Ever since Verizon bought out Vodafone to take 100% ownership of Verizon Wireless, the largest U.S. wireless carrier has taken steps to divest its wireline operations to free up focus for its more luctorative wireless business. This past March, Verizon sold its wireline operations (including FiOS) in California, Florida and Texas to Frontier Communications for $10 billion. This May, Verizon bought AOL for $4.4 billion in cash, a deal aimed at advancing the telecom giant’s growth ambitions in mobile video and advertising.
On June 9th, the WSJ reported that Verizon’s largest union, The Communications Workers of America (CWA), claims the company is refusing to fix broken landlines. CWA is accusing the carrier of abandoning its copper landline networks in portions of the northeastern United States. It says that Verizon isn’t making necessary repairs and instead is pushing customers in parts of New York, Delaware, Pennsylvania, New Jersey, Maryland, Virginia, and Washington, DC. toward wireless home phone service.
CWA, which represents about 35,000 Verizon employees, announced intentions to file Freedom of Information Act (FOIA) requests to pull up data on Verizon’s maintenance of legacy networks. The dispute comes as Verizon and the union are about to enter negotiations later this month for a new contract.
“As a public utility in these states, Verizon has a duty to maintain services for all customers. But we’ve seen how the company abandons users, particularly on legacy networks, and customers across the country have noticed their service quality is plummeting,” Dennis Trainor, CWA vice president for District 1, said in a statement.
“Verizon is systematically abandoning the legacy network and as a consequence the quality of service for millions of phone customers has plummeted,” said Bob Master, CWA’s political director for the union’s northeastern region. Mr. Master said the union’s interests are aligned with those of consumers. Many customers want to keep their copper landline phones because in the event of a power outage the lines will keep running, while wireless and fiber phone systems will stop working as soon as the batteries die, according to Mr. Master. [Of course that’s correct, because copper phone lines have power feeding from the 48v dc battery in the telco central office that runs for several hours/days after a regional power failure).
Caption: Are copper phone lines for the birds?
Verizon spokesman Rich Young countered those remarks by saying that the CWA’s allegations are aimed at pressuring the carrier in advance of the contract negotiation talks and he denied the union’s claims. “It’s pure nonsense to say we’re abandoning our copper networks,” Mr. Young told the WSJ. Mr. Young said the company is investing in its copper network, and it only offers Voice Link, which delivers service over Verizon’s cellular network, as a temporary replacement while repairs are being done. About 13,000 customers have decided to keep the Voice Link service, Mr. Young said.
Spending on Verizon’s wireline network has declined. In the last year, the company invested $5.8 billion on its wirelines (copper and fiber), a 7.7% reduction from the year before. Mr. Young attributed the drop in spending not to reduced maintenance but to a slowdown in its FiOS build out.
In the wake of Hurricane Sandy, Verizon’s copper lines on parts of the East Coast were damaged. The carrier drew criticism from organizations like AARP for planning to turn off those legacy networks in favor of offering wireless Voice Link technology.
Verizon has expressed a desire to shut off its copper line system in the future in favor of cheaper wireless and higher-speed fiber network access technology. In addition to being faster and in some cases cheaper to build, those technologies face fewer regulations than services delivered over copper infrastructure. AT&T Inc. has also said it wants to eventually shut off its copper network. That’s despite advances in DSL technology like “vectoring” which mitigates interference and thereby increases upload/download speeds.
Verizon has about 10.5 million residential landline voice customers, about half of which are on copper. In the past few years, the company has moved about 800,000 people off its copper network onto its newer, fiber-to-the-premises based FiOS access network.
In it’s 1st Quarter 2015 earnings report, Verizon noted a 10.2% year-over-year increase in FiOS revenues with 133,000 FiOS Internet and 90,000 FiOS Video net additions. Total FiOS revenues in the 1st quarter were $3.4 billion. Verizon has a total of 6.7 million FiOS Internet and 5.7 million FiOS Video connections at the end of the 1st quarter 2015, representing year-over-year increases of 9.4% and 7.9%, respectively.
Clearly, Verizon is not abandoning FioS, but is not saying much about maintaining its existing copper wire plant. It’s not correct to conclude that Verizon wants to focus soley on wireless as they see a good business in offering FiOS based triple and quadruple play service bundles to residential customers.
Dish Network, the satellite television company controlled by billionaire Charles Ergen, is in talks to acquire wireless telco T-Mobile US, according to people briefed on the matter. T-Mobile US has a market value of $31 billion, while Dish Network is worth nearly $35 billion. Details of the price, and the cash and stock mix, were still being worked out. Both Dish and T-Mobile declined to comment.
A merger of Dish and T-Mobile US would provide a definitive answer to what Dish plans to do with its huge wireless spectrum holdings, which Mr. Ergen has been adding to for years without revealing any clear plan for how Dish would use it. Speculation has persisted that DIsh would either build its own LTE or (true) 4G-LTE Advanced network – either on its own, or by acquiring a wireless network operator that had LTE/mobile broadband engineering expertise.
According to a Wells Fargo report, Dish’s full spectrum license collection is likely worth a total of between $40 billion and $44 billion. That figure includes Dish’s 700 MHz, AWS-4 and H Block licenses, as well as the AWS-3 licenses the company won in the FCC’s recent spectrum auction. (However, those AWS-3 licenses are somewhat in question because they are tied to Dish via the company’s two designated entities (DEs)–Northstar Wireless and SNR Wireless–which could pay around $10 billion in the auction for 702 licenses. Both regulators and Dish’s rivals have blasted Dish’s use of DEs–and the 25 percent small business discount they are to receive–as unfair). It’s also worth noting that Dish’s spectrum portfolio could be worth as little as $28.1 billion or as much as $56.7 billion, Wells Fargo said, depending on buyers’ eagerness.
Following the close of the recent FCC AWS-3 auction, Dish commands an average of around 80 MHz of licensed spectrum nationwide, putting it just behind T-Mobile in terms of spectrum depth. Sprint leads in overall spectrum owned due to its extensive 2.5 GHz licenses, while AT&T comes in second place, Verizon comes in third, and T-Mobile comes in fourth (even though it acquired all of MetroPCS’ spectrum in May 2013).
NOTE: Low-band spectrum can cover large geographic areas, while high-band spectrum can transmit larger amounts of data. Therefore, buyers of licensed spectrum might only be looking for spectrum licenses that fit in with their overall network rollout strategy. The value of spectrum is directly tied to demand from actual mobile broadband users, and demand is a hard metric to calculate. But the rising value of spectrum was clearly on display during the FCC’s recent AWS-3 spectrum auction, which raised almost $45 billion in total gross bids–double even the highest forecasts before the event.
A merger would also give T-Mobile US a clear path to grow and continue its role as a market disrupter (“the uncarrier”), giving it both the spectrum and financial resources it needs to build out its mobile broadband network to cover more of the U.S. T-Mobile would be able to use Dish’s accumulated spectrum, adding more and faster broadband wireless service across the U.S. That, combined with the continuation of its industry-disruption pricing strategy, could turn T-Mobile into a real threat for Verizon and AT&T for the first time. As the proposed deal wouldn’t reduce the number of wireless carriers, regulators are likely to approve it.
Braxton Carter, T-Mobile’s chief financial officer, in March complimented Mr. Ergen’s push to accumulate unused licensed spectrum. “You look at what he is doing with some of his technologies, and that type of marriage could be very, very, very interesting, or partnership,” he said.
Implications for Real Time Mobile Video:
Finally, a merged entity would be a serious competitive threat to the combined AT&T-DirecTV merged company, because it would sell both satellite TV as well as mobile broadband/wireless voice service. It would probably accelerate the trend toward delivery of REAL TIME MOBILE VIDEO, which both merged entities will likely pursue aggressively.
Here’s what DirecTV said about its acquisition by AT&T in a press release:
Creates Content Distribution Leader Across Mobile, Video & Broadband Platforms
- The premier pay TV brand with the best content relationships now poised to deliver video to multiple screens – mobile, TV, laptops and more – to meet consumers’ future viewing and programming preferences
- Unparalleled video content distribution scale in U.S. – nationwide mobile and video networks; broadband to cover 70 million customer locations with our broadband expansion
“DIRECTV is the premier pay TV provider in the United States and Latin America, with a high-quality customer base, the best selection of programming, the best technology for delivering and viewing high-quality video on any device and the best customer satisfaction among major U.S. cable and satellite TV providers. AT&T has a best-in-class nationwide mobile network and a high-speed broadband network that will cover 70 million customer locations with the broadband expansion enabled by this transaction.”
We can expect a very similar press release if and when the Dish/T-Mobile US deal is completed and announced.
In summary, a new Dish/T-Mobile, would be able to offer customers a full array of mobile Internet-based services along with its fast-growing “skinny-bundle” service called Sling TV. The combined entity could provide mobile Internet, pay-TV and cell phone services resulting in a “poor man’s triple play.” That’s because faster and more reliable wire-line broadband Internet wouldn’t be available from the new entity. So it couldn’t justifiably compete with AT&T’s U-verse, Verizon’s FiOS, or Comcast’s Xfinity triple play. However, we see tremendous competition in wireless only triple plays between Dish/T-Mobile and AT&T/DirecTV entities.
In its 2015 Broadband Progress report, released January 29th, the FCC states that U.S. broadband deployment, especially in rural areas, is failing to keep pace with today’s advanced, high-quality voice, data, graphics and video offerings.
In an effort to stimulate deployment, the FCC voted 3-2 to change the definition of “broadband” for wireline networks in Section 706 of the Telecommunications Act of 1996 . The redefinition is from 4 Mbps downstream and 1 Mbps upstream (set in 2010) to 25 Mbps downstream and 3 Mbps upstream. The 2010 broadband hurdle rates were said to be “inadequate for evaluating whether advanced broadband is being deployed to all Americans in a timely way,” the FCC found.
“Using the new higher broadband rate benchmark, the 2015 Broadband Progress report finds that 55 million Americans – 17% of the population – lack access to advanced broadband. Moreover, a significant digital divide remains between urban and rural America. Over half of all rural Americans lack access to 25 Mbps/3 Mbps service. The divide is still greater on Tribal lands and in U.S. territories, where nearly 2/3 of residents lack access to today’s speeds. And 35% of schools across the nation still lack access to fiber networks capable of delivering the advanced broadband required to support today’s digital-learning tools.”
Using the new broadband definition, approximately 20% of U.S. wired Internet connections today do not qualify as broadband, including many (mostly DSL connections) that formerly did qualify. For example, this author and many others have AT&T U-Verse Internet, which typically provides downstream rates of either 11Mb/sec or 22Mb/sec (the Uverse Upstream rate is not stated by AT&T). Others have 4Mb/sec and higher ADSL based Internet access. As of yesterday, we don’t have broadband anymore!
The change is designed to protect consumers by ensuring that cablecos (MSOs), telcos, and other Internet access providers don’t offer subpar download speeds as call them “broadband.” It’s also meant to stimulate the telecom/cableco industry into offering higher-quality services to the one-fifth of the population that has little or no Internet access, according to FCC Chairman Tom Wheeler. “We have a problem” when 20 percent of the U.S. doesn’t have access to the new speed. And we have a responsibility to that 20 percent,” Wheeler said.
It appears the FCC is paying more attention on cable’s growing broadband monopoly, as AT&T and Verizon back away from unwanted ADSL Internet access markets to focus on their triple play offerings (U-verse and FiOS, respectively) and 4G-LTE nationwide wireless access. Not only do those telcos not want to upgrade their DSL lines, they’re paying for state laws that ensure nobody else can either. It’s a paradigm that’s needed changing for most of the last decade, and few thought that Wheeler would try to do that. It remains to be seen if AT&T will upgrade U-verse Internet customer speeds as they are almost always served by DSL (only some greenfield U-verse deployments get fiber to the building). Verizon FiOS uses fiber access, which already provides higher speeds than 25M/3M to all its customers.
The redefinition also creates a huge problem for Comcast. Suddenly, the company’s share of the broadband market becomes a lot larger — and that gives regulators and politicians concerned about market concentration/monopoly power more cause to closely scrutinize Comcast’s plans to merge with Time Warner Cable. If that merger closes, approximately 63% of U.S. households would have only one choice for a broadband provider at the new faster speeds, according to a December 2014 memo from the FCC.
Time Warner Cable CEO Rob Marcus said he didn’t think the commission’s “somewhat arbitrary” definition would affect the deal with Comcast. “I don’t anticipate that that has any practical implications for life going forward or for the (the Department of Justice) analysis of the deal,” Marcus said in an earnings call Thursday, January 29th.
Comcast has said its market share would grow by less than 1% because Time Warner Cable has virtually no broadband customers at speeds above 25 Mbps. No customer will have fewer choices after the merger because Comcast and Time Warner Cable serve different areas, Comcast has repeatedly stated.
There’s still the chance that regulators could block the transaction or seek specific concessions before approving it. The reviews by the FCC and Justice Department, which is evaluating the merger’s impact on competition, have already been delayed several times as the anniversary of the deal’s announcement nears.
“The market suggests that odds of the deal closing are no higher than 50-50,” Craig Moffett, an analyst at Moffett Nathanson, said in a note to clients Thursday. The merger “has lost its air of inevitability,” he said. Earlier this month, Moffett had said he expected regulators to sign off on the deal. “But if it is rejected, combined Comcast’s share of the broadband market would be the reason,” he wrote in Jan. 8th note to clients.
Comcast says it’s better to measure broadband by including slower speeds, giving it about 35.5% market share in the U.S.
Meanwhile, the debate over a new downstream/upstream rate definition for broadband service mirrors the battle lines over network neutrality. The big Internet content companies including Google, Facebook, Yahoo and Netflix favor strong net neutrality action by the FCC, while the cable and telecommunications companies want the FCC to refrain from reclassifying broadband as a regulated service under Title II of the Communications Act. Earlier this month, Wheeler strongly hinted that Title II will be the basis for new net neutrality rules governing the broadband industry. Title II lets the FCC regulate telecommunications providers as common carriers. President Obama urged the commission to use Title II to impose net neutrality rules that ban blocking, throttling, and paid prioritization (AKA “paid peering).
In a filing with the FCC last week, Matthew Brill, counsel for the National Cable and Telecommunications Association, called the proposed broadband reclassification as “arbitrary and capricious.” He termed the assumptions behind it “hypothetical” that “dramatically exaggerate the amount of bandwidth needed by the typical broadband user.”
Utility Telephone, Inc. is is an Integrated Communications Provider and Competitive Local Exchange Carrier (CLEC) which provides a variety of Internet, data and telephone services to businesses and non profit organizations in both California and Nevada.
Specific services include: Internet access and secure data services; private line services for dedicated point-to-point communications; local phone service (PSTN), business voice solutions, auto attendant, on-demand conference, hosted PBX-IP business trunking, music on hold, VoIP phone, and DSL and web server hosting services.
Unlike many other competitive carriers that resell tier 1 carrier services, Utility operates its own switching and fiber-optic OC-48 networks, including over 30 ILEC collocation sites and a datacenter in Los Angeles, CA.
Utility Telephone’s Virtual Private Network (VPN) and IP-Multi-Protocol Label Switching (MPLS) are two robust and secure service offerings for business customers that want the benefits of a private network using managed IP transport.
1. VPN allows business locations to seamlessly communicate over a private and secure connection, sharing information and maximizing productivity across multiple locations.
2. IP-MPLS captures your data for specific user groups, establishing a private network that cannot be accessed by any unathorized viewers, whether they are in different buildings, cities or countries.
The IP- MPLS service has the following benefits for business customers:
- Reduces overhead
- Removes firewalls
- Improves performance-faster throughput and lower latency
- Simple implementation and configuration
- Capital investment savings (CAPEX)
This privately held company was founded in 1996 and has its headquarters in Stockton, California. Utility is noted for providing “Customer First” support and service to businesses within its serving areas. Long-term customer relationships are valued highly by the company’s executive team.
You can read customer testimonials at: http://www.utilitytelephone.com/company_testimonials.php
The company has been a Better Business Bureau (BBB) Accredited Business since 10/14/2008.
For further info on the company, please contact me at: Michaelericweiss@yahoo.com
Regulation: All CLECs (and ILECs) operating in CA are regulated by the CA Public Utility Commision (CPUC). The CPUC serves the public interest by protecting consumers and ensuring the provision of safe, reliable utility service and infrastructure at reasonable rates, with a commitment to environmental enhancement and a healthy California economy.
Latest Technology Watch Report: spatial standards for the IoT
ITU-T’s latest Technology Watch report introduces readers to location (spatial) standards and their role in enabling the Internet of Things, describing how communications infrastructure has increased people’s associations with the natural and built environment as well as how this can be leveraged to improve governance and service delivery by revealing new insights into how we interact with one another and the services and infrastructures that surround us.
Authored by staff and members of the Open Geospatial Consortium (OGC), with support from ITU-T, the report is titled “ Location matters: Spatial standards for the Internet of Things” and can be downloaded free of charge here.
The report discusses the technologies and standards emerging in support of location-based services (LBS), analyzing shortfalls in interoperability and highlighting where global standardization can tap the full potential of these fast-maturing technologies and the valuable data they return.
Spatial standards’ role in the marketplace is critiqued with a view to uncovering clear trends or market drivers, and readers will discover that location matters in a wide range of sectors, with examples being made of emergency and disaster management and response; smart infrastructure; smart water management; and, of course, transportation.
The report goes on to describe the spatial standards landscape, looking at the activities of the involved standardization bodies and concluding with an analysis of the greatest obstacles to be overcome in the spatial standards arena.
New ITU standards on cloud computing security & digital object architecture
ITU members have agreed new international standards (ITU-T Recommendations) outlining security considerations essential to cloud computing and, crucial to the long-term preservation and utility of IP-based resources, a ‘framework for the discovery of identity management information’ to enable interoperability across heterogenous information systems.
Recommendation ITU-T X.1600 “Security framework for cloud computing”, having reached first-stage approval (‘determined’) and now undergoing a final review, describes security threats in the cloud computing environment and, through a framework methodology, matches threats with the security capabilities advised to be specified in mitigating them. ITU-T X.1600 will act as a ‘handbook’ guiding the future standardization of identified threat-mitigation techniques; in addition providing an implementation reference for systems-level cloud security.
Recommendation ITU-T X.1255 “Framework for the discovery of identity management information”, approved and soon to be freely available on ITU’s website, details an open architecture framework in which identity management (IdM) information – identifying ‘digital objects’ and enabling information sharing among entities including subscribers, users, networks, network elements, software applications, services and devices – can be discovered, accessed and represented by heterogenous IdM systems representing IdM information in different ways, supported by a variety of trust frameworks and employing different metadata schemas.
ITU-T X.1255 lays out a framework that enables discovery of identity-related information and its provenance; identity-related information attributes, including but not limited to visual logos and human-readable site names; and attributes and functionality of applications. The framework, in addition, describes a data model and protocol to enable meta-level interoperability in the management of this information across heterogeneous IdM environments.
The Recommendation is a first step towards the Digital Object Architecture (DOA) advocated by the Corporation for National Research Initiatives (CNRI), which is intended to achieve the “universal information access” possible with uniquely identifiable digital objects structured so as to ensure their machine and platform independence.
For a succinct description of the history, motivation and promise of the DOA, see Peter J. Denning & Robert E. Kahn, “The Long Quest for Universal Information Access”, Communications of the ACM, Vol. 53 No. 12, Pages 34-36.
The new Recommendations were agreed at a meeting of ITU-T Study Group 17 (Security) in Geneva, 26 August to 04 September, which also saw the establishment of three new work items, on: •high-speed Abstract Syntax Notation (ASN.1) Octet Encoding Rules (OER) needed by the financial services sector to gain milliseconds on the trading floor; •updating the Cryptographic Message Syntax (CMS) to eliminate all obsolete ASN.1 features in the interests of making the CMS usable with all ASN.1 standardized encoding rules; and, •new challenges for Public-Key Infrastructure (PKI) standardization presented by mobile networks, machine-to-machine (M2M) communication, cloud computing and smart grid.
More information on the work of ITU-T Study Group 17 can be found at: http://www.itu.int/en/ITU-T/studygroups/2013-2016/17/Pages/default.aspx
ITU-T SG 13 Chairman Chae Sub Lee explains the importance of ITU’s work on Software Defined Networks (in Korean with English subtitles): http://www.youtube.com/watch?v=biCpFf5oCd8&list=PLpoIPNlF8P2PacVXmmIdJDVhJjk4ptutO&index=23
ITU-T work on SDN can be accessed through their new SDN portal: http://www.itu.int/en/ITU-T/sdn/Pages/default.aspx “
“SDN is considered a major shift in networking technology which will give network operators the ability to establish and manage new virtualized resources and networks without deploying new hardware technologies. ICT market players see SDN and network virtualization as critical to countering the increases in network complexity, management and operational costs traditionally associated with the introduction of new services or technologies. SDN proposes to decouple the control and data planes by way of a centralized, programmable control-plane and data-plane abstraction. This abstraction will usher in greater speed and flexibility in routing instructions and the security and energy management of network equipment such as routers and switches.”
AT&T is expanding its Higher Speed U-verse Internet service to five more states. In addition to the 17 states where the new speeds have already launched, U-verse High Speed Internet Power will be available to eligible residential and small business customers in selected markets in Arkansas, Kansas, Missouri, Oklahoma and Texas. High Speed U-Verse subscribers will get up to 45 Mbps downstream and 6 Mbps upstream, beginning 29 September 2013. AT&T plans to upgrade top tier U-verse speeds to up to 100 Mbps in the future.
Comment: Note that the “last mile” (or last few kilometers) U-Verse transport is over 2 wire copper -with VDSL vectoring- for all but greenfield build-outs. The greenfield – new buildouts- will get fiber to the premises, according to AT&T. AT&T’s move forward with U-verse is another example of telcos leveraging existing, inexpensive copper lines, vectored VDSL technology, and fiber to the cabinet to achieve speeds up to 100 Mbps.
In other AT&T news, the telco is launching its Digital Life smart home service in Milwaukee, Charlotte, Hartford, Jacksonville, Oklahoma City and Tulsa. Including the new markets, Digital Life will be available in 45 markets, with plans to launch the service in up to 50 markets by the end of 2013.
With Digital Life, customers can use their existing home broadband provider, and any wireless phone service, and enjoy the security and convenience of a home management system with the flexibility to meet their unique needs.
— Actively Protected & In Control: The foundation of Digital Life is complete home security with 24/7 professional monitoring that allows you to know what is happening at home, or where an event has occurred. Through AT&T-owned and operated, U.S.-based monitoring centers, professionals will respond to emergencies and alert police and fire authorities.
— Seamlessly Connected: Digital Life is an all-digital, fully integrated, wireless home management system, giving customers flexibility to manage their home from their smartphone, tablet or PC. Our takeover module lets you easily extend your existing security system and investment. The Digital Life application is available on most web browsers. Apps are available for iOS, as well as Android, BlackBerry and Windows Phones. To ensure customers’ privacy is protected, Digital Life has a secure log in system each time the app is opened from any Internet-connected device.
— Amazingly Simple & Intuitive: A user-friendly application was designed to be as simple as possible, making it easier than ever to manage your home. The Digital Life application gives customers control over cameras, door locks, lights, thermostats, small appliances and more by setting alerts or programs to manage your home. It’s all integrated into one simple system.
— Personalized & Flexible: Digital Life provides total flexibility so you can personalize your home to adapt to everyday life — with custom notifications and scheduled tasks. Add devices and solutions anytime, as your needs grow, or your lifestyle changes.
“AT&T remains committed to providing our customers with easy, fast and affordable ways that allows them to manage and secure their homes all from the touch of their smartphones, tablets and PCs,” said Kevin Petersen, president, Digital Life, Inc. “With the launch of these six new markets, we’re looking forward to making Digital Life available to more customers throughout the country.”
Comment: AT&T (as well as VZ) can now offer a 5-play for residential customers: high speed internet, VoIP, and video services using U-Verse (FiOS in the case of VZ) and wireless/mobile 3G/4G-LTE service using their cellular network. Sprint can’t make this claim as it sold off its local telco wireline operation to Embarq, which was acquired by Century Link several years ago.
Verizon Communications (VZ) is close to buying the remaining stake in Verizon Wireless (VZW) from Vodafone Group PLC it does not own for potentially $130 billion, according to people familiar with the talks, in what could be the third-biggest deal of all time. VZW is the largest U.S. mobile carrier. For months it has expressed its desire to gain full ownership of the jointly owned wireless network, which is growing fast and generating billions of dollars in free cash flow.
“Verizon Wireless is the crown jewel,” says Chris King, an analyst at Stifel Nicolaus. “It has been the best performing of all telecom assets in the US.” http://www.telegraph.co.uk/finance/9783344/Telecoms-giant-Verizon-is-conquering-America-the-world-should-take-note.html
Verizon and AT&T already dominate the U.S. telco market. They have effectively re-constructed the monopoly AT&T had before the divestiture of the Bell System.
This chart, courtesy of the Wall Street Journal, shows the changing world order for U.S. telcos:
Disclaimer: this post is from the IEEE Member Discussion email group open to all current IEEE members. Instructions to join are at http://comsocscv.org/ (Click on SUBSCRIBE)
From KC Star newspaper (Sprint HDQ is Overland Park, KS- near Kansas City):
July began with SoftBank Corp. in Tokyo buying 78 percent of America’s No. 3 wireless carrier.
SoftBank has pumped $5 billion into Sprint’s checkbook and installed its own founder, Masayoshi Son, as chairman. Sprint used some of that money to buyout its longtime wireless network partner Clearwire Corp.
After years of repairs to its reputation and struggles to overcome an ill conceived merger with Nextel, Sprint finally has the resources it needs to do battle. “I have great hopes for Sprint,” said analyst Roger Entner at Recon Analytics. “We’re out of excuses.”
Investors are hoping for some details Tuesday on how the new partners will challenge Verizon, AT&T and T-Mobile.
What vision does SoftBank’s Son have for Sprint’s future? Mr. Son has said he won’t take part in the traditional quarterly chat session with Wall Street analysts, though some were looking forward to hearing from him.
Is a price war in Sprint chief executive Dan Hesse’s plans to lure customers away from AT&T and Verizon?
How quickly can Sprint overcome its laggard’s start in the industry-wide race to deliver faster Internet connections for smartphones with LTE technology? Short for Long Term Evolution, LTE makes videos run smoothly on smartphones, downloads apps quickly and posts photos online in a snap.
From Mike Finegan, Sprint’s Manager M2M Solutions Engineering and good friend of IEEE ComSoc SCV chapter:
A few highlights regarding the Sprint/Softbank combination:
-The new, combined Sprint and SoftBank company is already among the top three communications companies in the world in terms of size of our customer base and revenue. Our buying power commands a position among the most powerful names in all of global business and places right up top in terms of all of our manufacturing partners’ biggest customers, globally.
-Sprint now has a whopping 185 MHz of spectrum. ATT has 106 MHz; VZ has 107 mhz. Sprint greater access to frequency ranges may give our customers the advance of a network that can handle higher levels of bandwidth.
-Motley Fool/Alexander Cho writes on July 3: “ Sell ATT and VZ: Sprint has an Overwhelming Advantage”
-$16B in capital will be invested in 2013 and 2014 as we build the world’s best network – a huge increase from our previous plans.
-A new innovation center will be built in the Silicon Valley to drive innovation and new technology with as many as 1000 employees.
-Guaranteed Unlimited is launched as an industry first!
-Headlines like: “Sprint/SoftBank Shake Up Wireless” and “Sprint: Buy for Awesome Spectrum Position” light up the news.
-Deutsche Bank issues a buy rating and an $8 price target for Sprint. Calls Sprint “the new king of spectrum with more bandwidth available for LTE than all its national competitors combined”
-We are now among the largest and strongest companies on Earth. We are investing more than ever in our network. We are committed to be innovators in the industry and in the world of technology.
Satellite-TV provider Dish Network Corp. is making a $25.5 billion bid for Sprint Corp. in an effort to derail the No. 3 U.S. wireless carrier’s acquisition by Softbank Corp. of Japan. Dish said Monday it is offering to pay $4.76 in cash and about $2.24 in Dish stock, based on Friday’s closing price, for every share of Sprint. Dish argues that the deal represents a 13% premium to Softbank’s complicated proposal to buy 70% of Sprint for $20.1 billion.
Charlie Ergen, Dish’s Executive Chairman, has been looking for a way into the wireless world for years. Dish has been buying space on the airwaves for cellphone service or wireless broadband. The Englewood, Colo., company has tried to partner with cellphone companies to put its spectrum rights to use, but has been repeatedly rebuffed.
A Dish spokesman said it’s too early in the process to know a number of specifics including who would lead the company and whether Mr. Ergen will serve as chairman of the board. Sprint said its board of directors will evaluate the proposal carefully. Softbank had no immediate comment on the bid by Dish.
“Sprint is in play,” Mr. Ergen said in an interview with the Wall Street Journal in New York. “We think we’ve made an offer that’s much more compelling than the Softbank transaction.” Control of the combined company would rest with Dish shareholders, and Mr. Ergen would be its largest shareholder.
Buying Sprint would allow Dish to offer video, high-speed Internet and voice service across the country in one package whether people are at home or out and about, Mr. Ergen said. People who don’t have access to broadband from a cable company would be able to sign up for Internet service delivered wirelessly from Sprint cellphone towers to an antenna installed on their roof, Mr. Ergen said.
“You want to be in your home with video, broadband, and data, and voice, and you want to be outside your home with those same things,” Ergen said on a conference call. “And while the cable industry does a really good job in your home, and the current wireless industry does a really good job outside your home, there’s really no one company on a national scale that puts it all together. The new Dish-Sprint will do that.”
Earlier this year, Dish made an informal offer to buy Clearwire Corp. -a wireless carrier that is half-owned by Sprint and that has agreed to sell Sprint the other half. Dish has yet to move forward with a formal bid. Mr. Ergen said the “deck was stacked against us” with Clearwire due to a
tangle of contractual obligations. With Sprint, the only obstacle is a $600 million breakup fee that would be due Softbank. He said he is willing to pay that.
Sprint had $35.3 billion in revenue last year, compared with $14.3 billion for Dish. The combined company would carry more than $36 billion in debt, according to CapitalIQ, even before loading on the $9 billion Dish indicated it would borrow to do the deal. It will now be up to the Sprint board to decide whether Dish’s bid is superior to Softbank’s. If the board decides it is, Softbank will have an opportunity to increase its own offer.
Rethink Wireless reports that Deutsche Telekom is considering a separate deal with Sprint Nextel, which would improve its capex position for expanding its own LTE roll-out. DT owns T-Mobile, which is the 4th largest U.S. wireless carrier.
Dish and Sprint both held talks with MetroPCS before the T-Mobile deal was agreed, the sources say. DT last week improved the terms of its offer for MetroPCS to reassure major shareholders in the flat rate carrier, notably by reducing the debt burden on the combined entity, and the leading opponent of the proposal did reverse its position, raising hopes that the deal will be approved at a delayed shareholder meeting on April 24.
Not to be outdone, Telegeography weighed in with this rumor: “Charlie Ergen, chairman of US satellite TV giant DISH Network, reportedly approached Germany’s Deutsche Telekom (DT) regarding a possible merger with T-Mobile USA, albeit informally. According to Bloomberg, citing sources familiar with the situation, DISH made the proposal sometime before 10 April, when DT unveiled a ‘sweetened’ bid for merger target MetroPCS Communications. The sources, who wished to remain anonymous, added that DT might consider DISH’s proposal, although only after the transaction with MetroPCS closes, and after verifying that a separate deal with Sprint Nextel is not feasible.”
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AMI Partners Report:
According to AMI Partners (http://www.ami-partners.com/), hosting companies — pure-plays, telcos and MSOs — will provide nearly half of the cloud services purchased by U.S. small and midsize business. The firm predicts SMBs will have invested a total of $34 billion in the cloud by the end of the year. According to the report, hosting providers such as telecom firms, MSOs and pure-plays are uniquely suited to handle the high level of customer service demanded by SMBs because of their long history of providing Web access solutions to the sector.
“A key reason that hosters are becoming a leading cloud channel for SMBs is because they have proven they can effectively handle critical infrastructure, while providing the necessary level of support,” said Monik Sheth, research analyst at AMI-Partners. “Poor service can be an immediate deal breaker for any company, and SMBs are no different.”
AMI Partners is including telecommunications providers (telcos and cable companies) in the “hosters” category is because many of the solutions offerings are beginning to overlap, especially around IaaS and related cloud offerings, Sheth told Channel Partners. “Telecom firms are making strategic plays in the hosting space, as you can see for example by M&A activity among major telecoms in the U.S. (e.g..Verizon acquiring Terremark and Time Warner Cable acquiring NaviSite),” he said.
SMB cloud services spend includes investments in IaaS, SaaS, web hosting, UC and remotely managed IT services. Two areas where AMI Partners found SMBs see clear benefits, and are aggressively moving to the cloud, are hosted infrastructure, such as servers and storage, and remote management of IT systems and related applications. That’s because SMBs have very limited, if any, internal staff dedicated to managing technology, so deploying these solutions in the cloud, with the support of a trusted provider, is quickly becoming the norm, the research firm explained.
We see Savvis-Century Link and Terremark-Verizon as the telco leaders in providing cloud services to SMBs. Of course, that’s why Century Link and Verizon acquired those two formerly independent companies! It remains to be seen what competive telcos will do in the cloud space. Those include: TW Telecom, Level 3 Communications, AboveNet, XO Communications, Windstream, and Globe Telecom (amongst others).
Meanwhile, MSOs (multiple system operators) are becoming a bigger threat to telcos in the business end services and wholesale market, as more SMBs and wireless operators (e.g VZW) look for alternative providers to meet their needs. We see Comcast Business as particularly strong in Carrier Ethernet and VoIP to SMB, but they haven’t announced anything definitive for cloud computing.
Perhaps, it takes web hosting and IT service management expertise that’s beyond the reach of most telco’s and MSOs.
What’s your opinion?