Recently in telco Category

Nuvox is out kicking tires to see who they can buy. Rumor has it that Greenville-based Nuvox is looking to buy One Communications in the Northeast to expand their footprint, especially their MPLS reach. (I didn't know Nuvox sold MPLS. I thought they were just a cheap Integrated T1 supplier).

Rumor also has it that One Comm. is having problems. Provisioning being one of them, which usually leads to sales declining. Customers don't like install issues and neither do agents, since it costs them time - time they need to be out selling to make up for the shrinking commissions. (The shrinking commissions correlate to the shrinking prices).

Nuvox is coming off its merger with FDN last year that created a good amount of internal strife as former Nuvox folks didn't relate well to FDN people. Maybe that has been straightened out. Here's hoping another merger will have better integration.

UPDATE: In another rumor, it's Nuvox will get bought by XO to increase its VoIP customer base. (And because privately held Nuvox has debt coming due end of 2008).

In a discussion on LinkedIn, it seems that IMS (IP Multimedia Subsystem) isn't killing it in terms of measuring up to the hype. According to Ericsson, an IMS proponent and vendor,

"IMS is defined by 3GPP/3GPP2 as a new core and service 'domain' that enables the convergence of data, speech and network technology over an IP-based infrastructure. It is the operator choice of control and service logic for primarily IP/packet-based person-to-person communication but also for person-to-content communication.

For users, IMS-based services will enable communications in a variety of modes - including voice, text, pictures and video, or any combination of these - in a highly personalized and secure way.

The most widely deployed application on IMS are: Instant Messaging, Presence, Push-To-Talk and Video Sharing. There is lackluster customer appeal so far.

IMS was supposed to help to be like cartilage between the legacy telecom architecture and IP-based next gen systems. It was supposed to reduce OPEX and enable new services quickly to the end users. Likely that has not all been worked out yet, although SKT and AT&T are working on it.

Informa's IMS Conference is next month. Here's one guy's preview.

"The leaders of three of Australia's largest ISP's have declared the Net neutrality debate as solely a U.S. problem--and further, that the nation that pioneered the Internet might want to study the Australian market for clues as to how to solve the dilemma..... "The (Net neutrality) problem isn't about running out of capacity. It's a business model that's about to explode due to stress." [CNET]

Basically they are saying that someone has to pay for the plumbing, which is exactly what Verizon's Ivan and AT&T's CEO were saying last year (but a lot less diplomatically). As prices start to decline for bundles, DSL, and wholesale IP (down to under $10 per MB), the business models are having a problem catching up. Consumers are using the Internet more, especially for entertainment - whether that means video, music, streaming, or what have you. All of that is taxing the US ISP broadband network. Cablecos want to do preferential network management and the FCC says no. Now there are caps.

Here's where I differ. We in the US pay more than Korea, Japan or France for broadband - and get less of it. (2007 data here or directly from OECD). How come these telcos don't have network issues? 

Here's the problem with caps: No one understands what they mean -- And the ISP's are still advertising it as Unlimited! You can't say Unlimited and then have a cap. That's dishonest.  

People are encouraged to use the web. It's the communications medium - email, VoIP, IM/chat. Companies would prefer to support you via the Internet - web, IM/chat, email or forums. The average page size is over 1MB though. Add interlaced videos, pop-ups, flash intros, animated banners, and the like makes for heavy use just with surfing the web. People will switch back to phone use for support, which will tax the corporations to hire more bodies. It will also tax the cellular network as more folks go all cellular.

How about Apple TV, TiVo, and iTunes automatically downloading podcasts and shows in the background? Or Microsoft updates? Those are 300MB a pop at times. If you have more than one PC, that's a GB per update.

In these tough economic times, families getting hit with overage charges will have problems - as will the ISP's with bad debt collection.

I don't think consumers want something for free. I think consumers want what we pay for - and what is advertised to us.

"Global Wireless Penetration to Hit 80% in 2013, Says Portio Research" [via teleclick]  If all the growth will be in Africa, China, and India, what does that mean for European and US carriers? Cellular penetration is now more than 50%.

Looking at the ARPU stat: "Average Revenue Per User (ARPU) declines to $15.80 in 2013, down from $23.20 in 2005." With debt piling up from building out 3G and now 4G networks, how do you pay it back with declining ARPU? As more folks use the network (and use more of it), upgrades are needed to meet capacity demand, including in tower backhaul. Not to mention that the cellular folks have to pay inter-carrier comp for dropping traffic on the ILEC networks. I just don't know how this will work out, specifically for the US Cellcos. 

VZW will be adding debt if (when) it buys Alltel. Add in LTE roll-outs as well as FiOS construction, where does all this money come from? (DSL adds are down).

Growth is not the end all. ARPU and profit (earnings) are. (According to Dan Caruso, the end all is cash flow).

Here's something to do: surf over to Sprint.com and try to find any wireline services. After 5 minutes of searching Business Services, navigation takes you to Nextel.com for Sprint's MPLS offering. On that page, you can find info about MPLS, VPN, IP Convergence, and Internet Access. Yesterday, Sprint gave a presentation to re-affirm to agents that Sprint was still in the wireline game. Of course, Sprint still has a robust backbone, it is what the cellular network runs on. It is also the backbone for Sprint's MSO partners for voice termination. The problem I see (that I expressed to the Sprint team present) is that during a 45 minute presentation about Wireline, 20 minutes of it was about Wireless Convergence, so the message that Sprint is a Wireline company is not very clear. And if you can't convince the agent, how do you convince Enterprise CIO's who have been trouble choosing Sprint for WAN options due to its lack of focus on wireline and its shaking financial situation. It's an uphill road for Sprint.

SERVICE QUALITY, CUSTOMER SATISFACTION, INFRASTRUCTURE AND OPERATING DATA GATHERING. Granted forbearance from legacy reporting and accounting requirements. Seeks comment on industry - wide reporting. (Dkt No. 07-21, 07-139 , 07-204). Action by: the Commission. Adopted: 09/06/2008 by MO&O. (FCC No. 08-203). WCB.

The CommLawBlog writes, "On Saturday, September 6, the FCC released a decision granting forbearance from filing Automatic Reporting Management Information System (ARMIS) Report Nos. 43-05, 43-06, 43-07, and 43-08 to all carriers currently required to file those reports. (Editorial note: Who knew the FCC ever did anything on Saturdays?)  These reports were originally designed to monitor what the FCC calls a "theoretical concern" that price-cap carriers might reduce service quality or network investment to increase short-term profits. The FCC has now concluded that the information is of only limited benefit to consumers, because the reports are filed by only some large wireline carriers and not by smaller wireline carriers or cable or wireless telephone service providers, so the reports paint an incomplete picture of the industry. It rejected complaints by states that they need the reports for state regulatory purposes, finding that it does not have the authority to maintain federal regulatory requirements solely to help state commissions undertake intrastate regulation."

On the one hand, most of the FCC reports are flawed and/or old. On the other hand, the FCC hasn't done much enforcement any way, so why collect all that data.  However, Bruce and TeleTruth have a reply to the FCC:

Harms to Small Competitors: FCC "Consequently, we estimate that the majority of these firms are small entities that may be affected by our action."

"We all know the consequence of bad data - Entering Iraq and the missing weapons-of-mass-destruction debacle should be an indicator just how bad it gets when data is flawed, intentionally misleading or missing. While Congress and others have been holding meetings about the paucity of the FCC's data on broadband, on Monday, September 8th, the FCC decided to erase your ability to know the truth about AT&T, Verizon and Qwest's behavior and acts on multiple topics pertaining to America's telecom and broadband future.  It is a slap to the face of everyone reading this.  Now, even the analysts will not be given enough data to see just how badly we've been hosed.

"The FCC today essentially granted "forbearance" meaning, AT&T, Verizon and Qwest no longer have to collect data on say, quality of service, the build out of the infrastructure, or other important issues.

"In this Order, we grant significant forbearance from carriers' obligation to file Automated Reporting Management Information System (ARMIS) Reports 43-05, 43-06, 43-07, and 43-08 (collectively, the "ARMIS service quality and infrastructure reports").  In particular, with certain limited exceptions, we find that the section 10 criteria are met for the ARMIS service quality and infrastructure reports, subject to certain conditions." - To read the document
http://hraunfoss.fcc.gov/edocs_public/attachmatch/FCC-08-203A1.doc       

"ARMIS reports" are the basic data the phone companies should be supplying to the FCC; now strip-mined to nothing useful.

Dissenting in part, FCC Commissioner Copps wrote: "The collection and analysis of solid communications-related data is a linchpin in the Commission's ability to make sound decisions and provide useful guidance and assistance to consumers, states, industry-participants and other stakeholders. That is why it has been so troubling to see in to many instances the Commission headed down the road of collecting less data."

Commissioner Adelstein wrote: "I have long believed that the Commission has a responsibility to collect accurate and reliable data in order to develop effective policies and fulfill Congress's goals for the evolving telecommunications marketplace.  Just as an airplane pilot would not land a plane with eyes closed and instruments off, the Commission must ensure that its decision-making is guided by sufficient data."

You can read the rest of Bruce's report at NewNetworks (TeleTruth) website.

I'm beginning to believe that maybe the FCC is an expense we can cut from the federal budget along with the FAA. We have to save money some where!

BTW, the FCC has even more chances to move to Deregulation (or what I call UnRegulation). See them here.

Metaswitch landed a big gear sale to Embarq. In doing so, it avoids going the way of the CopperCom. You need a big carrier to be a vested customer so that you can sustain the R&D and tech support departments.

When you look at the numbers, the companies winning the consumer VOIP battle appear to be the cable operators. Ike Elliott has a post about Over-the-top VoIP Providers dying in the residential space. Vonage is spending $65M per quarter to maintain its subscriber numbers at 2.6M. It's churn is barely being replaced by new customers. Cheap folks are flocking to Skype and its look-alikes, MagicJack (don't get me started!) and T-Mobile cell & VoIP plans.

8x8 decided wisely a year ago to focus on Business customers, which have an average of 7 lines and $252 in ARPU. That beats the sub-$40 ARPU of Vonage.

MagicJack is $20 per YEAR. I don't see how that will work out. Plus talking to folks on it sounds like there is tissue paper being crinkled on the line. It doesn't stop people from using it.

SunRocket imploded. ATT CallVantage is on hold. deltathree is tanking. Over-the-top Consumer VoIP is almost over. I think UC and Hosted PBX is a better play - and it is what people will pay for. One number. Find-me. Unified voicemail box. VM-2-email. Combined address book. And I guess calling International often, but that's what calling cards are for.

All-you-can-eat cellular plans are also going to be a landline replacement, as RBOCs are learning. T-Mobile is hoping so with @Home.

Not everyone cares about the call quality - as you can see from the number of folks that spend all day on cell phones and the millions that use over-the-top VoIP. Also, Skype and other PC-to-PC and PC-to-phone apps. If I am trying to make a connection with a prospect or solve a problem for a client, I want to HEAR it. Give me a POTS line or my CallVantage line any time.

That was the slogan that AireSpring was using at the Channel Partner show in Boston - "Just SIP it!" The problem, as I see it is, is that 85-90% of the Agents have any idea what SIP is.

I sat through the VOIP/SIP BootCamp that FreedomVoice sponsored. People just can't wrap their head around VoIP and SIP.

I sat through the Covad presentation on their Integrated Access product, which i sreally SIP Trunks with call paths. However, they just call it a dynamic T1. It is easier for the agents to grasp, I guess.

Some of it is that Sales Folks know it all, so won't admit (in public) that they are ignorant. Self-education on SIP and VOIP is tough, because even some of the education coming from the Industry is vague and erroneous.

Now that Qwest, AT&T, Paetec and Level3 are clamping down on short term TDM traffic (dialer traffic that lasts less than 1 minute), TDM LD minutes of usage will start to shrink. Call Centers will be looking to swap to SIP Trunks to replace those LD T1's. Agents will be hard pressed to figure out what carrier to use and what the implemantation will look like. Unlike a PRI, which has two set standards nation-wide and inter-operates with almost any PRI card in any PBX or similar equipment, SIP Trunk is not a standard but a spec. There isn't universal inter-operability, so more education and research will be needed by the Agents. When carriers are thinking about training, they should do it in stages. Simple stuff in a short webinar to handle the basics for the first chapter. The second chapter should explain what SIP Trunking is, what it is not, and where it fits. Chapter 3 should be about provisioning. RAD-INFO will be doing an agent call on How to SELLECOM: SIP Trunking in September. Sign up it's no charge.

UPDATE: FTC all but bans Robocalls! YEAH! That will work about as well as the Do Not Call list -- meaning mediocre.

I often quote that there are over 1000 VoIP Providers, including every Tom, Dick and Harry with an Asterisk box. Invariably, I get asked about consolidation. Well, cable has taken the lion's share of VoIP. Far and away the MSO's have become the giants in the VOIP world.

I think dial-tone replacement companies like Vonage do not have much hope, since cable has been quality control and bundling. Also, cellular is becoming the choice for landline replacement. Oh, and deltathree posted horrible 2Q08 results and may close.

What about the Hosted PBX companies? With the help of GenBand and Broadsoft, Business Hosted VoIP should boom (see Gary Kim's estimate). Hosted PBX is the way to go for profitability and churn reduction for VoIP Providers, if you can control the quality and offer a level of customer care.