Recently in Internet Category

Expanding network into Charlotte and Raleigh was just the start of expansion for  XO in 2009.  

XO's been adding even more services to its too-big catalog lately. (I say too big because even XO sales folks don't remember half of what they sell or can brief prospects on more than a handful). The catalog is RBOC sized including Hosting, wireless, IP, VoIP, PBX, SIP trunks, transport, collocation, TDM, Ethernet, and Managed Services.

Oh, I forgot wavelength services too.  And in a deal with Pacific Crossing, XO extends its reach to the Asia.

XO is back to pushing Fixed Wireless that it relegated to the old Nextlink brand.  It was mentioned recently when XO announced that it was adding new speeds to its Hatteras based mid-band Ethernet service.

XO is also pushing Concentric, its hosting brand, with the announcement of a Managed Backup Service.  According to Phone+ magazine, the service will be sold via a new VAR Channel Program (as well as current XO Business Partners).

Beyond transport, XO added Hosted IVR, labeled as an Inbound Teleservice, and XO Connect, which is a mass notification service. I guess, they are taking lessons from Ifbyphone to use SIP to do more than make cheap calls.

And finally XO has an agreement to extend VoIP to 2800 LSO's in the US. That deal apparently also includes transport and transit to 2800 rate centers.

That's a lot of expansion once the heavy debt was lifted.

BellSouth and Cox fought Lafayette (LA) over the municipal fiber project (LUS) to the  tune of $500,000 in legal fees. Who do you think paid those fees? Taxpayers and consumers.

Then there's the Embarq, TimeWarner Cable fight over the Wilson (NC) municipal fiber project called Greenlight. It was a $28M project. Not for nothing, but couldn't TWC or Embarq have ponied up that cash and delivered FTTH instead of battling it in the legal system?
 
So when the Duopoly doesn't deliver broadband and the government takes matters into its own hands, they get sued. Why? The duopoly can't compete with a government-owned ISP. Instead, they lobby heavy, get the lawyers involved, and start spreading the cash to have laws made that prevent Americans from getting reasonably priced super-fast Internet Access.

Now, the Duopoly spends millions - literally, hundreds of millions - lobbying and contributing to politicians each year. Why not take that money and build FTTH instead? 

I have another suggestion:  Eminent domain. Eminent domain seems to work for cities that want to take over waterfront property for developers. How is having a network that you won't upgrade and deliver your promises on any different? When the Duopoly sues a city over a Muni Broadband project, why can't the city just counter-sue under eminent domain and take the network assets over?

January of 2000 CNN announced: "In a stunning development, America Online Inc. announced plans to acquire Time Warner Inc. for roughly $182 billion in stock and debt Monday, creating a digital media powerhouse with the potential to reach every American in one form or another."

This morning, over 9 years later, TW is spinning AOL out, according to CNN, a TW company.

Steve Case on Twitter had a lot to say about AOL: "AOL Spin-Off Approved Last Night By Time Warner Board: http://bit.ly/ThYkx. My perspective on AOL & Time Warner: has been a long, tortuous journey - and after a difficult decade, its time to open new chapter. Merger could've been transformative: driven convergence of TV/Internet/phone, ushered in digital music & video, etc."

I have to agree there. There were culture wars between the AOL employees and the TW employees, a classic case of old media versus new media mindsets. At the time, all I thought was that AOL was going to become THE place on the web. Pay your $10 per month and access all of TW Media like Time magazine, People, etc.; see movie trailers; get CNN breaking news. None of that happened. It had all that content to work with and absolutely no idea what to do with it. It didn't even have a Broadband play - even though TW owned Road Runner at the time.

Back to Steve Case: "But synergy didn't happen. Didn't integrate businesses to drive innovation. Lots of missed opportunities. Glad breakup now finally happening. Agree w/ TW CEO Jeff Bewkes, it is best for AOL and for TW. AOL not what it was a decade ago, to be sure. Uphill battle to return to greatness. But doable. Wish the team at AOL the very best!"

Case added: "Thomas Edison: "Vision without execution is hallucination" - pretty much sums up AOL/TW - failure of leadership (myself included). Resigned as Chairman 6+ years ago, left Board soon after, urged company to go left or go right, integrate or liberate."

AOL-TW wasn't the only big merger that didn't enjoy the synergies: VZ-MCI, HP-Compaq, DEC-Compaq, and so many others. Heck, AT&T is one umbrella with seven separate companies un-integrated under it, much like Level3. So mergers look good on paper - and the money looks great to the shareholders, bankers, and execs, but I don't know any that have worked out. It usually leads to short term monetary gains for a few and a big mess for the rest. It creates no ultimate value.

What will AOL do as a stand-alone company? Ride the dial-up cash cow, while figuring out the advertising network model, I guess.

 Thanks to the Arkansas Democratic Gazette for the chart.

Despite a big drop in earnings and revenue for the first quarter 2009, Windstream still managed to buy some more lines and customers by snatching up D&E Comm.

D&E Communications is an ICP, an  integrated communications provider, offering residential Voice, Video, Broadband and On-Site Computer Support services as well as business-class Networking, Business Continuity, IT, Security, Voice and Training solutions. D&E is an ILEC and a CLEC.

This stock-and-cash deal (worth about $330M)  "nearly doubles the company's operating presence in Pennsylvania with the addition of approximately 165,000 access lines and about 44,000 high-speed Internet customers."  That's about $2000 per subscriber.

"D&E Communications generated $148 million in revenue and $64 million in operating income before depreciation and amortization (OIBDA) in the twelve months ended March 31, 2009."  So the buy is about 2x Annual Revenue for those hoping to play at home.

"The transaction also includes six wireless licenses for 700 MHz spectrum covering a population of approximately 1.3 million in central Pennsylvania," according to the press release. 

While Windstream isn't having a strong quarter with dipping revenue, it is doing okay selling Internet and TV. It passed 1 million high-speed Internet subs by adding net 31,000 this quarter. In addition, more than 21,000 digital TV customers were added, bringing the total TV count to about 295,000. "It also recently finalized an agreement with DISH Network to sell digital TV to Windstream's commercial customers, Gardner said."

 

Tonight, Steve Case was on twitter tweeting, "Sad AOL went from being Internet pioneer/leader to also-ran. But still more there then most understand; hopeful can return to greatness." My replies were as follows: what they need are some young, hungry start-up execs, but what they will get is a stodgy exec that wants to cost cut and ride it out.

Why do I say that? Look at Embarq. Hesse had a couple months to pick a team and formulate a plan for the soon-to-be spun off Embarq. What did he do? Let's go with DSL and cost cutting. Blah! They needed that at Sprint not at Embarq. The next guy, Gerke, who took over last March, has been trying to be innovative with the eGo home phone. But EMBQ was already up for sale just trying to find a match.

Then you have EarthLink. Under Barry, it was trying everything: Muni Wi-Fi, BPL, MVNO, etc. He dies. The balls drop to the ground. The Board hires Rolla Hoff to come in, cost cut and try to find a buyer. No go. Just ride it out.

AOL has a wealth of brand recognition and content. It has active email accounts and IM users. My thoughts: go mobile with mobile IM app, definitely make the website and its content WAP based. Create MyAOL for the smartphone for $9.95 per month.

Also, I would have a premium email service that has extra value like saved address book, calendar and mobile access.

AOL has an advertising platform that I am not certain would spin-off, but if it did, there's cash and potential there, just like with the dial-up silo. And ADN, which it the AOL backbone is also something that could be leveraged.

I would even partner with ISP's to be the portal and content partner. Maybe the cable guys would like a deal like Yahoo! has with AT&T.

Anyway, there's plenty there to be worked (a social network too I think), but it wouldn't be that hard to find someone creative and passionate enough to run it. (Hey, Steve, my CV is on LinkedIn!)

Speaking with some industry channel folks today, we got to discussing Level3. Rob Powell says it best, "The Economy Takes a Big Bite Out of Level 3". This is a company with $6B in debt compared to $4B in revenue and negative free cash flow. Everyone wondered when the BK filing woud happen.

Level3 is as much at fault as Cogent and Hurricane Electric in leading the way to pricing underwater. Plus with operational challenges they aren't creating happy customers or agents. And with the new round of layoffs, not making happy employees either.

Level 3 has posted a profit only once since 1999. With pricing dropping and economy stalled, should Jim Crowe consider filing for bankruptcy? How do they even put a dent in the debt load with revenues dropping? Operational issues are still a factor which also act as a hurdle to sales. 

As an agent, I would lose revenue if they do file BK, but the truth is, I don't see how they get out from under the mountain of debt. 

As the FCC, USDA, and NTIA get set to disburse $7.2 billion in moneys to telecommunications companies for broadband deployment, penetration, and mapping along with E-Rate type services and tele-medicine, the FCC has to actually come up with a National Broadband Strategy.

"The American Recovery and Reinvestment Act charged the FCC with creating a plan to give all Americans access to broadband. The FCC began the effort, which will include a series of hearings and meetings, on Wednesday by asking for public comment. The FCC must present the plan to lawmakers by Feb. 17, 2010." [Infoweek]

One would have thought that former FCC Chairman Martin would have put a national policy in place, but all he had was a chalk board with "ideas" or guidelines that the telcos could ignore. Now acting FCC Chair Copps has been tasked and he takes this seriously.

"This commission has never, I believe, received a more serious charge than the one to spearhead development of a national broadband plan," FCC Chairman Michael Copps said in a statement Wednesday. [CircleID] 

The three agencies did  whirlwind tour of America to listen to experts and public opinion about Broadband availability. April 15th is the last day to comment on the NTIA Broadband Grant Program.  The NTIA does break down how their share of the money will be allocated and are working diligently to put in place a grant program for disbursement. The lynchpin is going to be how terms are defined. By terms, I mean broadband, unserved, and underserved.

The other sticking piint will be what companies are eligible to get grant. Certainly, the 20% matching funds will limit the smaller providers. However, the larger companies (like Verizon and TW Cable) are not happy with the Net Neutrality type of conditions on the money.

Back to the FCC: Copps could really use your input on the development of the National Broadband Plan. The FCC "Seeks public input on plan to ensure every American has access to broadband capability. (Dkt No 09-51). If you have thoughts on these elements, the Commission now seeks your comment:

• The most effective and efficient ways to ensure broadband access for all Americans
• Strategies for achieving affordability and maximum utilization of broadband infrastructure and services
• Evaluation of the status of broadband deployment, including the progress of related grant programs
• How to use broadband to advance consumer welfare, civic participation, public safety and homeland security, community development, health care delivery, energy independence and efficiency, education, worker training, private sector investment, entrepreneurial activity, job creation, and economic growth, and other national purposes.

This from Telephony online and the Convergence Consulting Group:

The latest in an annual study of the bundled services market shows US telecom service providers are losing wireline voice customers at a faster pace and being transformed in the process into companies that will look very different from their traditional telecom roots. The Battle for the American Couch Potato: Bundling, TV, Internet, Telephone, Wireless, released this week by the Convergence Consulting Group, shows maintaining a broadband connection is increasingly important to telecom providers, as wireline voice services become much less important.

If you look at the numbers in that PDF report and you still think that the QBPP is a viable option or that the last 400K businesses in the BellSouth region will somehow see the light and convert, I have some land for you in South Florida.

I have written about this in years past: the telcos have finally hit the wall. Everything is flat or down now: TV, wireline, cellular, and broadband. Granted most numbers are for residential, not business accounts which agents sell, but this will affect the entire telco business. Telco moved from the most profitable service - Voice - to Internet (the 2nd most profitable) - into TV, which is te least profitable. Why? Set-top boxes cost $400 per pop. How do you recoup that $5 per month rental? Most of the pricing goes straight to the content. You know, Disney and ESPN want their dough. Then there's the network upgrade for TV (and high-speed internet), which although VZT says is under $900 per home passed, the numbers I see are closer to $2000. Let's factor in the advertising. I get something almost everyday from VZ. At even $0.75 per mailer that's $15 per month. Times how many homes passed?  See how that may slow the telco engine? Plus MSO's moved from the least profitable service (TV) to the most profitable (Voice). And MSO's are getting into mobile data and maybe cellular voice with Sprint.

When you look at the summary from Convergence Consulting Group, it looks bleak.

• We estimate Cable's double play base of TV and Internet subscribers YE2008 at 61% (we forecast 79% YE2011). The RBOC/Telcos residential telephone to broadband overlap was 33% at YE2008 (we forecast 54% YE2011). Hence, it's easier for Cable to add voice customers off this overlap than for the RBOC/Telcos to add TV customers.
• 2008 RBOC/Telcos residential wireline telephone line loss was 10%.
• Wireless Substitution was responsible for about half the loss and Cable for the other half.
• We forecast Cable will have 23% of residential telephone subscribers by YE2009.
• We estimate wireless-only households at 20% at YE2008.
• Wireless annual subscriber additions continue to slow, 2008 saw 15.6M (2007 saw 22.4M) and we forecast 13.9M in 2009.
• Data continues to drive wireless ARPU growth (voice ARPU is declining). We forecast that price competition, which intensified in 2008, will continue to increase going forward.

Telcos are building out high-speed networks for TV and Internet, which is costing a bundle, at the same time that they are forklift upgrading the cellular networks to 4G. Have they even paid off the debt from constructing the 2.5G and 3G systems? Meanwhile, Charter is bankrupt and the rest of the MSO's have to upgrade to DOCSIS 3.0 while also constructing WiMAX networks. All while the ARPU is decreasing and the customer acquisition costs are increasing.

With these kinds of pressures on the RBOCs, imagine the pressure on the ILECs without a cellular division like QWEST, Embarq, Windstream, Frontier and Fairpoint. Landline losses that cannot be off-set by TV or cellular revenues. Yikes! Basically, the EarthLink strategy right? Cost cutting as the primary executive decision. Right out the knitting until its over.

Where do you think Agents come into that play? With losses, an easy cost cutting measure is to stop paying agent commissions. Think about your Channel Partners in 2009.

I'm just back from a three day seminar on Internet Marketing. Panels were on pay-per-click (PPC) campaigns, affiliate marketing, search engine optimization (SEO), and search engine marketing (SEM). What did I take-away?

1. Telecom is a space that affiliate marketers thrive in. (So does MLM).
2. Content is king. Nothing beats great content.
3. Social media is about interaction.

So social media expert, Chris Brogan, blogs about Michael Goodspeed being wronged by YouTube. Since Google owns YouTube, this is the beginning of Google becomes the Evil Empire.  I've been watching this happen for a while. When GrandCentral was upgrading to Googel Voice in waves it was a bitchfest on Twitter because people had to wait. *gasp*. They had to wait like 10 days to get access to an upgrade to a free service. WTH?

I just don't understand the issue with entitlement in this world.

It's like the people who have sued Google when Google makes changes to its algorithms, causing their business to fall off. Or when Google started charging for Google Apps and Gmail for businesses. People were not  happy. (What will they do when Google Voice comes off Beta and has a price tag? Voice has a cost).

I now understand why businesses fail: lack of common sense; lack of business sense; no knowledge of business or contract law; and entitlement.

Google, YouTube, Flickr, Yahoo! Mail, Hotmail, Twitter, and Facebook are free to use. If your account gets deleted like Goodspeed's did, it is a bad day. You have back ups, right? But is Google evil because the account was deleted? I don't think so.

If you base your business on a free software platform and that company changes something, you better have plan B. What if the government decides to take ARPANet back for government use only? Or Net Neutrality policy fails so that you only get content form your ISP?  No more INternet as we no it. What then? You better have a Plan B.

I understand that Goodspeed is upset his account was suspended, but it happened on Thursday, March 26th. It's only the 31st. Google isn't set up for customer support to consumers on its free services.

And he forewarned people that this could happen. How did he know?

When twitter is slow, people complain all day. There's a Facebook group titled I will not pay to use Facebook - Keep it free. I just don't understand the mentality. It costs big dollars to provide these platforms and keep them running. And to do it for free is unheard of until the Internet came along. It's the Generation of Entitlement - and it is annoying. No one owes you anything.