
]]>In the business market, Alexa is integrated with Skyswitch, a Netsapiens softswitch operator.
Better Late than Never: Amazon's Unified Communications Starts with 'Chime' by Edgewater Networks.
Interesting look at Hosted PBX seat pricing at CP online.
Seth Godin asks, "Learn something new and difficult and valuable." Why? "There are people who can cut corners better than you, work more hours than you and certainly work cheaper than you. But what would happen if you became the person who was smarter, better at solving problems and cared the most?"
47% of jobs are at risk for being automated in the next 20 years (faster probably). The only way to stay relevant is "Solve interesting problems"; Consultatively Sell Solutions; and utilize Creative Thinking.
FTTH Council has changed their name to the Fiber Broadband Association.
Windstream is making big waves as it fights against industry consolidation that may make it less relevant. WIND complained about Level3 not paying its bills. Now they are worried that the mergers will strand small business during the TDM-to-IP transition. This is all gamesmanship to get concessions favorable to themselves.
BTW, no one wants to buy Cogent.
Stonepeak Infrastructure Partners has closed a deal to become majority owner of the data center and interconnection company, COLOGIX, which runs 24 data centers in North America. So the data center market is still hot!
]]>Avaya sold its networking business to Extreme Networks for a paltry $100M (It is about $200M in revenue). That $100M does not make a dent in the billions in debt that Avaya is trying to scrape off in bankruptcy.
HPE is acquiring Nimble Storage for $1B.
LUMOS is being taken private by EQT Investment Startegy for almost a billion dollars. This comes following LUMOS buying three data center from DC74 and Clarity Communications, a fiber operator in NC.
FirstLight Fiber's main PE owner, Oak Hill Capital Partners, has acquired Finger Lakes Technology Group in upstate NY to fill in its fiber route. The data centers, Cisco business and fiber network all go with FLTG to FLF. FirstLight recently announced similar transactions with Oxford Networks and Sovernet Communications.
Another RLEC was picked off by private money: "Hargray Communications has agreed to be sold to an investment group led by the Tom Pritzker Family Business Interests. Redwood Capital Investments and Stephens Capital Partners are also investors.
In other news, Amazon AWS launched some new Cloud-Based tools to help enterprises manage their call centers. They already built the tools for internal management of their own call centers, so now they are just leveraging more internal IT/tech for revenue.
8x8 is funny. They hire a banker and put up the for sale sign; then buy something. 8x8 acquired Sameroom, an inter-connection platform for various chat apps including Slack and Skype. ComputerWorld has a good article on the pivot of Sameroom and the 30 year history of 8x8.
Worth noting: "Today 8x8 introduced the world's first Communications Cloud, which combines unified communications, team collaboration inter-operability, contact center, and analytics in a single, open and real-time platform. The company also announced a number of new business application integrations, aimed at enhancing business workflows by making real-time communications, collaboration capabilities and intelligence available for third-party cloud applications, all customizable via an Open Cloud approach to fit individual enterprise needs." Note the words inter-op, analytics and integration. These will be the key to real UCaaS or UC&C or WCC (or whatever we call it next). These are the factors the separate the sale of UCaaS from Hosted VoIP. One is valuable, bringing productivity and business change. Hosted VoIP is just dial-tone replacement.
Today is International Women's Day! I am recognizing it by re-posting my Women in Tech prezo from ITEXPO and an article on gender diversity from Fred Wilson.
]]>Google Fiber stopped over-building fiber to the home (FTTH) to give fixed gigabit wireless a chance. This isn't even 5G. This is current non-millimeter tech.
AT&T is trying to get BPL (broadband over power lines) to work with Project AirGig. Will it work this time? The power infrastructure is still pretty old/antiquated, ut technology has gotten better.
API isn't talked about like that. Integrations are. UCaaS as a stand-alone platform is not that impactful to the employee work day. Integrated with CRM, email and other work day applications is. [All About API is at ITEXPO.]
Intelepeer just announced a platform that integrates with Cisco Spark. Hope they demo that at ITEXPO.
The IDEA Showcase is Thursday evening. I always get amped at startup events because there is great energy (hope, promise, excitement) that we kind of lack in telecom.
If you like startup stuff, the week of Feb. 13 is Startup Week! Techstars runs that globally.
Channel Vision Expo is collocated with ITEXPO again. This is the first channel partners event of the year. And it is collocated with MSP Expo. Should be interesting because more and more referrals and indirect sales are making a difference for cloud providers. 8x8 notes, "New monthly recurring revenue (MRR) sold to mid-market and enterprise customers and by channel sales teams accounted for 60% of total new MRR booked in the quarter."
I don't understand Blockchain. (There I said it!) Maybe I will get a chance to see what that is about on the show floor next week as well at the Blockchain Event.
WebRTC is still a thing, according to Andy Abramson. We'll see as Real Time Web Solutions has a section of the ITEXPO as well.
Most of the noise in my email is about HPBX/UCaaS, SD-WAN or IOT. The IOT Evolution is happening at the same time in Ft Lauderdale but it is a separate show. Verizon, Amazon, Gogo, Sprint, T-Mobile, Cisco (but no AT&T) are speaking and/or exhibiting.
That is a lot of tech to take in at one time, but it also in one place. Where can you get that much info/demo/prezo in one place?
Some interesting stats from 451 Research Group.
Overall IT Spending vs. Cloud Spending. Cloud spending remains strong, and the growth rate continues to outpace overall IT spending. A total of 44% of cloud users expect spending to increase over the next 90 days, while 4% expect a decrease. In comparison, 38% expect an increase in their overall IT spending vs. 11% expecting a decrease.
Cloud Adoption. SaaS (64%, up 1-pt) remains the most popular type of cloud computing in use, followed by Infrastructure as a Service (43%, up 4-pts) and On-Premises Private Cloud (34%, down 2-pts).
On-Premises Private Cloud Vendors. The most popular vendor for on-premises private cloud is VMware vCloud (65%), with Cisco (33%) and Microsoft Cloud OS (30%) a more distant second and third.
Key Attributes. The most important attributes for on-premises private cloud vendors are Platform Reliability (66%), followed by Value for Money/Cost (47%) and Technical Expertise (36%).
If you are in Ft Lauderdale next week, let's grab coffee! Or join us for dinner on 2/7 HERE.
]]>Telcos spent billions on both fiber and TV services. [Verizon reportedly spent $23 billion rolling out FiOS since 2004, some of it from rate hikes, some from government subsidies.] Unfortunately, by the time telco TV, like Windstream's Kinetic, is widely available cord cutting is accelerating.
From DSLR, "Telco TV and satellite TV providers saw record pay TV subscriber losses last quarter, according to the latest analysis by Leichtman Research. According to Leichtman, the pay TV sector lost about 210,000 subscribers last quarter, though this figure is dramatically lower than the 430,000 subscriber net loss stated by Wall Street research firms like SNL Kagan. While traditional cable providers "only" saw a net loss of 90,000 video subscribers last quarter, the telcos were particularly hard hit, losing 375,000 video subscribers last quarter -- compared 45,000 during the same quarter last year."
In the broadband realm, "Cable companies added a net of 775,000 broadband subscribers last quarter, compared to a net loss of 150,000 broadband subscribers during the same period," writes DSLR. [see chart here]
For consumers, it is all about the Internet and smartphones, according to Pew.
Telcos didn't want to get into the DSL game. Mainly to protect a highly profitable T1 business. The same way they threw obstacles at Google Fiber, the LECs threw obstacles at the newly minted DLECs - NorthPoint, Rhythms and Covad. Sure, some of it was incompetence on the part of the DLECs and GF, but the hurdles kept tripping them up. After they all filed bankruptcy, the RBOCs decided to get into the DSL retil game, to the chagrin of the independent ISP, who was finally making money on DSL. Undercut by the vendor, many ISPs failed or limped along for years, which affected many small businesses as the ISP was usually the local computer expert and Internet Provider. This was something that the LEC could not provide: personal service to the small business. To this day, the Duopoly can only supply commodity service with almost non-existent support. As they have gotten bigger and bigger to take advantage of scale, the support to the small business has suffered.
Small business is 99% of the businesses in America. Yet every provider wants to go up market.
There are almost 28 million small businesses in the US and over 22 million are self employed with no additional payroll or employees (these are called nonemployers). Over 50% of the working population (120 million individuals) works in a small business. But it is under-served by the Duopoly.
From the FCC's 2016 Broadband Report:
Think about those numbers. VZ spent $23B. Other telcos spent billions. The FCC donated billions in BTOP, BIP, ARRA, CAF, CAF II and USF funds to the effort to build out broadband across America. Private companies (PCOs, ISPs, WISPs and CLECs) have invested hundreds of millions more. Cable dropped bilions. Yet not everyone has good Internet????Or a choice of more than 1 ISP?
I have to wonder where this goes. The telcos spent billions to get triple-play just as that bundle becomes undesirable. They now have to build out fiber to stop losing broadband subscribers, so more hundreds of millions. At a time when their debt is High - and the pies for TV, broadband and voice are stagnant. Even cellular has peaked.
They are all chasing Enterprise, which I imagine means 500+ employees. There are only 30K businesses in the US with more than 500 employees. So Comcast, Charter, AT&T, Verizon, CenturyLink and Windstream are fighting desperately over the same 30,000 businesses and government contracts. With VZ acquiring XO (approved today); C-Link acquiring Level3 (ugh); and WIND Buying EarthLink, that leaves Zayo as the sole big indie.
What happened? Bad short-term decisions that cost jobs, revenue losses and more CAPEX spending than if they had just done it from the beginning. To still see announcements from the telcos about Gigabit deployments in select cities is just plain sad. The monopolies that were the Bell companies re-constituted but lost their edge. It's like they don't know how to compete at all. They just lean on their brand and hope for the best.
EoC wasn't widely enough deployed and sold. Yet everyone is banking on SD-WAN, which will likely just make SLAs crumble.
Small business has suffered from this mess -- and further with the mega-mergers and consolidation. Small businesses - all businesses - rely on telecommunications to do business. The Internet is vital to our economy. Let's hope we don't stifle it anymore.
]]>CS&L, the telecom real estate investment trust (REIT) spun out of Windstream last year, owns the copper and fiber assets that Windstream exclusively leases for its network. CS&L bought Tower Cloud and PEG Bandwidth to add to its fiber portfolio. CS&L lost $4.1 million during its 2016 third quarter on $200M in revenue of which 82% comes from WIND. CS&L will "acquire Network Management Holdings LTD, a private company that owns and operates 359 wireless communications towers in Mexico, Nicaragua and Colombia" for $65 million. Towers are like real estate for a REIT. Fiber is still an asset to rent in a REIT. Surprisedly, Level3 nor others have spun out fiber, data centers or other assets into a REIT as a tax savings entity.
As I wrote my column for Internet Telephony magazine last night, Tony Thomas must have read my mind. WIND CEO says that SD-WAN and UCaaS are the driving forces for the WIND-EarthLink merger -- and where success will come from for similar telecom providers.
Cellular companies have started counting all Internet connected devices as number of handsets slows down. In the latest quarter results (see here), it is all about the notes:
"Subscribers include retail and wholesale connections of both traditional and new connected device categories (e.g. M2M). Verizon Wireless subscribers include Strategy Analytics' estimates for wholesale and connected device volumes. Sprint subscribers and net adds exclude affiliate subscribers, but include wholesale."
The blended ARPU is diminished by M2M and IOT device revenue. And this will continue. Family plans, hotspot add-on, tablets at $10 per month - these are the tricks that will need to improve going forward for ARPU to not slide off. Or they will have to break out M2M and IOT which they can't do.
]]>If you can't see that flash mp3 player, you can download the mp3 or listen on Soundcloud.
]]>The US presidential election is finally over.
GTT is buying Hibernia Networks for $590 million (mostly cash). Hibernia adds sub-sea assets to GTT's Tier 1 global network. This move also adds IRUs across Europe to GTT's network. It also adds "about $185M in revenue and $65M in EBITDA." What is that 9x EBITDA and less than 3x revenue. This feels strategic as opposed to other M&A that feels defensive. (EarthLink-Windstream was both!)
More M&A: Lumos Networks, a fiber player in the mid-Atlantic region signed an LOI to "acquire Clarity Communications Group, which operates a 730 mile fiber network with 75 on-net locations located across four states in the south-eastern United States. The vast majority of Clarity's operations and fiber mileage is in the state of North Carolina." [PR} This is a strategic fill-in move. Lumos has been growing the fiber biz for about 5 years. It has a wireline business that was formed in 2011 as a spin-off of nTelos. LUMOS is trying to figure out what to do with its RLEC business.
Zendesk re-branded to pivot beyond just help desk ticketing. They added some analytics and business intelligience (BI) to improve customer experiences. It is about UX/CX now more than ever - especially if one company KPI is LVC (lifetime value of the customer).
In a similar vein, Why the goal should be unified experiences - not just unified communications.
BIG STATISTIC (for Agents especially): "40-75% of audio calls in the enterprise are conference calls - and its growing! [source]
75% of users communicate at work with 3 or more devices! [source]
"All are chasing the UCaaS growth opportunity. UCaaS is expected to grow from USD 17.35 Billion in 2016 to USD 28.69 Billion by 2021. The market is transitioning from the "early adopter phase" to the "early mainstream phase" for enterprise delivery." [source]
Google parent, Alphabet, is pulling back on projects - from Google Fiber (aka Alphabet Access) to Project Wing (drone delivery) - as it strains to build profitable business lines beyond Google and search.
]]>Yet, this headline: "75% of internet use will be mobile in 2017 according to forecast" is kind of misleading. "Zenith Media has released a forecast which says that mobile devices will account for 75% of global internet traffic in 2017." Globally that would appear to be on point since much of the world is mobile only. Laptop and desktops aren't booming. I wonder if tablets are considered mobile or only if they are on a 4G plan.
Mobile internet use passes desktop for the first time, study finds. "The combined traffic from mobile and tablet devices tipped the balance at 51.2 percent, vs. 48.7 percent for desktop access, marking the first time this has happened since StatCounter began tracking stats for [global] Internet usage."
Keep in mind that Mobile vs Desktop has unique User Behaviors. Maybe 55/45 is as far as we go.
"For someone in telecom, the surface-level answer seems obvious. Millennials grew up in the age of cell phones and the Internet. They expect constant connection, mobility, and innovation. This explains why millennials are shaking up personal mobility and communications. But how is it that they're having such an impact on business communications and collaboration too?" from this report.
To continue, "Millennials are becoming the majority in the workforce. They're already the largest generation in the U.S. workforce and should be more than half of the global workforce by 2020. Millennials are becoming managers and leaders. Their preferences and early-adopter tendencies are shifting the conversation about tech in the workplace."
This might be why so much emphasis is on 5G and mobility, but let's not forget that the 2 RBOCs get about half their revenue from mobile, so they will hype up the biggest half of their business.
I don't know how 5G will trump fiber to the home, especially for Boomers and older. Reading tablets and phones with old eyes is a challenge, believe me.
As we have recently witnessed with IOT and hacked phones, security will be an issue. A big issue. No idea how we handle that going forward since people still use password for password (and 1234 for PINs).
If 5G is sold in buckets of data, how does that compete against cable wi-fi or an almost unlimited fiber pipe? "Wi-Fi Expected to Carry up to 60% of Mobile Data by 2019". Is that still mobile only?
Fiber has had set-backs, especially with Google Fiber, but it is also on the rise. More than 600 independent telcos have FTTH projects in the works. Getting pole access via telco, power and government entities is a maze of red tape. Yet cell towers are facing bigger hurdles as no one wants one in their neighborhood. Companies like Crown Castle and Zayo are building out small cells along their dark fiber routes to help 4G fill-in. No idea how dense it will need to be for 5G -- or the lasting effects of that many radios and wi-fi routers per block.
What about the economic effects of fiber? "The evidence is mounting: investment in fiber improves the economic performance of a community as well as its quality of life," said FTTH Council President and CEO Heather Burnett Gold. Would fixed 5G present the same economics?
We will see a certain amount of the market go wireless only. "The latest data from the Centers for Disease Control paints the picture of a growing mobile first society in the U.S., with nearly half (45.4%) of U.S. households wireless only," from the CDC's National Health Interview Survey (NHIS).
5G will change things for a few companies. Point to Point licensed wireless has made a few CLECs happy (and profitable). But it isn't for everyone or for every where.
]]>In 2008, C-Link bought Embarq, formerly Sprint/United.in $11.6B deal including assumed debt. In 2010, C-Link bought Qwest which included RBOC assets that flew the US West banner. "The valuation of CenturyLink's purchase was $22.4 billion, including the assumption of $11.8 billion of outstanding debt held by Qwest."
In 2011, CenturyLink begins to stray from grabbing fiber and POTS lines in favor of the data center business it acquired with Qwest. Much to the chagrin of the agent channel, Savvis was scooped up for $3.2B including debt. This started a series of acquisitions to beef up a cloud business that for all intents and purposes C-Link is mired in for no reason.
The ITO Business Division of Ciber (managed services), AppFrog (PAAS), Tier3 (IAAS), Cognilytics (analytics), DataGardens (DRaaS), Orchestrate (DBaaS), netAura LLC (security services) and ElasticBox (VPS) - all scooped up in the last 3 years to make a soup out of a cloud division that it is still trying to sell. The rumor today is that Savvis will be spun off. No word if that will be just data center or both data center and cloud. And that makes even less sense since Level3 actually knows how to sell colocation - unlike practically anyone in Monroe.
I understand that being rural and watching your CAF and USF subsidies slowly decrease makes you yearn for fatter and happier days. And when you look at Level3's $10B in NOLs, you start to think like Carl Icahn. However, have you seen what Icahn did to XO???? Have you seen what C-Link did to Qwest and Savvis??? That husk will next be Level3.
With debt this deal will be worth about $34B to get combined revenues to $25B.
Not a single merger in telecom in the last fifteen years resulted in anything good. Not one.
The integrations rarely go as planned. These two companies probably have 26 or more separate and different software systems in the BSS/OSS. These will NEVER be integrated. Orders, status and asset availability will be a nightmare. I know. I know. You think I am a pessimist. But truly this will suck especially for the channel.
Any agent that says this is good is either (a) looking for press or (b) is delusional.
There is now less choice. When VZ takes over XO, except for Zayo, who is left that isn't a LEC or cableco? What happened to the CLEC industry? Totally collapsed as its owners cashed out. Everyone got bigger and no one got better. One by one they have fallen.
It is why Cable is winning the broadband game. (Cable is single minded.) It is why businesses buy cloud services from OTT. (Bell-head mentality precludes anything but network and voice.)
This is the LEC problem: lack of focus; deficient long term strategy; and a missing willingness to win the customer. It's all about the creation of value without actually creating any value.
Since the Board will almost stay intact and the CEO remains, what new gen strategy or thinking do you think will occur with the combined entity? I get why the L3 CFO is staying: someone has to keep that debt at bay and play with the NOLs so that the stock doesn't crash when revenues start to slide.
I won't even get into the culture differences between the 2 companies. L3 and TWT had only slightly different cultures but most of the TWT people exited. This is a good payday for L3 CEO but he will go down as the guy who killed a good idea. The blood of thousands of employees and agents are on Story's head.
Hopefully, someone else will make a BID for Level3 as a white knight - Comcast, Zayo, or a PE firm*.
**Although STT owns about 13% of Level3, I don't see a PE firm wanting the company, except to do to it what Icahn did to XO. L3 doesn't throw off enough cash.
According to CenturyLink press release, the deal, which is expected to close by the end of the 3Q 2017, results in:
I wonder back to when AT&T tried to buy T-Mobile in 2011. That Obama Admin said NO. Despite the fact that AT&T was actively helping the NSA and other 3-letter agencies since before 2006, when Klein exposed Room 641A.
Then there is the other program that AT&T runs for the feds: "Hemisphere was used far beyond the war on drugs to include everything from investigations of homicide to Medicaid fraud." The Daily Beast explains how AT&T is spying on Americans for profit. (It would be weirder if they were just doing it for fun.)
Barry Eisler spells out how all this works via his "fictional" book God's Eye View.
AT&T has hedged its bets since the T-Monile No. It won approval for DirecTV. It plans to get a Yes from the DOJ - and has told the FCC that they don't have a say in this acquisition.
From NEXTDRAFT by Dave Pell: "Will the AT&T acquisition of TimeWarner get federal approval? Before you place your bet, consider this data provided by the NYT: "AT&T is the biggest donor to federal lawmakers and their causes among cable and cellular telecommunications companies, with its employees and political action committee sending money to 374 of the House's 435 members and 85 of the Senate's 100 members this election cycle."
Why are they buying TW? Well, to catch up to VZ and Comcast. And because all the pies are flat. AT&T had a bad quarter. VZ has a had a couple. They are laden with debt. Cellular which is half the revenue or more is being picked apart by T-Mobile and to a much smaller extent Sprint. Cable is eating the wireline broadband lunch*. Since all of the bets were on cellular, it is now a run to use fixed wireless (LTE or licensed) for broadband deployment which will increase ARPU for them -- and the bills to consumers.
Ma and Pa Bell have spent tens of billions on spectrum. They will use it to get out of terrestrial broadband and have everything be wireless. They will still have to figure out the T-Mobile problem as well as the cable wi-fi problem.
They want content to build a walled garden - like Facebook or AOL before them. When you own the content you can be king, just ask Comcast/NBCU or Disney.
The one thing that will kill off the telco is an economic depression. When the US experiences another economic slowdown - like say 3Q2017 - consumers will have a lot less money to spend. That means ARPU will not go - and subscriber counts will go down. When you have to eat, you skip HBO and cable TV.
The auto industry is already feeling this crunch. More leasing, less sales, more discounts, interest free loans. The cars last longer. And driverless cars are coming.
One reason for immigration is to actually increase the population of the US. Millennials aren't having kids - in many cases because student loan debt and poor salaries make a child too expensive, except by accident.
In the midst of this noise 2 things to note: (1) ABRY is selling Masergy to Berkshire Partners for about $1 Billion dollars. The reports say $900M; I was told it is more than that.
(2) Google Fiber is laying off. The CEO of Google Access, Craig Barratt, is also stepping down. Too few subscribers, too many hassles means they will try fixed wireless then probably call it a day. The Duopoly of cable and telco have successfully squashed competition. And for all the little guys cheering, it could be you next!
Please note that in the middle of all this, despite the skyrocketing analyst forecasts, cloud computing is not mentioned in this scenario. Why? It amounts to peanuts in revenue for the Duopoly. "Total SaaS/PaaS revenues of top 50 software companies globally are $22.4B. Microsoft, Oracle, IBM, SAP, Symantec, EMC, VMWare, HP, Salesforce and Intuit are the top ten software companies worldwide," according to Fortune and PWC. Unless they were to buy Salesforce to gain $5.5Billion in revenue, they have to go content. Microsoft bought LinkedIN for $26B!! And LI revenue isn't even $4B dollars.
IOT isn't even a billion dollars in revenue for VZW yet. So how do you move the revenue needle at the former Bells?
* Per telecompetitor, "The number of U.S. fixed broadband subscribers dropped by nearly 200,000 on a net basis in 2Q 2016, a decline of 0.2 percent, according to the latest market data from Point Topic."
]]>As one CEO told me, "Luddites are still selling network. And the price compression is killing everyone." I know. Revenue and price compression are working against everyone.
I get requests for Gigabit pipes in rural areas that come with a budget of less than $3K. It is unrealistic, but you can't explain it to people. They don't want to hear it.
Providers would like to sell more managed services. They probably could if they told a better story besides we want to manage your technology. MSPs do a good job of explaining the value of outsourced services to businesses, but carriers do not (yet).
While partners hear all the chatter about cloud, colo, SD-WAN and UCaaS, they realize that network is the easier sale. And you have to sell more and more to stay even.
Some of it is a Trust issue. If the vendor has screwed up number porting on a PRI or POTS line, are you really going to sell their UCaaS?
If the carrier can't find their network maps, do you think they can do a good job with SD-WAN?
If the billing is always an issue, why would you sell complicated stuff with that vendor?
Personally, I have an issue selling managed router. It is overly automated with no human interaction at all. Automated emails and trouble tickets mean an angry customer.
Would I use that carrier for managed security? Um, no.
Some of it is a Clarity problem. By that I mean, the vendor catalog is so larg - and it is usually delivered to the channel in a fashion similar to confetti: thrown at you. There needs to be more context. What is the core product? How do the rest of those services align or add value to that core? Who buys it? Why do they buy it?
Additionally, there needs to be more proof that clients are buying it.
Meanwhile, another provider enters the network fray: Google Fiber is looking to partners to reach the small business market. "Aaron Withrow, channel partner manager for Google Fiber, acknowledged the challenges in selling to businesses and offering them value beyond a boatload of bandwidth." [CP]
An ASIDE: the reason folks sell SIP Trunks in place of UCaaS is a similar argument. It is a faster sale - straight up replacement transaction.
]]>As I watch Hurricane Matthew, I wonder how many elderly and infirm still have POTS lines.
Verizon workers can now be fired if they fix copper phone lines for DSL, according to reports (and HERE). Verizon wants people to buy fixed wireless and 4G LTE-A in place of anything copper.
Certainly, VZ needed the money when it sold off VZT in Cali, Texas and Florida to Frontier. It had to pay the FCC $10B for spectrum - and that is what the sale price was to Frontier. But it wants out of the union labor based telco business. Buying Yahoo and AOL is a way to be a mobile and entertainment business. So copper has to go.
Windstream is using copper for G.Fast and VDSL2 in Project Excel as it beefs up broadband in its ILEC regions. Their ARPU is up, which is what they need - to pay for the upgrades AND to keep Wall Street happy AND to pay down debt.
AT&T uses copper for VDSL2 for the now retired brand U-Verse. "AT&T notes that "AT&T Fiber" may not actually mean fiber -- the telco noting that "under the AT&T Fiber umbrella brand we will use a variety of network technologies." That's likely to include wireless broadband, and should it ever come to market, AT&T's AirGig initiative which utilizes power lines." [DSLR]
After Google Fiber finished up its acquisition of WISP, WebPass, it started thinking about fixed wireless in places, instead of always actual fiber. Why? It got exhausted trying to jump through hoops with local governments for rights of way, pole attachments and more. Then there was the matter of the electric companies who also own poles. And finally dealing with the ILEC, who also owns poles, and who along with cable was suing to slow it down. Louisville being a good example.
Google Fiber reminds me a lot of Covad and the DLECs (and Earthlink's Muni wi-fi project): Good idea, poor execution, no telco experience, learning the lessons all CLECs know the hard way: ILECs will screw you to hamper competition. So will cable. Monopoly mentality just can't be changed.
It would be nice if the copper plant could be rolled up into a nationwide REIT (similar to CS&L), so that EoC, DSL and T1s could still be utilized by alternative carriers. It is the one thing that other CLECs find a use for XO: EoC. We'll see how it plays out.
]]>By 2012, half were gone, swallowed up by acquisitions. [CBEY-Birch, Qwest-CLink, Paetec-WIND, L3-GX, L3-twt, Zayo-ABoveNet]. Today, with XO going to Verizon next year, there are really only a handful left. And they don't look like what a CLEC looked like 6 years ago.
Wireline Copper is in decline in large part to fiber, Google and cable, but to no small extent by the ILECs not wanting to be in that business anymore. They don't have to share fiber assets like a UNE. They do wholesale it, but since the ILECs are getting beat by the cablecos, the wholesale ILEC fiber isn't an awesome deal.
Buying wholesale from cable is resembles punching yourself in the face. They don't want to sell wholesale. I have heard this from them repeatedly. They make Verizon look like a generous wholesale partner. They will snake your customer out from under your contract. )I have heard these stories repeatedly as well.)
After you have done this for a while, you want a change. Who wouldn't? Telco is to gastroenterology what candy is to dentistry.
TelePacific has made a shift. With its acquisition of DSCI, TelePacific is taking managed services, UCaaS and SD-WAN nationwide. I have been known to say, Layer 1 or Layer 7 - either own the network or own the app. With managed services, UCaaS and SD-WAN, TPAC is betting on being a business technology partner at Layer 7 (of the OSI Model). Congrats, to one of my favorite clients (for full disclosure to my readers).
The other final pivot occurred in Atlanta, where EarthLink "acquired Boston Retail Partners, LLC ("BRP"), a highly regarded management consulting firm focused on the retail vertical. BRP's experienced consultants work with leading retailers to deliver strategic solutions that address the business and technology challenges unique to the industry." This might be the final note of the retail song that ELNK has been playing. Retail is a vertical they decided to attack and own and this might be the final piece needed.
It reminds me of CapGemini a little in that CapGemini is a consulting firm that partnered with VMWare and their AirWatch division to offer mobile desktop mixed with MDM. A consulting firm being a service provider like an MSP.
This ELNK acquisition makes me wonder if they will spin-off their network assets - Deltacom/IFN fiber, ONE Comm fiber in the northeast and New Edge Networks - to a REIT or other entity. It would make sense IF the revenue of the CLEC could stand up to scrutiny by itself. We'll see, but it is definitely a different looking CLEC. I'm not even certain that term applies to them any more.
After 28 acquisitions, Birch has a new CEO and mission for organic growth predicated on a fiber lit building strategy and Cbeyond's cloud portfolio. They still look and act like a CLEC.
Zayo is all fiber all day. Pipe, pipe, pipe. Oh, yeah we have some data center stuff from a Latisys acquisition but fiber, fiber, fiber.
And Level3 is still plugging away at its own triple play: the voice network that more than 70% of the VoIP providers rely on; a very well connected network with a top looking glass that is connected to content engines as well as enterprises, government and carriers; and fiber. The next step for Level3 is to connect their young security services department into their well-connected market. This would get them up the stack a little too.
Rumor today is that Comcast wants to buy Level3 to compete eye to eye with AT&T and VZ.
Network is the main play but no one can survive forever on just selling network - unless you have many unique routes, you run your network flawlessly and you know where the assets are. There has to be a layer beyond just pipe. That's what everyone is working on.
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