Rob Powell has a good post collecting some of the M&A activity this year. He makes note that the Comcast-TWC-Charter transaction will create a $7B business CLEC. Seven billion dollar business is larger than Level3 (at $6.4B) or Windstream (with just under $6B) or even Frontier (whose $4.5B is mainly residential). Relatively, CenturyLink is doing $17B. The $7B is purely just the business services. That's a lot of lit buildings. The combo of L3 and twt has a "national fiber footprint with over 30,000 on-net buildings" but MSO's don't give out the number of buildings they light with fiber.
This cable beast also will have the capital power to build out wherever it wants to. Only 3 telcos can say that -- all the others have to do a cost analysis. When the RBOCs decided NOT to compete with cable, they made a big mistake.
AT&T is trying to fix that mistake by buying DirecTV to compete for the business lobby, hospitality and some residential with cable. Verizon is steadfast to its mobile and GEM strategy.
SpectrumCo that sold its spectrum to VZW has a non-compete for one more year. By the end of 2015, the triple threat Comcast-TWC-Charter could be offering cellular as an MVNO.
If you look at regional CLECs, they are doing well. Investors are looking at them because region fiber and denser networks are the new shiny object on Wall Street. It helps that many regional CLECs are healthy - and by that I mean profitable.
The HPBX space will be interesting because Vonage snagging Telesphere was not the last deal of this type. Sprint is partnering with companies like Computer Talk to fill out its Sprint Complete Collaboration - with Lync. And I have seen a lot of movement in the Microsoft space to add voice to Lync in different ways. As if the Cloud Comm Alliance didn't have enough to worry about from Premise PBX (Shoretel, MITEL, Avaya) and the Asterisk crowd, they now must have an answer for Lync as well. There are no breaks in cloud comm. It's hustle day and night just to make a buck. The two lights at the end of this tunnel are (1) that some of the CCA members will be bought and (2) that Enterprise is doing more hybrid UC solutions than just a single vendor (premise or cloud). Integration, discovery and case study will be integral to winning bigger deals.
There are 6 companies that will be interesting to watch next year.
Birch because I want to see how they handle the acquisition of Cbeyond. I think they will go small and not go big - meaning they will stick to the Birch strategy that I have seen from the other acquisitions where it was all about stripping out the money and not about what to do long term.
Integra made two purchases - WCI and ProTel. Interesting moves from a company that has had its head down for a while. It is making noise in the channel and with MITEL, so that lends it some national scope without too much CAPEX. (Also, it falls under my regional CLEC banner.)
TelePacific is another regional CLEC. (One that I have worked with a lot in the past couple of years.) It will be interesting to see how the re-branding goes especially as they continue to make in-roads into Texas (their third state after Cali and Nevada) and beyond just selling network.
GTT bought UNSi this year. Be curious what that means next year because I haven't seen a whole lot of noise since that transaction.
Global Capacity just grabbed MegaPath assets. GC is making noise around being the go-to network wholesaler. I have no idea if that business model has legs or not, especially with AT&T's new wholesale partner platform that just rolled out in 2014. We'll watch and see.
It seemed like 2014 was a transitional year for MegaPath. HR was very busy in 2014. It re-launched its HPBX service (but then many others did as well). It just seems like this company has decided what it wants to be yet, but the runway for deciding is in the distance.
The channel doesn't really get a benefit from this consolidation. More trouble for customers who want to switch carriers (but may have nowhere to go), but no upside for the channel partners. Less carriers to work with; integration issues; commission missteps; lost contacts; and so much more than affects the channel partner, his customers and his income.
I think the FCC decisions - and the accompanying lawsuits - will weigh heavy on the industry in 3Q2015. That doesn't mean that we won't continue to see PR and posturing from AT&T, Comcast, VZ and the Internet guys (Netflix, Google, Amazon).
The one place all this consolidation is effecting is JOBS. Plain and simple there have been a tremendous number of layoffs in telecom in the last two years (with more coming). IT and cloud companies are picking up some people -- and so are master agencies, but there just aren't enough jobs in the industry - and few other industries pay what telecom once did. It has an economic ripple effect. Plus all that domain knowledge keeps draining.
