Recently in telecommunications Category

Yesterday was a big day for The Channel. Two separate acquisitions occurred with both takeover companies expressing interest in the Channel of the company being bought.

First, we have GTT buying WBS Connect. WBSC is just a reseller of Transit and Transport with about $28M in revenue. It was bought for about $1.8M in cash and notes plus $600K in stock. A spreadout payment over 18 months. WBS Connect had 900 customers  (ARPU calculated at $2600 per month). Lots of hype about POP's and lit buildings touched but at the end of the day WBS Connect was just a reseller pushing IP pricing lower (i.e., in my experience, they sold on price. Get your best deal and I will beat it by $1/MB). If that's the sales approach, what value is that? I won't rant here. I'll let it speak for itself.

Second, ILEC Windstream (formerly Alltel combined with Valor) bought Nuvox. Nuvox was a combo of FDN, NewSouth and Nuvox. Apparently, Nuvox had $180M in debt with 90,000 customers bringing in $500M in revenue (ARPU of about $500 per month). Windstream will issue stock valued at $183M and pay $280 million in cash for $500M in revenue and access to business cutomers outside its footprint. With cellular assets an ILEC like Windstream would be swimming in the EarthLink pool: declining revenue from a declining customer base. The only way to attract new customers is to go outside its own region - or buy a cellular company or a cable outfit (both of which cost way more than $500M).

Nuvox pays out between 12 and 18 points to its Channel agents. Many people call me wondering how they do that when they sell PRI's in many markets for $400. I have no idea. One thing that stands out is that the $95M loan in 2006 grew to $180M in 2009, some it from its FDN acquisition in 2007, but how much because they sell underwater? Nuvox burned through nearly $500M in VC funding as well. 

It sounds funny but on the same day the two companies famous for driving the price of telecom down are acquired - and the Channel is given as a reason. Is this just a bunch of order-takers or is the state of the economy the reason that price is the main object (instead of value and reliability)?

In a discussion on twitter with @DougonIPcomm (that Doug blogged here), Doug is promoting the idea that HD Voice is here so buy the cheap HD Voice handsets from Polycom and Cisco now.  I think he missed my point.

Doug points to Xconnect, Simple Signal, Apteva and Sprint as examples of HD inter-connected ITSP. Big deal. There are 1100 VoIP Providers in the US alone. many not inter-connected with anyone but the PSTN.

To enjoy true HD Voice calling both sides of the call have to be SIP (supporting G.722). Most calls today still land either on a PSTN connected phone or (more likely) on a cell phone. That will break the HD Voice.

Doug dislikes this analogy but Fax over IP still doesn't work 99% today. Years after Brooktrout fixed this issue. Why? There are T.38 compliant fax machines and certainly Edgewater devices work, but the problem is in the WAN. Any conversions of the packet and you break the fax packet. So IP to PSTN, bye bye. The same issue with HD Voice. We do not have too many all IP networks.

Then let's look at the SIP Upstream providers. You mention Sprint. Most ITSP's buy from Level3, then Global Crossing, Bandwidth.com and Verizon. How many of those networks are G.722 end-to-end?

The best way to sell Hosted PBX service is to use the HD Voice demo. However, you need to set proper consumer expectations that it only works On-Net. That when Joe Sales calls in from the field on his cell phone, it will sound tinny, not HD.  

When Grandma calls in from her kitchen wall phone, it likely won't be HD either. 

Doug thinks you should buy the HD hadnset anyway. Go ahead. But if they are sub-$200 now, think what version 2 will be like price and feature wise?

On a listserv today, I replied to a wholesale account exec at a reseller that had just plugged his service to the list. In the reply, I said "that's one way to pimp your product" then went on to explain that he missed the point of the original email -- and in fact doesn't quite get the goal of the membership of that list/group.

Well, the AE got offended and pinged me offlist. I always say "pimping your stuff". Let's face it: in telecom most everyone is pitching and selling and pushing a commodity. Not much original stuff (except maybe fiber guys). Telecom people especially at Reseller CLEC's and IXC's are just pimping it out. Charging a little less than the company they buy from; adding a middle man; but what value? It's a straight price sale. (A rant on resellers coming in another post).

In many cases (not this one), the AE's move around so much that their business contact information should come with an expiration date. (You go to conferences to get the new business cards and find out where so-and-so is working now. What do they do with all that company logo-ed clothing?)

Do you think this industry is pimping it out? For the most part, I do. Exceptions in a later post. 

 

I am at the Broadsoft Connections event with 775 other folks piled into the Phoenician. Gorgeous hotel set at the foot of the mountains in Phoenix. Staff is nice and the suite is sweet.

I'm speaking tomorrow on a panel with Bell Canada, RoutIT, and KPN. The topic is how to build and market a profitable UC bundle. It's funny because my panel is in the customer retention market (ILEC's) and much of the audience is in the customer acquisition game.

Folks from  PBX-Change, Nuvox, Paetec, Callis, Simple Signal, Telovations, Cypress Communications and Digitel (of Atlanta) are in attendance. Lots of partners too. Polycom is here in force - over 30 people. Cisco, Aastra, Audio Codes, NEXTUSA and ADTRAN are just a few other the partners I met tonight.

Steve Smith, CEO of Equinix, is excited because he just bought Switch and Data. From a letter he sent:

"Today, we announced our intention to acquire Switch and Data in a transaction valued at approximately $689 million of equity value which will further extend our leadership position in North America. The transaction will allow us to serve you as the most comprehensive data center services provider for your global online business needs. The transaction will include 34 data centers in 22 markets located in the United States and Canada and will extend the company's presence to 16 new markets across North America, including Atlanta, Denver, Miami, Seattle, and Toronto. The acquisition will add more than one million gross square feet of data center capacity, bringing Equinix's total global footprint to 79 data centers in 34 markets and more than six million square feet of capacity across the North America, Europe and Asia-Pacific markets."

Consolidation. Probably a good time for it in this space with all the buzz around Cloud, Virtualization, and the need for secure, reliable, redundant data centers.

Lots of parties last week at Channel Partners Expo. It seems like it is almost 2003 again. So back to the Delano we went with FusionTel. FusionTel wanted to make a splash by having a party at the Delano. It worked about 60 people showed up at 4:30 to have a few drinks and chat.

I got to start a conversation with their President, but we didn't get to finish it. I did get to chat with Stacy Conrad, Senior Director of Partner Sales, about agents selling their Hosted VoIP service. The latest story is about an agent who sold their service.

The vertical was Healthcare. Fusion was sold because the customer, who is based in Massachusetts, was opening a new site in California and needed the combo pack - phones and Internet service. The agent presented the customer with the concept of trying Hosted VoIP instead of buying the traditional phone service and on-premise PBX. 

The value proposition that FusionTel presents is lower up front cost (CAPEX) as well as enhanced features. But the sales trigger was likely the ability for the receptionist in Mass. to also answer calls for Cali. and transfer calls for free via extension dialing. This freed the company from needing a receptionist in CA. 

"We differentiated ourselves by our expertise, our professional on site installation, and our competitive pricing," Stacy Conrad remarked.

I moderated a panel on Telecom Billing Issues at Channel Partners this week. It was a full room. Apparently, one or two people thought it was too hard on the carriers (or I was too hard on a carrier). 

If you have been in telecom for more than a year (and have any voice customers) then you know that there are billing issues. Heck, even on simple IP or transport bills there are errors and surprises. And by surprises I mean line items that aren't obvious.

One carrier in the audience to offense to some of the panel discussion, but what it boils down to is that they don't charge what it costs to deliver a minute of service. The numerous extra line items (other than legitimate federal, state, county and city taxes and USF fees) are just ways to make a profit - but confusing the customer. As I said on the panel, if it actually costs 4 cents to deliver a call, why not just charge 4 cents instead of quoting 1 cent then adding $80 in additional charges? 

Airlines are the only ones nickel and diming the consumer.

As stated previously, as telcos spend billions to deliver TelcoTV to the masses, the masses decided they don't want it.

The cellular companies want to deliver some kind of TV content exclusively to their uses. This makes no sense because these guys bitch a storm when you actually use your EVDO/High speed Internet card, but streaming video to my handset is fine? Schizophrenic much?

Also, these same companies - ATT and VZW - are building out telco TV networks and 4G networks. Can you say redundant billions?

Why they didn't just stick with the satellite TV partnership instead of their current play is beyond me. On top of all this fiber and VDSL deployment, there are head-ends, set-top boxes, ONT's, and disappointed customers everywhere. Plus they have to fight with cable for access rights to sports networks. Oh, and DirecTV and DISH have sweet DVR software. Others not so much.

But does it matter? No. Because people are moving to the Internet as their home entertainment network. Hulu, NetFlix, DirecTV, Joost, and so much more.

So it becomes a fight to be the best dumb pipe to the home - at an ever increasing customer acquisition cost due to a flat market that requires taking customers from each other. 

Here's the latest Report: TV Networks Should Be Afraid -- Very Afraid -- of Hulu. Even the TV Networks are in trouble. They will need exclusive content to keep viewers, because Content is still King.

A piece of news hit me that just adds to the bad taste that COMPTEL leaves in my mouth. Here's an organization that is mainly composed of CLEC's. Since MCI and AT&T were acquired by RBOC's all teeth have left the building. I can't think of a single COMPTEL FCC or court victory. The big one was supposed to be Brand-X, but that turned out to be a huge loss.

This morning a CLEC client pointed out all the benefits that he gets from NRTC Coop and I am astounded.

So the news item was about VON. "will host a CTO Summit at which leading competitive service providers will develop a road map for creating a nationwide IP-based peering fabric that will bypass the legacy PSTN and support advanced services such as HD voice.....Committed to attending so far are Alteva, Telesphere, Simple Signal, Callis Communications, ISN Telcom, Broadcore, Global IP Solutions and Consolidated Technologies" as well as Broadsoft and Polycom, vendors for most of those attending.

This isn't really ground breaking because there are IP Peers like Arbinet and Stealth's VPF. But it's the first time that the ITSP's decided to start their own. And I have to wonder why COMPTEL wasn't behind this a couple of years ago. COMPTEL needs to start thinking of ways to add value to its membership, instead of just ways to make it really expensive to network with each other.

SUTUS sells an Office-in-the-box solution for small business. For 25 and under employees, the Sutus Business Central 200 is a file server, email server, router, wireless access point, and phone system. The BC200 has gotten an upgrade. 

• New User Interface: enhanced Flex technology supports seamless installation, management and use of the Business Central 200, onsite and/or remotely.
• Enhanced Desktop Install Tools: enables the set-up of desktops, VPN clients and mail clients in a matter of minutes.
• Enhanced Network Interoperability: the appliance now can seamlessly co-exist within a customer's legacy local area networks; including active directory, hosted exchange, and existing internet routers.
• VoIP Interoperability: ITSP partners added to the VoIP interop menu now include Bandwidth.com, Airespring, Excel and XO Communications.

It's the telephony upgrade that caught my eye: Call park / retrieve and directed pick-up. Older key systems use call park and most Hosted PBX systems cannot emulate that feature. (Aastra has a PBX that can). Other features include:

• Overhead and handset paging
• Open / closed call flows
• Enhanced directory
• Ability to manage Polycom handsets through user interface

SUTUS is distributed by ScanSource and NETX.