On Rad's Radar? - telco Archives

Business is a Thinking Man's Sport

2013-05-09T17:11:53Z

When I heard Mark Sanborn call business a thinking man's spot, it made me smile and then think. Oddly, most of these news items have all fallen in my lap today. It made me re-think how the value added distributors (VADs), like Tech Data, were going to morph.

Tech Data is the 2nd largest VAD at $26 Billion after Ingram Micro (at $37.8 Billion in sales), but TD is located in Tampa Bay, where I reside.

Tech Data has a long standing sales agent agreement with XO. Next, it established a cellular master agency with TDMobility, which also offers MDM. Then last year, TD inked a deal with master agency, Microcorp. Tech Data has long dabbled in telecom, without actually embracing it.

CDW has a telecom division that is doing very well.

SYNNEX has a $180 million per year telecommunications division, according to an executive bio I read today.

Ingram Micro inked a deal with TWC and CenturyLink.

Adam Edwards at Telarus thinks this is great. I think it is the beginning of the shift for distributors to take over for most master agencies for network services. For straight telecom services, the distributors are in a better position to automate the process for the channel and for the carriers. In fact, for cablecos who lack the automation for channel sales, working with a VAD may actually enhance their channel opportunity.

When stuff becomes a commodity like T1, broadband, cellular, voice, hosted email, web hosting and hardware, margin comes from efficiencies. I see much of this, especially in the small business marketplace becoming something you buy at Amazon or Best Buy fairly soon. The more savvy VAR's will have a check box for each service to insure that the customer has it taken care of -- and to see if she can take it over under her billing or management. The total wallet share idea.

Where does that leave Master Agencies? They will have to morph like some of them are doing into either an extension of a carrier's channel sales division or a cloud service brokerage. Unfortunately, even in both those realms, they will be competing with VADs. SYNNEX, Tech Data, Ingram Micro and Arrow have cloud platforms. Sprint is making a play in this space as well, utilizing its Parallels system to sell cloud services to its wholesale and retail customers. APNI and VoIP innovations both rolled out private label Hosted PBX services as well. It seems we have come full circle in VoIP - white label, wholesale, retail, wholesale, white label.

I think cloud will be the sticker service. Once you start selling even Hosted Exchange or Sharepoint, are you going to want 2 vendors for this or just one?

Everyone seems to be scrambling to figure it out - masters, carriers, CSBs, VADs - and even the Agents and VARs, who are the ants marching in this scenario. It takes some real thinking to figure out the next move and then the next one after that.

Sunset

2013-03-06T16:26:57Z

We are watching the sunset of many things in telecom. The PSTN, growth, innovation, copper plant.

While there is much change going on in the industry, a lot hasn't changed.

VZ just pumped almost $350M into its Florida wireline infrastructure. So that isn't over just yet.

AT&T's sneaky plan to deregulate copper in Kentucky was undone by the state legislature. You have to be vigilant. I just got an email from the FTTH is supporting the death of copper. I unsubscribed. As ratepayers and taxpayers, we have paid the telcos for a DS3 to every home twice over. Instead we have expensive broadband - brought to you by cable! With caps, meters, etc. The telcos want you to buy even more expensive LTE, which is not only metered, it isn't even available everywhere! Plus it is shared! - just like they used to use against the cablecos, when they WERE competing for the broadband market.

The FTTH Council decides to make some noise for political gain - and I am done with them.

Now that the Channel Partners Expo will be the Cloud Partners show, it seems that there is a sunset on agents too. It is all cloud, all the time. That may be what you want to sell, but that isn't what people are buying or asking for!!!

Almost lost in all the news was TelePacific rolled out their Broadsoft-based Hosted PBX Suite and Star2Star just joined Intelisys.

Are the Telcos in Trouble?

2013-02-26T16:02:58Z

It seems that the big cable coalition - Comcast, Cox, Cablevision, Charter, TWC and Bright House - are set to grab 15-20% of the small business market by the end of the year. This same clutch of companies also offer Ethernet over Fiber and Broadsoft based Hosted PBX which will be used to target Mid-sized businesses and Enterprise. Their only disadvantage is the same one that RBOCs faced before consolidation - regional networks. With NNI's and other cooperation, I am certain this group will get past that hurdle in 2014.

I have to go with ZTE VP of wireless Sean Cai, "Telcos are blinded trying to resolve their many short-term issues and don't see the big picture. ... Many haven't woken up to the long-term [threats] and are still focused on dealing with old challenges."

While the ILECs try to handle pension liabilities, union woes, landline losses and spend big cash on cloud services and acquisitions, their debt is mounting. The debt is a huge problem, since it is likely tied to the stock prices. Did you see what happened to CenturyLink stock when they cut the dividend? A 22% drop. Windstream and Frontier quake in their boots over a similar reaction. Yet when the cash is needed to pay debt and build cloud, how do you pay out huge dividends too?

The big thing is that cable is taking all of the profitable customers. Those small business POTS, Centrex, T1 customers were pure gold to the ILEC. Now the big broadband bundle with voice and TV is eating away at the ILEC profits --- probably faster than they can move to another segment to replace that profit, revenue, margin, cash.

The other problem that telcos face is integration of all the acquired companies. CenturyLink (Qwest, Savvis, Embarq); AT&T (SBC, ATT, BellSouth); Level3 (Global Crossing); Windstream (Paetec, which didn't integrate Allworx, Quagga, Xeta, CavTel, MacLeod); and Frontier has indigestion from buying Verizon assets. This is causing distractions to management and sales. It is also causing churn.

BTW, who knew that ATNI had almost $760 million in annual revenue?

Why is Telecom So Old?

2013-02-11T04:21:07Z

Saw this picture on twitter. It made me think about the lack of innovation from the telcos.

For example. cellular and DSL technologies were discovered by Bell Labs in the 1960s, but didn't to market until decades later. And it usually wasn't by AT&T -- it was from a market disruptor. Think Covad for business DSL; Yipes for Ethernet; and Vonage for VoIP.

The ILECs launched Centrex but only recently started to offer IP Centrex - or Hosted PBX as we call it today, despite Broadsoft's second customer rolling it out in Tampa in 2003.

In most cases, the innovation is in the devices. Handsets add all of the coolness to cellular service. Wireless AP's add the utility to broadband modems.

Just food for thought.

Everything is Changing, No One is Happy

2013-01-25T15:08:19Z

Belkin is buying Linksys from Cisco, who is exiting the consumer business. What are they doing with the Scientific Atlantic set-top boxes?

Logitech is dumping some of its product lines as it re-vamps.

Andy says that Yahoo Voice is shutting down.

Microsoft sales of Office365 are decreasing.

Intermedia is acquiring Telanetix, which does business as AccessLine, for about $55M.

EarthLink is laying off as they realign.

So much is changing - and so fast.

You know what else is changing? The role of Master Agents and VADs (like Tech Data and Ingram).

Dell knows that hardware sales will continue to decline, which is one reason it is looking to go private. Microsoft knows that its best days are behind it. WinTel used to dominate the computing space. Then Apple iOS starting winning laptops and smartphones - and definitely the tablet sector. Android is the O/S for smartphones and tablets, but Chrome laptops are also in the market.

When everything is wireless do you need switches and cables?

Level3 just revamped its Channel, but the masters are wary of signing it. XO has a new contract out that masters also are balking at signing. Why?

Qwest/Savvis/C-Link stopped teaming agents with directs, but Level3 instituted something like teaming. There is a commission hit for teaming. Here's the dilemma:

One, prices keep dropping, so commissions are lower. Agents have to work harder to make the same money.

Two: Current customers want to lower the bill with every contract renewal, which means that commissions dip (or disappear) unless the Agent switches its customer base to a new provider.

Carrier Quotas keep going up, despite No. 1 and 2. So Masters can't hit the quota, lose commissions and can't pay the agents.

Everything is cloud, but revenues are much smaller, the sales cycle is longer, and the sale is more work for the agent. For less money.

Telecom - you know, the network - transport and transit - are still selling, and agents still want to sell it, but the carriers don't (or can't maybe) pay commissions on straight network sales. So Agents look for carriers that will pay them to sell transport and transit. Masters don't get this business. Carrier Channels sales dip. The cycle spins.

Most Cloud services providers don't work with Masters, so those sales don't go into the Masters revenue. Lost revenue.

VADs like Tech Data and Ingram are selling cloud, cellular, network and hardware.

VADs already have a relationship with VARs. VARs are comfortable with their relationship with the VADs. Why would they switch to the Masters?

Gartner's Bova likes to talk about the transformation of Agents but she misses two key points: Agents are on a hamster wheel and can't just jump to a new one because they need to keep the cash coming in to satisfy quota, bills, churn, etc.

Point 2 is that there isn't an easy transformation path for an Agent to become a cloud services broker. A billing system, integration with the vendors, cash flow, liability, and other factors all get in the way of an agent becoming a CSB.

Despite what the Carriers want - more sales, more VARs selling their stuff - and what the Masters want - pretty much the same thing - the cogs in this wheel - the Agents and VARs - are not yet ready or in any position to make sweeping changes to their business to satisfy Carriers or Masters. The VARs and Agents have a business model that they are running with every day. They have customers that they are trying to satisfy every day. The added pressure from carriers and masters to transform, while also sacking their current revenue stream is a catalyst for disaster.

Look around - Intel, Microsoft, Dell, Cisco, EarthLink, Cbeyond, Logitech - these are just the companies TODAY that I see in turmoil. All of these sell via a channel distribution model, so if they see revenue hits what do you think is happening to their channel partners????

DUH

The US VoIP Report

2013-01-04T21:02:35Z

I see a lot of reports about the telecom space. This one by E&Y sums up the industry in 2012: "Many established players are looking for new ways to cater to consumers and enterprises by buying capability in new areas." That accounts for not just a bunch of the M&A but also strategic partnerships taking place.

VoIP in the US: Market Research Report states that consumer VoIP is flat, but cable voice (VoIP) and cellular voice (also VoIP) are growth markets -- but both are primarily consumer. ??? IBISWorld looks at 860 companies in the VoIP space representing $15B in revenue in the US. Yet they list 873 MSO's in another report.

Forbes agrees that - despite the free offers from the likes of Skype and Google Voice - the VoIP industry in the US is a $15B business. How much of it is about Mobile though?

Everyone is impressed with IBISWorld stating "that the VoIP industry has experienced a 16.7% annual growth rate in the last five years." Umm, most of it is about POTS and TDM replacement. Have you tried to order a TDM PRI in the last 18 months? Almost all of it is SIP Trunking with PRI signaling at the customer premise from the IAD. BTW, that is NOT a PRI! Dynamic T1's, FiOS voice, cable digital voice, cellular voice -- all are VoIP, so to say that it grew less than 17% per year isn't that big of a deal. In addition, there has been a proliferation of VoIP players - like Vonage, Skype, MagicJack, etc.

Look at RebTel. All of the sudden they have 20M users and $80M in revenue.

It's the Hosted PBX and UC space that has dismal growth.

One reason is that the replacement stuff like SIP Trunking, cable and cellular just kind of happen. Replacement sales are easy. It's what the industry as a whole is trained to do.

But the move to UC or Hosted PBX is more than a replacement and requires what looks like work. Here's hoping 2013 is the year for Hosted PBX sales. I'd like that to have a 16% growth (and so would all the CCA VC's!)

Cloudy Math

2012-12-11T03:10:14Z

There is a lot of talk about the big money that Agents and VAR's can make if they just switch over to sell Managed Services and Cloud Services. Here are some facts about cloud.

M5 had the highest ARPU (average invoice per customer) when ShoreTel bought them - at $2000. Most other cloud communications providers hint at lower ARPU - maybe around $1000 per customer. However, 8x8 and Cbeyond are public and their cloud ARPU sits at between $200 and $250.

When you examine the "cloud services" of many carriers, it is just Hosted Exchange, Sharepoint and maybe some backup. That's $9 + $10 + $20 = $39 per user per month. Add in a Hosted PBX seat at $30 and you are now at $69 per month. For 20 employees, that's not a bad billing invoice for Agents, but it is also an unlikely sale. What small business will pay $1380 per month for phone and email? A PRI at $550 plus maybe $100 for the PBX lease and $50 per YEAR for Google has you covered. Add in some Dropbox and Bingo!

This isn't to discourage you. It's to put a pin in the hype balloon, which is starting to annoy me.

You will have to sell upmarket. There are 83K businesses in the US with 100-499 employees, according to the 2009 US Census (the last year data is available). With 1000 cloud service providers in the US that will be a fun Red Ocean to swim in.

There are only 17,500 business with more than 500 employees. That 's the spot you would like to sell in but you would need to be connected or a white elephant hunter.

That leaves Agents chasing 20-99 employees - since that is a majority of the businesses in the US. Let's call the average 40. If you sell that business the full boat: Internet, Hosted voice, email and backup - the ARPU is worth it. The sales cycle will be longer. The deployment will require more input and project management than Agents are used to. (In fact, it is more than most carriers have ever had to do!!!) Post-sales support will also be required. So overall, it is a lot more work for a stickier client with more ARPU than you are used to. Are you up for that challenge?

Let's go back to the 8x8 example at $256 of ARPU. That's about a 9 employee shop. So you sell them 8x8 voice, cable modem AND another broadband service (like DSL or 4G or fixed wireless). You offer them Google Apps for SMB via NeoNova for some small change. Add in some Mozy Pro back-up (or Carbonite or other backup service that pays you). Next you try to get the cell phones - there has to be a couple that are corporate owned -- for a few more dollars. Don't forget the 4G data plan.

So you wrapped up the Internet Access, mobility, voice, some DR (disaster recovery), backup, email and office suite. After that, what software do they use? How about Conferencing? Do you see? You have to grab the whole wallet (or you can't make much money).

It has to become a lot like McD's. What do they do? A call center hits you first in the drive-thru with, "Would you like to try our ______ special today?" No. "okay. Order when you are ready." But don't forget "Do you want fries with that? or can we Super Size that for you?" It sounds cheesy but you are going to have to do it.

CenturyLink, XO, MegaPath and quite a few other carriers offer transit, Hosted voice and cloud services. It will all be on one bill, with one carrier to blame, with one throat to choke. It makes it easier to sell --- check boxes on an order form or site survey.

You better hurry because the MSP's like MindShift and others are already out there doing this.

When you consider that Parallels AS platform allows hosting companies - like Intermedia.Net - to sell, bill and deploy these services (Hosted PBX, email, storage, office) with a click on an online order page, spend this month - the last month of 2012 - deciding what your plan is going to be for 2013. While I hate the hype, many of your competitors are already targeting your customers. Selling them a T1 will be easy after they sell them VDI or backup or Hosted PBX. Then what do you do?

Again, you have to do it but I wanted you to have a realistic view of what it was going to be like. You have vacuum up the services - all of them - heck, sell them office supplies if someone will pay you for it! Managed Print anyone ;)

RBOCs Declare War on CLECs

2012-12-06T17:58:29Z

This is a letter from telecom lawyer Kris Twomey to the members of FISPA, an association for ISP's and CLEC's. I know that Politics and Regulatory talk puts you to sleep or bores you or you don't have time for it - but these proposed changes to the Telecom Act WILL affect you!

"One of the questions I am often asked by ISPs considering starting CLEC operations is whether access to unbundled network elements ("UNEs" or "the copper in the ground") will continue in the future. My response has always been something like, "Of course, the Telecom Act guarantees it. Congress would have to revise the Act for any changes to impact UNE availability." Those of you that know me know that I don't get involved in hyperbole, and I'm basically too optimistic to accept any sky is falling-type theories. Now though, there's something brewing in D.C. that genuinely worries me. Turns out AT&T has a plan to wipe out the Telecom Act of 1996, or at least, the parts regulating interconnection.

"I think the next great telecom policy battle is at hand-- nothing less than an attempt by AT&T and others to dismantle the Telecom Act, destroy CLECs, and essentially codify the ILEC/Cableco wireline duopoly. Smaller CLECs need to get organized and respond.

"Debate has begun on all fronts about the future of telecom regulation and I believe we are at the precipice of major change. Over the last couple years, AT&T and Verizon have been quietly lobbying for the FCC to consider rules to transition to an all-IP network, or in ILEC-speak "facilitate a sunset of the POTS network." Verizon is even using a natural disaster to justify removing copper (and therefore interconnection rights) from its network: Other ILECs have been murmuring that the Telecom Act is now 15 years old and needs to be updated.

"On November 8th, AT&T filed the first real proposal with the FCC to "modernize telecom regulation for an IP world." The petition is here [pdf].

"The AT&T petition is a direct shot across the bow of the FCC and CLECs, essentially daring the FCC to act. The petition is breathtaking in its audacity. Here are its main points and suggestions":

Eliminate the availability of copper loops (all UNEs, really) in certain central offices as an experiment and see what happens;
Limit the time that CLECs can object to ILEC notices of network changes;
Reduce state utility commission regulatory authority;
Allow ILECs to remove all copper facilities when the feeder (such as a remote terminal) is upgraded to fiber;
Eliminate legacy ILEC regulations such as carrier of last resort obligations, long distance parity, etc.

"Various stakeholders have responded. The National Regulatory Research Institute, a group representing state public utility commissions, issued a paper on the TDM to IP network transition (here).

"The trade associations have begun to weigh in on AT&T's proposal. CompTel and individual CLECs have lobbied for pro-competitive policies and filed proposals concerning the IP network transition, preserving access to copper loops in fiber-fed ILEC networks, and requiring direct IP to IP network interconnection.

"The cable trade association, NCTA, filed a response to the AT&T petition arguing that the FCC should take its time developing a record. After all, they've actually got a pretty good deal under the current rules. The NTCA, which represents smaller ILECs, filed its own petition on November 19th seeking regulatory relief.

"I am concerned that there is no organized coalition of smaller facilities-based CLECs to defend its interests and propose alternative ideas. I fear COMPTEL will push the interests of its large CLEC members over those of smaller CLECs. I do not think that necessarily the interests of Level 3, Windstream, etc., that do not purchase many copper loops, will adequately align with those of truly local competitors in suburban or rural markets reliant on central office connectivity at regulated rates. I'm especially worried because, well, those "local competitors" describes virtually my entire client base and the businesses of many people that I consider friends." [RAD's note: Mine too, btw]

"As a preliminary matter on strategy, I believe that it is fruitless to solely fight against a policy without offering clear alternative proposals. I also think that by refusing to acknowledge the legitimacy of some opponents' suggestions detracts from the power of our unique ideas. I have several alternative, pro-competitive policy suggestions that would truly represent a modernization of the current system; seek to even the current playing field; and give the ILECs relief from some of the legacy regulatory requirements that are arguably outdated. For now though, it is better that these ideas remain off-list until consensus positions can be developed by a group.

"I have spoken to several of my facilities-based CLEC clients that are interested in forming an organized opposition to these attempts to gut the Telecom Act both at the FCC and to lobby Congress for a true modernization of the Act. I will be hosting a conference call for interested companies on Wednesday, December 12th at 2pm EST. The call is restricted to optimists--those that do not subscribe to the defeatist notion that the ILECs must always get their way. I have some very specific ideas and policy proposals, but am not pre-disposed to any particular strategy. I think it's time for like-minded companies to join forces to protect their interests and I'd be honored to represent them. Please contact me off-list at kris at lokt.net for call-in details."

[RAD Commentary] The RBOCs lost a court battle each recently.

VZW lost in Appeals court its fight to forbear cellular data roaming. It challenged the FCC's authority on this matter and lost.

Meanwhile, ATT lost a data throttling case in small claims court.

Copper clipping will affect Agents because EoC is a big deal - but requires copper plant!!!

XO, TelePacific, MegaPath and other CLECs would lose territories that they could offer EoC and flavors of DSL. ADTRAN, Zhone and Overture Networks make the geat gear that goes in the CO for CLEC's to provide EoC. These companies would be affected as well. Can you see the ripple effect?

How about affordable mid-band Internet Access for the SMB space? That is what EoC is - and it will go away.

The $14 Billion Dollar Announcement

2012-12-03T18:09:34Z

While I don't agree with everything that Bruce writes here about AT&T's $14 Billion network spend in the next 3 years, there were a few take aways.

The big one is that the ILEC's have been getting rate hikes for years to pay for fiber that most customers are not receiving. FiOS is where it is - and that's the end of that project. U-Verse is fiber to the node and that isn't deployed everywhere either.

Mike Powell, former FCC Chair and now CEO of NCTA, has often gotten in woefully wrong in presenting the state of telecom. You can talk about top speeds all day long, but that isn't what the Majority of US addresses have access to nor is it the top speed broadband even remotely affordable for consumers - and even some small businesses (at $300 per month). The average US broadband speed is 6.6 Mbps. And if you don't bundle that broadband, it costs a lot.

Despite the promises and the rate hikes, telcos have invested $249 per person on average for broadband per year. Consumers spend on average $529 on broadband annually. At a retail job at $10 per hour that is one week's pay. Unsustainable!

62% of Americans buy broadband. That is all. Period. The market is flat.

Verizon and AT&T have a plan to disconnect the copper plant. VZ has already done so in the shade of Storm Sandy at the battery Park CO. All the CLEC customers out of the CO are out of luck, time and competition.

Telcos are basically unregulated at the state level - and the FCC is useless when it comes to enforcement and competition.

The point that everyone misses is this: our economy in America is service based. It is broadband fueled too - ask Apple or Amazon or Google.

Without cheap, fast Internet everywhere, what happens to that economy?

Clipping copper is detrimental to not only the CLEC's but to the majority of small businesses in the US. Ethernet-over-copper is quick to deploy and gives a great MB for the buck. EoC is the last stand against the cableco becoming the ILEC and the ILEC becoming irrelevant. (I laugh when the stock pickers only point to the dividend as if that was somehow any indication if a telco will tank or not.)

Promises from the RBOCs - Verizon and AT&T - for rate hikes or mergers have largely gone unenforced. The $14B announcement was just PR - spin. Nothing either company does is good for the economy, it is just good for them - for now.

How will Cloud services take off if the broadband is too expensive, unreliable or unavailable?

How will the Internet-centric economy stay competitive in that same environment? How does any of that withstand broadband caps and metering? How do corporations have more tele-workers in that same scenario?

Things VAR's Will Love About Selling Telecom

2012-09-28T18:09:02Z

As the carriers look to the VAR space as the new sales channel, I would like to tell the VAR community a few things that they will love about selling telecom.

1) Install dates that are fluid. Porting numbers happen at the whim of the carriers you are porting from. The FOC date (when carriers install circuits) will move without notice or at the most a day's notice.

2) Your current partners - HP, IBM, Microsoft or Cisco - have never snaked a deal from you, but in telecom it will happen often. Recently, one CLEC said no to quoting a Gig Network and carrier sales was in the customer the next day.

3) Commissions - every week the CFO examines the carrier's balance sheet and wonders why agent commissions payments still have to be made. In some cases, like InterNAP, they make the wrong decision and cut the agent program. You haven't seen that from your side.

4) Until recently, VAR partners weren't offering competing services. So you have Microsoft and the Office 365 monstrosity, imagine that every day from every carrier. A VAR offers Hosted email, so does the carrier. A VAR offers managed router and security, so does the carrier. Every day for every service, VAR's - and MSP's - will be competing head-to-head against a carrier, the so-called "partner".

5) VAR's are used to billing customers directly and now those bills will come directly from the carrier, interfering with the relationship.

This may sound sarcastic and even bitter, but with 13 years in the agent space, I have experienced this stuff as well as been told numerous stories by other agents. This is Telecom - and telecom is broken.

It has been 16 years since the Telecom Act that basically created CLEC's and the vast majority of them still do not have a smooth operation. Sad really, especially if you consider that at any time a giant like Google or even Microsoft could come in with a disruptive service and wipe it all out.

The CLEC Space is Changing

2012-09-21T19:03:51Z

The FCC has removed its rules against CLEC-Cable mergers. Right now the M&A department at Comcast, flush with cash, is picking out its next target. "Hey, Guys! Call me if you need help with valuations or choices!"

Sprint and VZ and 42K other companies are selling Office 365. This consultant says to short that stock. "Resting on existing revenue streams, they are becoming good at expense management, but aren't finding meaningful growth." Which is True. "Telecom are generally stuck in the legacy thinking that their role is to choose vendor technologies, operationalize them, and sell them to the masses." Which is also True due to Monopoly Mindset or what I call Bell-Head Thinking. "It does not cost that much money for new entrants to come into the marketplace and replace telecom in nearly every sense at a fraction of the cost structure. Hope is not a strategy. Real disruption is on the horizon. Great leaders will embrace the chaos and create new markets for their companies, and will assemble a team of people who have fun doing it." (I work with some of the smart ones!) Razorsight says that Pipe revenue will always drive most Duopoly revenue, since their margins on it are high.

On the flip side, CLEC business hasn't turned out as expected, says Gary Kim. A majority of the CLEC business was UNE-P until 2004 - and most of that went to consumers of AT&T and MCI. Cable owns that consumer voice business of the CLECs today. Cable is turning its attention to small business, which it will dominate to the chagrin of CLEC's and ILEC's alike. Cloud and managed services will be important for CLEC's and ILEC's for a couple of reasons: (1) staying relevant to the marketplace; (2) a non-facilities revenue stream; (3) an avenue of differentiation (if they actually take it); and (4) a way to reduce churn and increase ARPU with customers.

Script out Change by Dan Heath for Comcast Business

AT&T Southeast experienced a huge Metro Ethernet outage in Atlanta and South Florida yesterday. AT&T reported that it was a core Cisco router. This is the third outage for AT&T in the last few months. See here and there. What is formerly BellSouth's Metro Ethernet surprisingly is not resilient.

Final piece of news in the CLEC space: Inteliquent Announces Changes to Its Management Team. Inteliquent is the new name of Neutral Tandem and Tinet. Inteliquent's President/COO, Surendra Saboo, and the CFO, Robert M. Junkroski, are both stepping down on October 1.

Typical Press Release

2012-09-20T16:28:24Z

Regularly I get added to press lists. I dislike that immensely, btw. I don't want my inbox to be full of press releases. Why? 3 Big Reasons:

1) Most press releases are not news to me. Personnel changes? Your CXO is speaking somewhere? Who cares? Unless you hire an ex-President or a convicted sex offender. Although T-Mobile hiring GC's Legere was a smart move.

2) Many press releases are chock full of marketing nonsense and say nothing useful about the company. Take this one. I don't even know what the software does!

3) Releasing a mobile app or relabeling your stuff with "as-a-service" is news - it is old news, because you are just doing me-too stuff, which is unimaginative and boring.

I get that the PR firm has to blanket the world with releases to get noise going and hopefully move the Google juice meter, but TMC (and other sites) have submission engines for that stuff.

Let me give you some samples:

nGenx Unveils Its Next Generation Desktop as a Service Offering

Snom releases new phone models and an IP-PBX

There is a new cloud service provider offering hosted virtual desktops, hosted virtual servers and cloud storage.

I am waiting for the 42,000 Office 365 resellers to put out their press releases.

MegaPath serves up a set of new cloud hosted services.

While I understand the press release machine, I don't understand why a company would want to opt-in bloggers to the media list. I should be asked to opt-in. There is a lot of noise in telecom, most of it around nothing special. This PR machine is making it harder to find anything special.

I get that much of the PR is for Wall Street because if the company isn't saying the right things, then getting money gets harder and more expensive. But doesn't the C-Suite realize that being one of 42,000 is going to mean no margin business?

The Definition of Insanity

2012-09-17T14:00:35Z

You might not want to hear about my airport observations but you get one more nonetheless.

Why was there heightened security at Tampa Airport? There were K9 patrols and TSA swabbed my hands for analysis. Yet the TSA personnel again outnumbered the passengers! Could that be cause and effect? Could the fact that the flight experience at every level - security theater, fees, lines, x-rays, tiny seats, and inconvenience after inconvenience* - have left the airlines in financial trouble? To many, it seems like the airlines have an unsustainable business model. Would you agree?

Airlines are a lot like telecom companies in so many ways. Both charge extra fees for everything, lots of taxes, poor customer care, me-too product set, no differentiation, and commoditization. Both are riddled with union and pension responsibilities that they want to end or wipe away.

Both only work on cost cutting, which only goes so far. The 737 I flew on yesterday was falling apart - literally! Pieces of the overhead cargo bins were falling off. If the inside is poorly maintained - what about the outside and the engine? If airlines keep losing money, is safety and maintenance the first to get cut? I wonder if Virasb Vahidi understands that the brand is hurt by dilapidated planes?

All these companies work on is cost cutting. How about raising organic revenue? Is it really THAT hard?

Why don't airlines let frequent fliers trade miles for gift certificates good towards drinks, baggage fees and seat upgrades? Is just because the extra fees are the only real revenue?

In my experience, there are very few loyal fliers but Delta seems to have most of them. One reason is that Delta goes most places. Apparently, AA and US Airways are merging to complete the map of routes. Shouldn't they work on loyalty? Build that tribe?

One thing that gets me is the delay in boarding and exiting the aircraft due to carry-on luggage. Why do they charge for baggage check? Is it to cover the union labor for baggage? Wouldn't it be better to board faster and exit quicker for plane turn around and on-time stats?

The airlines like telecom are in need of some serious retooling. It might be time to bring in outsiders to run these companies like GM did recently and IBM did years ago. Since there really aren't any C- level execs with big wins in either industry, it might be time to look outside the industry. The same thinking that got you here (in this mess) and all that.

I noticed recently that there are a bunch of management shake-ups but when the new guy gets the job, he brings "his people" with him. How is that helpful? He is surrounded by loyal people that owe him for their job. Has this "team" hit a home run before? Unlikely. So we just keep shifting the personnel from company to company expecting different results. That's the definition of insanity.

In the case of the airlines, bankruptcy is part of the culture - and so are bailouts. This is not an industry that has shaken up the business plan no matter how many times it has spun into a hole. Insane.

*Does anyone actually get a sense of security from the boondoggle of $3B that is TSA? Personally, I don't feel safer, just annoyed that my liberties are being stolen inch by inch.

CenturyLink Merger Mania Does Add Up

2012-08-15T20:57:58Z

"CenturyLink Inc.'s (CTL) second-quarter earnings fell 36% amid early-debt extinguishment and weaker margins, though the telecom company's revenue was boosted by an acquisition," writes the WSJ. "Revenue increased 4.7% to $4.61 billion, mostly as its Savvis acquisition added $278 million, as well as growth in demand for digital services."

What amazes me is that these giants keep getting bigger and the only metric growing is debt.

It is going to take some big CAPEX to beef up cloud, data center, EoC, broadband and TV services for CLT. How do they focus on that when CAPEX will affect their financials, that is tied to their debt?

Cloud isn't selling as well as the hype that goes with it. Yet. CLT is banking on a big bright future. Truth is CLT, while still headquartered in Monroe, Louisiana, is far removed from its rural ILEC days. It's future lies in federal cloud and WAN contracts; Fortune 5000 MPLS based on its fiber network; global sales for cloud, data center and networking; and data center services. None of these services were on their balance sheet 3 years ago.

Interesting corrollary is that 3 years ago, CLT didn't have a channel either. Now it's channel will be looked upon to drive a lot of cloud and data center sales.

I wonder if the CAF, ARRA and USF funds show up as revenue?

Verbal One Year Contracts

2012-07-31T19:03:35Z

ATT has verbal one year contracts available. New service ordered within a few minutes for clients via an Authorized Solution Provider (agent). [This has to be for really simple stuff like POTS and DSL.]

However, ATT doesn't send any TAC (terms) or even welcome information to the customer. There is also a failure to mention that the verbal contracts auto-renew for 2 additional one year terms; thus, it's really a 3 year agreement!

"ATT will send the client a letter 30-60 days prior to the auto renewal, but if the letter isn't responded to, the original verbal contracts auto renews. Now, the client does have a 30 days window after the renewal to cancel and move service or cancel and opt for a different term, but no additional notification is sent after the renewal letter send prior to the end of the term." [ccs]