On Rad's Radar? - telecommunications Archives

Strategy Matters

2012-07-24T15:26:53Z

"When everyone is playing the same game, your execution is critical." - Seth Godin

"the way you go to market, the structure of your offering, the model of your business--these are sufficient to cause you to lose, regardless of how you play the game."

It's like he was talking about telecom, the ultimate me-too industry. It is even me-too in service delivery - which means it largely sucks.

On reason telecom is stuck is due to the personnel. This industry just recycles staff. The same people doing the same thing just under a different logo for years. That would be fine, but we are missing risk-takers. By risk I mean, trying new stuff - new services, new marketing, new support.

Some will claim that Cloud is new, but it isn't. Hosting and the ASP (application service provider) model have been aroundfor over 10 years. Marketing just put some lipstick on that pig.

As the copper plant sunsets, CLECs and other service providers are going have to re-adjust their strategies - from relying on the ILEC network to something else. This is where Innovation and Creativity will be needed - and where me-too thinking will be a death nell. [Need help with this? Call RAD-INFO INC. at 813-963-5884 .... this is what we do for service providers - with a 13 year track record.]

7.5 Things Affecting the Channel

2012-07-18T17:30:51Z

There have been some changes in the Channel. Agents need to pay attention because this will result in even more changes in the Channel!

Windstream laid off their Channel Chief, Dan Sterling. Windstream has been trimming the management fat this year. It's all part of the "Synergies" of M&A or getting the balance sheet in shape. It also means that the channel lost one of thier favorites.
Lightyear Network Solutions just lost their CFO. That's another C-Level female exec lost in telecom. It's musical chairs in IT/telecom these days.
Level3's finances are a worry. In a way, all the telecom debt is a worry. Debt goes up, revenues remain flat.
Broadview had to restructure its short-term debt. It's investors had to write down its Broadview holdings since 2007 to the tune of $75M.
TNCI did not get acceptance of its reorg plan. New letter to creditors on July 2 says anyone's plan can be accepted. That doesn't bode well.
VZ is getting rid of copper. [page 8] That will mess up CLEC business operations and reach. EoC doesn't work without copper. Neither does T1, Sip Trunking or DIA.
More consolidation via M&A coming means more layoffs, more integration woes, less carriers to represent and more agents in the field (as sales reps get let go).

7.5 is that the telecom execs don't learn. Those who forget history repeat it. Intermedia (ICI) was the first billion dollar CLEC. It's CEO, David Ruberg, took out his platinum AMEX and bought companies like a drunken sailor. The integration was messy. The talent hardly ever stayed with the new owner. The short term debt became due. They sold to MCI for cash. No more ICI.

Agents are going to have to start selling Managed Services, backup, cloud, apps, M2M, TEM, MDM and other non-copper related services, because survival during the coming wave will require multiple streams of revenue.

The bright side is that the carriers need the Channel. They need as many sales as they can take. The Channel is the best sales option they have.

Top 10 Risks of Telecom

2012-07-17T18:53:19Z

Ernst & Young has a report out about the Top 10 Business Risks of the Telecommunications sector. The big one is thinking voice is still going to be the bread winner. Cellcos have gotten the memo that it will be all data all the time for profits. Top US Cablecos understand that too, I think. Voice is just extra revenue. For Hosted UC and Cloud Comm providers, they have NOT gotten this memo. They still think it is all about Voice. Hello? McFly?!

"Failure to capitalize on new types of connectivity." E&Y mentions M2M, but it took a while for telcos to embrace Ethernet too. Telcos are never the first to market. It is always new comers that force their hand. Another example: UC.

If you don't want to read the report, you can watch the video.

Another risk for US telcos is unions and pension requirements. AT&T just tied up 7000 workers for a year. VZ still has union issues, including their union clamoring that the SpectrumCo deal will end competition (what little competition there is).

"AT&T and Verizon don't really compete with one another--they copy one another," said Parul P. Desai, the communications policy counsel for Consumers Union, the policy and advocacy division of Consumer Reports magazine. Look at the cellular data sharing - copycats.

And if you thought there was little competition before, "Verizon CEO Ponders Killing Off Rural Phone and Broadband Service and just rake in wireless profits." One point is that VZW and FiOS have less union workers - which is a big savings for VZW. [Read the transcript.] CLECs in VZ territory are screwed. (Not that it has been a picnic thus far.] And because it is all about shareholder value, rural America will not have broadband, which will stymie the economy. We live in a service world. ATT and VZ are both abandoning wireline and rural despite the USF funds that they collect.

E&Y mentions poor M&A. No kidding!

On the regulatory front, I think that is hogwash. Except for the ATT-T-Mobile merger and possibly USF Reform, when have the ILECs not gotten what they want? The problem is that all their markets atre flat, so they have to get innovative with billing to keep profits flowing.

I think it boils down to watching the share price too much and not the customers enough. I understand that the burden of debt is huge in telecom - $66B at ATT; $51B at VZ; LVLT is $8.5B; $23B at CTL; $8.9B at WIND; $8.3B at Frontier; and Fairpoints BK left them with only $1B in debt. All this debt is tied to share price. So it is an ugly circle.

AT&T is trying to innovate with Hack-a-thons and The Innovation Pipeline. But this has more to do with apps for cell phones than any technology advances. And that won't move the needle on the revenue dashboard.

I don't think this is true:

"Over the next 5 years, all of the major US telcos and MSOs are expected to lose small business customers to a new crop of hosted service providers that will offer PBX-like voice services at lower reoccurring costs and with minimal site equipment expense," according to a new market research study from The INSIGHT Research Corporation. (March 2012).

I think with metering and copper disappearing (and the econoomy tanking), revenues are going to fall - across the board. People can't keep paying more and more for cell and broadband. It's just not there.

The new Microsoft Office automatically uses cloud services. What if you have crappy broadband? or none? Or its capped or metered? The telcos and cablecos are a utility that the rest of the IT industry relies on. Bleak.

All About Low Price

2012-07-04T17:10:52Z

I write about Low Price a lot.

While reading a trade journal, it got me thinking again about why this industry sells on price.

My thoughts:

You go low price because you either don't want to take the effort to sell or you suck at sales. [That's snarky but probably true.] I know there I times I don't feel like actually going through the whole sales process - discovery, questioning, needs analysis, probing - just to find out that the prospect is only concerned with price. It is annoying.

If you are a transactional agent (or a veteran T1 slinger) and you offer up 3 or more quotes, you are not selling. You are taking orders. There is nothing wrong with that. It IS how the telecom industry has acted since LDDS began discoounting long distance services back in 1983. But let's call it what it is.

Times they are a-changing.

If you just ask the customer for his bill or what he wants quoted or what he already has quotes for, you are order taking. There isn't a lot of value in that. Or a lot of commission.

I could see if you did that, then vacuumed up the rest of his telecom spend, but that's not what happens.

At the least, you could ask a couple of simple questions, like:

Are you looking for the cheapest? Or are there other factors at play?
Do you know the difference between broadband and dedicated Internet?

If you wanted to be a daredevil, you could ask these questions:

Are you worried about downtime or outages?
How important is reliability?
What does an Internet outage cost your business oer hour?
Do customers still order by phone? What would a dial-tone outage cost your company?

Remember that the prospect doesn't know telecom - that's your job - and it is your job to educate them about what they are asking for (versus what they need or want).

In managing salespeople, I sometimes think low price is about the thrill of the hunt - hunting for ink - on the way to the goal of Quota. In some cases, it is about reluctance to rejection as in "if I put forth a sales effort and don't win..."

Let's face it, offering the lowest price is faster. It takes some time to prepare to ask questions. As pricing is dropping, it takes more sales to make a living. Who is going to expend the extra time? It is easier to keep searching for the cheaper carrier.

It wouldn't hurt the Hunters to do some farming. By that I mean, upsell or cross-sell to your current client base in order to make:

the customer stickier to your business;
more commission/revenue;
yourself more valuable to the customer's business.

Even IDT todays makes its $1.2 Billion in revenue from a myriad of service offerings. It isn't all just LD revenue.

One last fact: the low price customers are also the biggest pain in the butt, which costs you time (time=money).

The Replacements

2012-06-19T12:06:31Z

Our Industry has traditionally been about selling replacement services for less money. That's why we have less revenue, debt, and the public is tired of hearing us pitch "We'll save you money."
It's also why the Industry can't sell Cloud, Managed Services, or anything but cheap telco.

Cbeyond 2.0

2012-02-27T20:40:02Z

Cbeyond laid off 200 employees last week. "The company said it is reducing its traditional entry level direct sales force by about half while building a new direct sales group dedicated to managing existing and new technology dependent customers."

In a message to agents today:

"Cbeyond is making some significant changes that are going to directly benefit their Agent Partners. They will be reducing their entry level sales force by 50% and redefining the roles of the existing team. They will also be providing agents with enhanced support systems and marketing, along with hiring channel-centric cloud sales engineers to help partners secure deals. Per Zane Long, VP Indirect Channel Sales, "... agents are a critical part of the team that will help us build what we are calling Cbeyond 2.0".

Cbeyond is going through changes. It no longer opens new metro areas for telecom and network servcies. This puts a bottleneck on revenue growth and employee satisfaction, because during the emergence of new metros, employees had opportunity for advancement. Now there's a bottleneck. These layoffs will create some more pressure for a CLEC that is essentially a sales and marketing arm. Sure, technically they did a good job with SIP Trunking, but other than that it has been a marketing machine. Now it is reinventing itself into a cloud services provider. "By the end of 2013, Cbeyond expects about 25 percent of revenues will be generated from its cloud-only customers and its customers who buy both network and cloud services." ARPU will be lower for cloud services, compared to telecom services, but the margins will be higher. Well, until next month when cloud becomes such a commodity that it becomes a bloody price war like VoIP.

A Brief View of Integra Telecom

2012-02-21T18:51:16Z

I interviewed Integra in Austin last year. Like quite a few interviews I do, I just can't find the time to write up the blog. It may seem like I do this blogging thing full time, but my bills still get paid doing consulting to ISP-CLEC-VOIP-MSO companies and being a telecom agent. It makes for a lot of juggling and long hours.

Integra Telecom is a CLEC in 11 Western states, including: Arizona, California, Colorado, Idaho, Minnesota, Montana, Nevada, North Dakota, Oregon, Utah and Washington - bringing in about $700M in revenue, in part due to the acquisition of Electric Lightwave and Escheleon Telecom. The parts I like are the 5,000-mile long-haul fiber network and the 3,000-mile metro network that feeds about 1,900 buildings. Now with Kevin O'Hara as CEO, Integra is re-branding itself as a "fiber-based, business-grade networking, communications and cloud solutions provider." That's right: from CLEC to Cloud provider.

Integra Telecom is going the UC&C route by "providing network-wide availability of hosted Microsoft Communication Services, which includes Microsoft Exchange, Microsoft Outlook 2010, Microsoft Lync, Microsoft SharePoint, enhanced encryption and other valuable features," according to the pr.

At ITEXPO West in 2011, they "introduced a cloud security services suite of managed, networked-based security products for companies that rely on the Internet for their business and need to protect their network from unauthorized and malicious access and content. The first available product is Cloud Firewall Service, a network-based unified threat prevention service that provides secure inbound and outbound Internet access without the need for on-premise equipment or additional staff," according to the pr. That service keeps them in the hunt with Netwolves, EarthLink and others who have rolled out a managed firewall service. Security is supposed to be the buzz word this year. We'll see.

To me, it's all about On-Net. Whether I am talking about EarthLink or Integra or WIND or XO or TWT or L3, it is all about LIT Buildings! Why? You already spent the capital to put fiber there, so get deep into that building. Then layer on services. Big pipes will need security since everyone is getting hacked.

Did I mention that Integra Telecom is channel friendly? (Though they haven't joined TCA yet.

3 Things Agents Need to Look at in 2012

2011-12-30T21:14:19Z

It will be a busy year in 2012 as all the carriers try to synergize their mega-mergers and get their back-office in order so that we can actually place orders.

Besides selling the traditional circuits - POTS, T1, SIP, PRI - there are some interesting things for an Agent to look at in 2012.

M2M is growing. We are seeing that the 3G/4G system is creeping in everywhere - from broadband backup systems to surveillance systems to fleet management to home healthcare monitoring to security monitoring. There are an unlimited number of ways that devices and the wireless network can interact. Think about the Kindle. There is money to be made in M2M.

More wireless but mixed with TEM. If you haven't moved your big accounts to TEM, 2012 may be the year you think about it. Auditing has increased in the last two years as governments (local, county, state) and medium businesses look for ways to reduce the ever-increasing telecom bills. (Cellular/3G/4G is big and growing, which is increasing the total cost of telecom spending.) Telecom Expense Management (TEM) can help accounts that spend more than $5K per month. It also makes the Agent the point person all the total telecom spend. It's a great way to become vital to the organization.

In addition, you can add Mobile Device Management. If a company has more than 250 employees, it likely needs help tracking laptops, data cards, cellphones and the like. There are software platforms for this to make an Agents life easy. This is yet another way to become integral to a clients business. Notice I'm not suggesting selling cellphones, but manage those assets for the business.

Lastly, there is Cloud and Managed Services. I'm going to skip cloud unless you want to sell apps to businesses. If you sell within a vertical, I would suggest that you certainly start selling apps into that vertical, because it will add revenue for you and make you the go-to person for all things IT and Telecom for that Vertical!

In Managed Services, we are seeing a few trends: hacking is increasing; security is lax; IT is pervasive in today's business environment but there is not enough money or staff to handle it all. That's where managed servcies comes in. If the company has a lot of empployees and a small IT staff, managed servcies would be a fit. Things to ask:

"What task would you like to relieve yourself of?"
"What routine task could we outsource to your ISP to free up your staff's time?
"You are consuming a lot more bandwidth, what are you doing about firewall and other security?"
"How are you tracking wireless spending and devices?"
"What would you do if a company laptop was stolen or lost?"
"How much private company data is on a smartphone or laptop? How much access does either device have to your network?"
"Do you backup your data regularly and off-site?"

You have to adjust for the changing times, unless you just want to push pipes. But your customers are under a strain to handle devices, billing, auditing, tracking as well as security and more. You can make some extra money -- and become more than just a sales guy -- if you move beyond the pipes and help your customers with the rest of the story. HUH? They buy those pipes from you for a reason. Help them with that.

Happy New Year!

Business is Still Happening

2011-10-19T18:57:49Z

Despite all the bad news, bad politics, financial collapse and more, at the end of the quarter business is still getting done. People are still buying stuff.

For example, Juliana Kenny reports that Yahoo still hit earnings expectations even with firing their CEO.

"The US telecom market generated $367bn in service revenue in 2010, an increase of 3.1% over 2009," according to ARPU has to decrease because all pricing is in a downward spiral.

So since business is getting done, what's your excuse now? Go Sell Something!

The Future of Media

2011-09-30T15:29:16Z

The buzz is that email is dead. Oh, voice is dying also. And if you believe all the hype, sell your airline stocks since video conferencing and tele-presence will replace travel.

"A company's corporate website is the top source of new sales leads--second only to personal connections and referrals, and more than seven times more effective than social media, according to a 2011 Demandbase National Marketing and Sales Study released today by marketing technology company Demandbase and online business network Focus, according to an article in the Tech Journal South. Yet the buzz says it's all social media.

Voice isn't dead either. If it was the contact center space would be folding up tents. Granted robo-calling is annoying, but it still won't end any time soon. (It just may get more challenging to reach humans instead of voicemail.)

Email is still my number one communication platform. Project management, clients, prospecting and more all happen via email. Notifications end up in email. When companies talk about unified messaging, it's about one inbox - the email tray.

Everyone has their preferred method of communicating: email, voice, text, chat, FB, twitter, and more. It is getting more baffling for people to keep track of conversation threads as they bounce from one medium to another - text to email to FB. But it all comes back to email - maybe mainly due to the inbox and inbox organization that we are used to. Texts, chats, notifications and more can all come back to an email inbox to be stored, organized and searched. That's why email will be around a while longer. Longer than you think anyway.

The future of media will be fractious at best.

Want an interesting look at new media?

The Latest in VoIP Updates

2011-09-19T22:00:37Z

There is just so many press releases. I'd say news but much of it is not new (that is to say innovative) or really news worthy other than as tidbits of info to keep up on the sector.

Metaswitch got into the SBC market, because their clients didn't want to buy the market leader, Acme Packet. Level3 jumped into the SBC market with a new service: Managed SBC.

Skype bought Groupme for a rumored $80M. Groupme was a contestant at the second Startup Camp, that also had the makers of the Android desktop phone, Glass.

Interesting thought: Inter-op is about user experience, so is device choice. Think about deployment from the user's experience.

Telesphere partnered with CosmoCom to add cloud-based contact center solutions. That's one more customer that won't be using BroadCloud. Oops! BSFT bought web conferencing company, iLinc, for just $2.4M. The hope is that clients will use BroadCloud instead of third party companies (like Citrix, MegaMeeting or CosmoCom) to fill in the UC components needed for the complete UC experience.

Sangoma acquired all the key assets of Vegastream.

InterCall announced that it will extend its Smoothstone VoiceMaxx IP-PBX services with the addition of VoiceMaxx CE, a suite of service packages based on the Cisco Hosted Collaboration Solution. Both Smoothstone and Intercall are owned by West Corp.

Here's something startling: a company debuted at ITEXPO with "a 100 percent turnkey white label product that will not only include provisioning, support, billing and telco services, but will also incorporate all of RealLinx products (VoiceLinx, SecurityLinx and BroadbandLinx)."

RingCentral got $10M more in funding. Aren't they self-sufficient yet?

8×8 recently acquired cloud-based call center provider Contactual Hosting.

"NetSapiens' SNAPsolution is utilized by One Source Networks to power a hybrid of cloud-based and premise-based solutions, integrating all of the necessary service delivery components critical to the OSN VoIP infrastructure, such as accounting, provisioning, and call switching to enable OSN's end-user applications such as unified communications, virtual PBX, conferencing, and enhanced call center solutions."

"Virtual PBX Complete with VoIP Anywhere allows customers to use their smart phones and computers as VoIP handsets with complete business phone system capabilities."

CounterPath added SMS, chat and presence to its Bria mobile app. Counterpath also launched the Client Configuration Server (CCS), a carrier grade server platform specifically designed to allow enterprises and service providers the ability to efficiently and consistently deploy, configure, update and upgrade softphone and UC Client end-points.

Zendesk adds some VoIP functionality via Twilio. Zendesk Voice is a cloud-based call center that integrates with the startup's popular help-desk platform.

Vocal IP Networx now offers a unified communications (UC) platform, dubbed Vocal UC, utilizing Microsoft Lync software.

3 Weatherman and an Agent

2011-08-26T14:18:46Z

At the CPExpo last night I was a panelist for the CPZ, an experiment in doing a talk show at the expo. It was 100 invitees, an open bar and 5 panelists in front of the camera - Khali Henderson, Dave Stewart of Simple Signal, Larry Walsh of the 2112 Group, John Siefert (CEO of Virgo), and me. It turns out that Siefert is a VAR (?) or works with VARs, so it was 3 cloud guys and me.

We started with the theme of the show: Is this the end of Transactional Agents? The truth is that while the runway may appear to be running out, telecom is mainly an arbitrage business made up of me-too providers, who will extend that runway for a while longer.

Take the case that Bells no longer pay commissions on POTS lines. There are 3 CLEC's that do: Granite, Ernst, MetTel. So agents can continue along on their path of selling DSL, POTS and T1.

The question of Energy came up. It was poo-poo'ed by most of the panel and some of the audience. However, energy falls under the transactional model and LD-POTS guys can still make a living adding Energy brokering to the mix.

I don't understand why the cloud guys are so upset that agents have not jumped on the bandwagon. VAR's haven't either. And despite how often cloud guys yell "Sell my stuff!", it will likely not have an impact.

The topic of InterNAP killing off agents with evergreen contracts came up. Siefert said that's just business, missing the point that if agents do NOT respond to this aggrievance it is likely to happen again and again.

I had to point out that the big name in cloud, InterNAP, just screwed a bunch of agents - and the cloud panelists wanted agents to go cloud. DUH! VAR's and Agents kind of aren't to certain about cloud - where they fit; where they make money; and which providers will survive the first wave - but a big name in cloud just wiped out commissions and you think the channel is going to run faster at cloud?????? Maybe you don't understand how the channel business works.

One point made by Siefert was that things are changing and the channel needs to change too. As a magazine exec, I guess he would understand that business models need to change, but no one changes until they forced to.

So while the weatherman (as I call cloud guys) want to force the agents to cloud, I ask how you push a rope?

It would be best of the cloud providers did 3 key things:

Be a Channel Champion. Not just lip service but seriously champion the Channel, like the current crop of TCA Vendor members.

Have a clear Value statement. In the days of Integrated T1, there was no differentiation between CLEC Int-T1 offerings. If you as a service provider do not espouse your value proposition clearly and concisely, one will be assigned to you (and you won't like it).

Concretely explain sales triggers for your service. Where exactly is the best fit for your service? How would the agent lightbulb go off upon hearing a keyword from a prospect? What makes the best lead for you? What to ask the prospect to qualify them?

If the cloud (and the rest of the carriers) want the Channel to become better Trusted Advisors, they will have to participate in the education of the Channel - not just about your stuff and selling your stuff. Until the Channel gets better educated -- and the cloud provider mature -- it will just be the early adopters that sell cloud.

Overhead at the show: There's about 8 guys selling collocation in the nation!

As I leave Chicago to fly to Florida through Hurricane Irene, I want to leave you with this tune: The Dog Days are Over!

The Phone System is Broken (too)

2011-08-24T14:53:16Z

The PSTN - America's phone network - is broken. There are two main issues that bring me to say that telecom is broken: number porting and call termination.

I hear complaints from VoIP Providers (and smaller CLEC's) all the time how they cannot port numbers. In some cases both VoIP Providers use a CLEC for LNP, but it is different CLEC's. The CLEC's won't talk to you. An official CDR (call detail record) is needed, but how do you get it from the underlying CLEC? Especially in Florida where the Public Utility Commission just tapped out of telecom regulations - meaning that you don't need a CLEC license in Florida and there is no governing body. Welcome to the Wild West (which unfortunately Florida is already infamous for).

Even CLEC's have a problem porting from other LEC's - ILEC, RLEC, CLEC, doesn't matter. The porting issue makes the new service provider look bad and the on-boarding of the customer ends up being a lousy experience (that studies show the customer doesn't get over). What's a service provider to do?

Then there is the ongoing battle over call termination. You would think in the 21st century, I could call anywhere and have my call go through. Not so much.

"NTCA, NECA, OPASTCO and WTA (the "Rural Representatives") filed a letter with the FCC pleading for an investigation into the dirty business of call termination problems, likely caused by magicJack and other "least cost routing" originating and intermediary carriers," according to this report from JSICA.

"The reported increase in consumer complaints over the termination and completion of long distance calls may only be the "tip of the iceberg" of the actual scope of the problem, panelists said yesterday during a discussion at the National Association of Regulatory Utility Commissioners' summer meeting,", according to this article and this article.

Why the problem? "Improper network management or setup, originating carriers routing calls to LCR providers whose contracts stipulate that they will not complete calls to certain exchanges and nomadic voice over Internet protocol providers unwilling to terminate calls to certain areas." Expense mainly. When you talk about LCR (least cost routing) - in an era of flat rate calling - carriers do not want to spend five to 25 cents per minute to terminate calls to expensive areas.

Some of this dispute was initiated by the business plans of companies like freeconference.com, whereby the company made money through inter-carrier compensation to provide the service (and huge profit) until carriers started fighting back. Ultimately, this issue of call termination is the result of an FCC that does not want to solve the ICC (inter-carrier compensation) issue.

Of course, it is propagated by an industry that can't miss out on any arbitrage play to make a half cent. (In other words, an industry that made quite a few folks rich without adding any value to the system, just scamming it, albeit in the grey area.)

The call termination issue means businesses lose clients. Not telecom companies but the small businesses that need a working phone system. The rural associations argued to the FCC that "this is not an inter-carrier compensation issue; this is a consumer service issue." I think it all gets solved with ICC.

I propose that both the LNP and the ICC issue could be solved with ENUM Exchange. I know, I'm a little crazy, but hear me out. With ENUM, calls are completed faster - that's a given - but the calls are completed. With every carrier connected to an inter-connected ENUM "network" or maybe a "neutral tandem", the inter-carrier compensation issue would be resolved through contracts with the ENUM / Exchange network. If most of the phone numbers were in an ENUM pool, the LNP would be easier - or at least as easy as the domain registration process of ICANN.

Another advantage would be one database for CNAM info that would be consistent (not change with every carrier or every chance a busienss wants), like back in the old days when Telecordia handled all this.

In VoIP, it might mean that we go to a system similar to DNS for phone numbers. It's a draft idea, but with ENUM / Exchange / Peering being almost universal, HD Voice and Fax over IP would have a greater level of success. Service improves.

Unfortunately, the rural carriers are stuck in a cycle of high access rates and USF subsidy. Before you start yelling at me for that, consider that most of us pay for our own utilities, but rural residents (and their utility companies) get subsidized to hell. It's not unusual to see a RLEC get $10K per line per year!! Satellite phone at $1.86 per minute would be cheaper (at 300 minutes per month that's under $8K).

We live in a nation filled with subsidy. Pundits bitch about welfare, but what about ALL of the other subsidy programs? [BTW, unless you vote AND pay taxes shut your pie-hole.] That being said I still think my plan will work, especially if USF and RUS keeps funding the rural folks. In the mean time, the phone system is broken.

CLEC Frustration Part II

2011-07-28T18:22:31Z

One reason that the ILEC's have been frustrated with CLEC's and spend so much effort frustrating their orders is due to the Lack of Value that the CLEC's -- in general -- bring to the market place.

Resellers, Rebillers, switchless, UNE-P, and the like add nothing to the ecosystem, except lower rates. And this has been the case before the Telecom Act of 1996.

Along comes VoIP and what's the first thing the Industry decides: Hey! Let's sell it for less than TDM! SIP trunking, same thing. How wholly unoriginal -- and lazy.

The original plan for UNE-P was that CLEC's would use it to build up a customer base where they did not have a switch to finance the purchase of collocation and a switch. It rarely happened. That's why when the TELRIC ruling came in and UNE-P went good-bye, hundreds of CLEC's gulped and lost their business.

Even now, they can't bring margin. Birch - a two-time (2002 and 2005 and almost again in 2008) BK player - just bought Cordia assets - " Included in the acquisition are approximately 55,000 business, residential and broadband access lines across 24 states" for $8M. Those accounts are valued at $145 each. No wonder Cordia filed BK.

The big problem for most CLEC's is they have no idea what their mission is or what their value is (other than I will save you 10% cha-cha-cha).

The successful ones -- not the big ones because Intermedia was the first $1B CLEC and also the biggest CLEC to HAVE to sell itself -- the successful ones, like Sonic.Net, Gorge.Net, Hunt Telecom, Cbeyond and Socket Networks, know not only what the mission is, but the Value they provide AND on top of that they know what they do NOT provide.

Rule number 1 in sales is not always be closing but always be dis-qualifying. Sales does not have the time or manpower to hang with every prospect. Sales needs to determine who wants, needs and can afford our services now.

CLEC's hate to say NO. Even when it isn't a good fit or they will lose money on the deal. Just say No! Quickly.

Key points for any executives:

Know what services you make margin on.
Know your Value Proposition to your marketplace.
Know who your marketplace is.
Focus on just that - providing high margin services to your targeted marketplace.

Ethernet is Spreading

2011-07-18T15:59:55Z

So many notices this week about Ethernet. It's the preferred protocol for most businesses. (No one wants to buy a DS3 card and configure it, I guess). Ethernet is becoming more and more available as the delivery protocol for Internet bandwidth, MPLS, IP/VPN, and Private Line.

The M&A targets are all fiber guys like FiberLight, AboveNet, Zayo, Sidera, Fibertower, Fibertech and XO. All are Ethernet players.

AT&T announced that come August 1st it is almost doubling the Metro Ethernet rates in the 9-state BLS region. What a bonus for customers.

Sprint launched Ethernet access in 25 new markets and expanded offerings in five existing markets. Ethernet is available for MPLS and IP products. Sprint finally leveraging their pin-drop network. [Don't want to play with Sprint directly, TNCI resells Sprint.]

FiberLight released a new IP network architecture based on Ethernet for governemnet and enterprise customers. Juniper and IBM are technology partners in this new IP platform.

In a similar fasion, Comcast and Ciena went on the road to train salespeople on how to sell Comcast Metro E. "Ciena's Carrier Ethernet Service Delivery (CESD) platforms are being deployed by Comcast as customer premise equipment for business services and wireless backhaul."

Media reports that wireless backhaul is a huge market - and it is slowly migrating to Ethernet. I think physics determines that wireless tower backhaul is a finite market - - you can only get so many bits into X amount of spectrum, no matter how many radios you use. So with everyone spouting off about backhaul opportunities, I don't know how many players will actually make a huge dent in revenue from it. I have seen figures that VZW pays less than $1000 per tower backhaul. That would take a lot of towers to move the revenue meter. And let's not forget that it is a competitive market -- RFQ and bidding war anyone? Especially after you told Wall Street how much the backhaul market would bring in. DUH!

In other Ethernet news in July that affects the Channel:

Netwolves announced that they can put multiple Ethernet providers with managed services on 1 invoice. NetWolves has relationships with over 50 different providers that sell Ethernet services. This allows us to find the provider that is best suited to deliver the service for you. We also have the ability to bundle multiple Ethernet providers onto a single bill for your customers.

Also, Airespring uses the lowest cost provider per area to build an inter-connected MPLS network. (Can you say NNI?)

NITEL is another carrier that can help Agents expand their product offering to with nationwide MPLS, Ethernet, dedicated Internet (DIA) and private line services.

EarthLink Business has nationwide MPLS, formerly sold under the New Edge brand. Since adding Deltacom, Ethernet should be available extensively in the Southeast.

All this Ethernet talk makes me think of the numerous Carrier Ethernet Exchanges that have evolved - from TELX and Equinix to Neutral Tandem and CENX. It's a lot of spots popping up to inter-connect using Ethernet. Basically, it's a meet-me-room with carrier ethernet switching gear (usually from Cisco) that allows the exchange of traffic at 100MB or higher. It is a cost-effective way to pay for peering (sort of), as you exchange traffic of HD voice, video, SAAS, mobile data, CDN and tele-presence packets. Carrier Ethernet Exchanges mean Ethernet sales and in many cases collocation sales for agents.

US Signal deploys Cisco ASR 9000 Series for enhanced Carrier Ethernet and a new managed Data Center service. The ASR will allow US Signal, a TCA vendor member, to scale its Ethernet offerings in the Midwest. "US Signal Managed Data Center service is built with dedicated resource pools designed to rapidly provision and host Virtual Private Servers accessible through the upgraded US Signal IP NGN." So we go from Ethernet to Cloud just like that.