Losses and Growth

Peter : On Rad's Radar?
| Peter Radizeski of RAD-INFO, Inc. talking telecom, Cloud, VoIP, CLEC, and The Channel.

Losses and Growth

The only thing really growing is debt.

Clearwire grew revenue but also its losses.

PAETEC finished swallowing CavTel to get to ~$2B in revenue but with losses. And with just 54,000 business customers. (Cbeyond has more than 58,000). Margins are 18.4% according to Rob Powell.

Centurylink is getting hit with a lot of access line loss which is adversely affecting its revenue. If you take a look at Frontier numbers, access line revenue is slowing along with TV adds and broadband net adds. (A $4B revenue company that only adds 10,500 internet customers?) Meanwhile Windtream lost about 111,000 lines in the last year, with corresponding revenue dipping -- and interest expense rising 19%. Why? Because debt is now costing carriers between 5.75% and 10% whereas two years ago it was under 5%.

Then there's Cloud Communications. CommPartners had 200 resellers and 27,000 seats before it was liquidated. They started white label back in 2005. (I was a referral partner for CP in 2005 helping them sign up ISP's.)  27K in 6 years. OUCH!

If 135 seats per reseller is average, what's that say about most of the Hosted VoIP space then? 8x8 just announced it was going to start chasing Solopreneurs and SoHo offices with a UC offering. It means that that train is chugging uphill along with cellular, broadband and TV subscriptions. It's a zero sum game: you have to take service from someone else to gain revenue. This means the cost of customer acquisition increases. The ripple effect to that is retention costs increase, revenues dips (re: price wars), and sales get harder and harder.

Here's a bright side:

Cogent is doing well though and Vonage actually had net income of $21M!

The Channel will become vital to deliver business customers to telecommunications companies - cloud, VoIP, cable, telco, MSP, doesn't matter. The Channel delivers customers with a lower acquisition cost and with a lower churn. Agents that can figure out how to market and sell new services (MPLS, SIP, Cloud, Apps, Security, PBX, MS, etc.) beyond transit and transport stand to make a killing!

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