Level 3 Communications (2nd largest ISP after Google) earnings miss & FBR Commentary

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Level 3 Communications (NYS: LVLT) reported earnings on April 25. For the quarter ended March 31 (Q1), Level 3 Communications missed slightly on revenues and missed expectations on earnings per share.  Margins expanded across the board.  Level 3 Communications tallied revenue of $1.58 billion. The 14 analysts polled by S&P Capital IQ hoped for revenue of $1.61 billion on the same basis. GAAP reported sales were the same as the prior-year quarter’s.

Source: S&P Capital IQ. Quarterly

http://www.dailyfinance.com/2013/04/26/level-3-communications-misses-on-both-revenue-and/

Level 3 Communications’ (NYSE: LVLT) first-quarter revenues declined sequentially and year-over-year to $1.58 billion due to the expected termination of various North America and UK government contracts.
During the first quarter, the company’s net loss was $0.36 per share, including $0.11 in foreign exchange losses in EMEA and Latin America.

“In the first quarter, we saw the effects of the near-term revenue pressures we cited last quarter, due to the typical reversal in seasonally strong fourth quarter revenue and some known contract disconnects in North America and UK Government,” said Sunit Patel, CFO of Level 3.  Patel said that “our gross margin is now back above 60 percent for the first time since acquiring Global Crossing.”

Despite these initial revenue challenges, Level 3′s total Enterprise Core Network Services (CNS) revenue grew 2.2 percent year-over-year to $1.37 billion. Taking out the impact of UK government revenue, Enterprise CNS revenue grew 6.8 percent year-over year. Wholesale revenue, meanwhile, declined to $501 million, while wholesale voice and other revenue declined to $205 million.

On a regional basis, North America was the clear leader with $967 million in revenue, while EMEA and Latin America posted revenues of $223 and $182 million, respectively.

http://solusns.com/level-3s-q1-revenue-dips-to-1-58-billion-on-expected-government-contract-disconnects/

David Dixon of FBR wrote:  

“While Level 3 continues to generate benefits from the Global Crossing merger, and we welcome incoming CEO Jeff Storey, our concerns about weak top-line trends and cost structure continue to be borne out. In the retail enterprise segment, a tough macro environment is coupled with a challenging pricing environment for connectivity services, which are largely commoditized. Furthermore, generationally challenged Ethernet equipment is an issue. Level 3 has avoided significant capex over the past two years by using Huawei engineers under contract to tune lasers on older fiber on a hop-by-hop basis to increase capacity and avoid network upgrades; however, excess capacity is unclear. In the wholesale segment, wireless backhaul demand is a potential bright spot, as demand for backhaul is increasing.

Cable companies are focused on offering lit fiber versus dark fiber to maintain owner economics. For Level 3, it is unclear to what extent the company would sell metro dark fiber circuits to wireless companies seeking fiber-based backhaul and feeder fiber from IXC hubs. While Level 3 gives up owner economics in this case, it may be the preferred approach, as wireless carriers are reluctant to use Level 3 to source lit fiber because of concerns regarding a lack of a capacity upgrade path —i.e., Level 3 can provide 100 Mbps today, but carriers need substantially higher capacity going forward. And our checks confirm that customer confidence is low regarding the company’s ability to increase investment levels to meet growing capacity requirements (particularly in a virtualized network context), primarily due to balance sheet concerns.

■ CNS* revenues weaker than expected, but EBITDA beat expectations as margins rebound—a flip from results last quarter. CNS revenue of $1,372M in 4Q12, up 1.6% YOY, was below our $1,418M estimate and consensus of $1,390M. One of the primary growth drivers was Latin America (13% of CNS revenues). Adjusted EBITDA were $386M, above our $378M estimate and consensus of $378M. The 24.5% EBITDA margin was ahead of consensus and our estimate of 23.5%, the first margin above 24% since the merger closed in 4Q11.

* Editors Note:  We don’t know if Core Network Services (CNS) also includes Content Delivery Networks (CDNs), which Level 3 provides to other service providers.  Their CDN is said to “support some of the largest video, software and web properties. The Level 3® Network is connected with direct, private connections to almost every major ISP and Telco, which allows traffic to flow directly to end users without traversing public peering points.”

http://www.level3.com/en/products-and-services/data-and-internet/cdn-content-delivery-network/

■ Reiteration of weak EBITDA guidance. For the second-largest ISP after Google, modest revenue growth, low-double-digit EBITDA guidance, and what we interpret as modestly positive FCF growth (i.e., positive FCF, excluding $56M
in interest rate swap liabilities) are weak. Capex spending remains moderate, tracking below expectations, and a 4% head-count reduction taken late in the fourth quarter may provide a boost to EBITDA by $40M but will likely challenge
top-line growth in FY13.”

by David Dixon and Neil Macker, CFA

FBR Technology, Media & Telecom

ITU-T SG13/Q14: SDN and Service Aware Networking of Future Networks

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The Feb 2013 ITU-T SG 13 Plenary meeting report lists Question 13 as having primary responsibility for investigating Software Defined Networking and Network Virtualization. 

Here is a cut and paste of the pertinent ITU-T SG13 Plenary report:

TD 26 (PLEN/13)

Software Defined Networking (SDN) and network virtualization are among promising technologies because they enable network operators to divide networks into partitions to make problem size smaller, and to control their networks in unified, programmable manner. This realizes multiple isolated and flexible networks in order to support a broad range of network architectures, services, and users that do not interfere with others. It is considered as one of the key technologies for FNs, and various SDOs have started to study these technologies in intensive manner, but overall framework that covers all telecom industry has not yet been defined. And there are other approaches to mitigate the diversity and complexity by e.g., introducing easily-manageable network architecture such as carefully-designed decentralization and autonomicity.

The Recommendations that specifies framework, service scenarios, requirements, and architecture of service-aware networking, in particular network virtualization and SDN technologies, fall under the responsibility of this question. As for SDN, the focus is on common part of SDN that is applicable to various networks, and its application to future networks.

Question

Study items to be considered, but not limited to:

• Requirements for the architecture to manage and to operate exploding and diversifying services and supporting functions in particular SDN and network virtualization

• Analysis of gaps between SDN, service-aware networking and existing standards and/or technologies

• Approaches, architectures and mechanisms for highly-scalable and distributed SDN and service-aware networking easy to control, operate and manage

• Issues and solutions for migrating from current IP-based network to SDN and service aware networking.

Tasks

Tasks include, but are not limited to:

• Produce new Recommendations on requirements, functional architecture and mechanisms of generic SDN, its application to future networks, and service aware networking.

• Produce Recommendations on general overview of service aware networking

Relationships

Recommendations:

• Y.3011, Y-series Recommendations

Questions:

• All SDN and FN related Questions

Study Groups:

• ITU-T Study Groups involved in SDN and FN studies

Standardization bodies, fora and consortia:

• ISO/IEC JTC1 SC 6

• ETSI ISG Network Functions Virtualization (NFV)

• Open Networking Foundation

• IETF/IRTF

• TMF

• BBF

And that’s “all she wrote” about ITU-T standardization of SDN and Network Virtualization

References:

http://viodi.com/2013/04/24/open-network-foundation-onf-optical-transport-wg-ciena-sdn/

https://techblog.comsoc.org/2013/04/21/2013-open-network-summit-ons-announcements-take-aways-conclusions#comment-2124

http://viodi.com/2013/04/23/service-provider-sdn-network-virtualization-and-the-etsi-nfv-wg/

https://techblog.comsoc.org/2013/03/21/fbr-sdns-impact-on-the-networks-deployed-by-service-providers-and-large-enterprises

http://viodi.com/2013/03/22/2013-idc-directions-part-iii-where-are-we-headed-with-software-defined-networking-sdn/

https://techblog.comsoc.org/2012/04/24/googles-largest-internal-network-interconnects-its-data-centers-using-software-defined-network-sdn-in-the-wan

Qualcomm Earnings report: competition in Asia for cheap smartphones-Ominous For Apple, BlackBerry, Nokia?

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Qualcomm Incorporated (Nasdaq: QCOM), a leading developer and innovator of advanced wireless technologies, products and services, today announced results for the second quarter of fiscal 2013 ended March 31, 2013.

“We delivered another strong quarter as the worldwide adoption of smartphones continues,” said Dr. Paul E. Jacobs, chairman and CEO of Qualcomm.  “Looking forward, we are seeing strong traction with our new Qualcomm Snapdragon 600 and 800 processors, and we continue to expect healthy growth in 3G and 3G/4G multimode devices around the world.  We are pleased to be raising our calendar 2013 3G/4G device shipment estimates and our revenue and earnings guidance for fiscal 2013.”

Second Quarter Results (GAAP)

  • Revenues: 1 $6.12 billion, up 24 percent year-over-year (y-o-y) and 2 percent sequentially.
  • Operating income: 1 $1.88 billion, up 24 percent y-o-y and down 10 percent sequentially.
  • Net income: 2 $1.87 billion, down 16 percent y-o-y* and 2 percent sequentially.
  • Diluted earnings per share: 2 $1.06, down 17 percent y-o-y* and 3 percent sequentially. 
  • Effective tax rate: 1 13 percent for the quarter.
  • Operating cash flow:  $2.22 billion, up 17 percent y-o-y; 36 percent of revenues.
  • Return of capital to stockholders:  $431 million, or $0.25 per share, of cash dividends paid.

http://media.prnewswire.com/en/jsp/latest.jsp?resourceid=6723404&access=EH

http://investor.qualcomm.com/results.cfm

http://www.reuters.com/article/2013/04/24/us-qualcomm-results-idUSBRE93N18T20130424

Forbes: Qualcomm Cheap Phone Warning is Ominous

Qualcomm owns intellectual property related to code division multiple access (CDMA).  This technology is behind many of today’s wireless networks.  Qualcomm also provides chip sets for mobile devices.  Since Qualcomm licenses the technology or provides the guts of a wide base of wireless devices and networks, there are serious implications for smartphone manufacturers in Qualcomm’s results.

martphone prices are falling much faster than expectations.  Of further concern is the number of new entrants in the smartphone market.  Somewhat shocking was a statement by Qualcomm that some of its customers are able to launch their devices in as little as 60 days from start to launch.  These customers are using Qualcomm Reference Design (QRD).

As of January 2013, 170 QRD based devices have been commercialized by more than 40 manufacturers.  The irony here is that based on the large number of emails I receive, investors tend to extrapolate from their experiences in the United States and Europe and do not realize that there are more than 40 manufacturers of smartphones. The 60-day time to launch is in stark contrast with the traditional time of nine months to a year.

This is real bad news for Apple.  Growth is in emerging markets as the developed markets are mostly saturated.   In emerging markets, disposable incomes are not high enough for the masses to afford existing Apple products.  Apple has already ruled out a $99 iPhone.  The indications are that Apple is hard at work on a low end phone.  Nobody knows the  price of the future low-end iPhone.  Most of the informed speculation centers around a price in the range of $300 to $400 in contrast to the $613 average selling price of the present iPhone.

The strong inference from Qualcomm’s earnings report is that smartphone prices are falling so fast that the new low end Apple iPhone is not likely to be competitive.

BlackBerry has been touting its success in emerging markets with Z10, but Z10 is simply too expensive for these markets. BlackBerry’s CEO is on record saying that BlackBerry is working on a low end phone.  However considering how fast smartphone prices are falling, even if BlackBerry is able to introduce a new device at 50% of the current price of Z10, it is not likely to become competitive.

Qualcomm’s earnings report validates Nokia’s strategy for the emerging markets.  Its line of low-end phones called Asha is doing well in emerging markets, but Nokia is about to face stiff competition primarily from Chinese manufacturers. Most of the phones from the new entrants are based onGoogle GOOG -0.14% Android.  Further, these new entrants are shying away from Windows Phone OS.

The bottom line is that a sea change is on the horizon which is good for Google and Qualcomm but bad for almost everyone else.

Write me :[email protected] and follow me here. 

http://www.forbes.com/sites/greatspeculations/2013/04/25/qualcomm-cheap-phone-warning-ominous-for-apple-blackberry-nokia/

AT&T Financial Results: Project Velocity IP Still Going Strong; Wireless Business is Terrific, Best Ever U-verse Growth!

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Financial Results
For the quarter ended March 31, 2013, AT&T’s consolidated revenues totaled $31.4 billion, down 1.5 percent versus the year-earlier quarter and up 0.9 percent when excluding revenues from the divested Advertising Solutions business unit. Net earnings were $3.7 billion, or 67c a share, compared with $3.6bn a year earlier, or 60c a share.
AT&T’s first-quarter 2013 cash from operating activities totalled $8.2bn, and capital expenditures totalled $4.3bn. Free cash flow – cash from operating activities minus capital expenditures – totalled $3.9bn.
Operating expenses were $25.4 billion versus $25.7 billion; operating income was $5.9 billion versus $6.1 billion; and operating income margin was 18.9 percent, compared to 19.2 percent.
The company said it continued to expect capital spending in 2013 to be in the $21bn range and expected capital spending for 2014 and 2015 respectively to be in the $20bn range, with no reduction in its Project Velocity IP (VIP) plans for wireless and fibre optic-based broadband expansion.  AT&T earlier stated it expected capital spending of $22bn annually in 2014 and 2015. The company is achieving savings through greater integration efficiencies in Project VIP, accelerating LTE rollout in 2013 and other ongoing initiatives.
Much more at:
Wireless Business is “Terrific”
AT&T set a record for smartphone sales during the latest quarter, selling 6m smartphones, including 4.8m Apple iPhones.  The strong smartphone sales, together with sales of 365,000 connected tablets, helped to offset a decline in its prepaid and reseller wireless business. As a result, AT&T Mobility added a net 296,000 monthly contract customers and increased the number of smartphones connected to its network by 1.2m.  The largest U.S. telco said the rollout of its new 4G-LTE mobile network was running ahead of schedule and now covered 200m people.
Wireless data revenues grew by 21 per cent and total wireless revenues and wireless service revenues both increased by 3.4 per cent compared with the same quarter last year. Operating margins in the wireless services business increased to 43.2 per cent.  “Our wireless network performance continues to be terrific,” said Randall Stephenson, AT&T’s chief executive. “And that helped drive our best-ever first quarter for smartphone sales, improved wireless churn and strong growth in mobile data revenues.”
While smartphone sales are heavily subsidised by large US mobile operators (e.g. VZW and Sprint), they generate significantly higher monthly revenues than older “feature” phones, benefiting results over the longer term. For AT&T, smartphone sales represented 88 per cent of handset sales during the period and now constitute 70 per cent of AT&T Mobility’s installed handset base.

Fixed line Consumer Revenues Increase

AT&T boosted fixed-line consumer revenues by 2 per cent, aided by revenues from its U-verse TV and internet service, which grew by 31.5 per cent year over year. U-verse added 731,000 internet subscribers and 232,000 U-verse TV subscribers during the quarter and ended the period with a total of 8.7m subscribers.
 
Best-Ever High Speed IP Broadband Growth: U-verse!
Total U-verse revenues grew 31.5 percent year over year and were up 5.0 percent versus the fourth quarter of 2012. Total U-verse subscribers (TV and high speed Internet) reached 8.7 million in the first quarter. U-verse TV added 232,000 subscribers, its best net gain in nine quarters, to reach 4.8 million in service. U-verse High Speed Internet delivered a best-ever net gain of 731,000 subscribers to reach a total of 8.4 million. Overall, the company added 124,000 wireline broadband subscribers, the best quarterly increase in eight quarters. Total broadband ARPU was up more than 9 percent year over year. Total U-verse High Speed Internet subscribers now represent more than half of all wireline broadband subscribers.  Much More at:
Ultra High Speed Broadband Access in Austin, TX 
Earlier this month, AT&T and Google both announced plans to build fibre optic broadband networks in Austin, TX capable of delivering 1 gigabit per second download speeds – more than 100 times faster than current average download speeds in the US.
“Most encouraging is the recognition by government officials that policies which eliminate unnecessary regulation, lower costs and speed infrastructure deployment, can be a meaningful catalyst to additional investment in advanced networks which drives employment and economic growth,” said Randall Stephenson, AT&T chairman and CEO.  
On April 9, 2013, AT&T announced that in conjunction with its previously announced Project VIP expansion of broadband access, it is prepared to build an advanced fiber optic infrastructure in Austin, Texas, capable of delivering speeds up to 1 gigabit per second.  AT&T’s expanded fiber plans in Austin anticipate it will be granted the same terms and conditions as Google on issues such as geographic scope of offerings, rights of way, permitting, state licenses and any investment incentives. This expanded investment is not expected to materially alter AT&T’s anticipated 2013 capital expenditures.
AT&T consistently invests in U.S. communities — $98 billion in capital in the past five years, more than any other public company.  More at: http://www.att.com/gen/press-room?pid=24032&cdvn=news&newsarticleid=36275
FBR Capital Markets: More Work Required to Regain Momentum
“AT&T reported underwhelming 1Q13 results, with disappointing net adds, weak ARPU trends, and continued wireline segment declines. We believe management is caught in a bind, having enabled application service providers to a greater-than-expected extent, and we see more limited opportunities to innovate going forward, as well as increased network costs to service these applications.
On a positive note, management is executing well on prioritizing LTE network parity with Verizon to lower postpaid churn and potentially increase wireless margins. Consolidated revenues of $31.3B and wireless service revenue of $15.1B were in line with consensus. However, annual wireless service revenue growth fell from 4.2% to 3.4%, the lowest growth rate  over the last five years. EBITDA of $10.5B were slightly below the Street estimate.  Wireless net adds of 291,000 fell well short of the 785,000 consensus estimate. AT&T posted negative net adds in prepaid for the second straight quarter; resellers lost 252,000 net subscribers.
These results point toward weaker top-line growth in the near future, as AT&T will see (and likely respond to) increased competition in both the lower-end prepaid market (T-Mobile and Sprint) and higher-end postpaid market (Verizon). We believe AT&T will also face increased cost pressure to fulfill management’s 2013 guidance to retain wireless market share.”      
“Increased competition from T-Mobile is likely. We expect T-Mobile to pressure both AT&T and Sprint in the prepaid market as the company completes its 4G network upgrade (which shows better performance, versus AT&T and VZ, according to our vendor checks), launches its LTE network, and markets its new “no-contract” plans with a reinvigorated
device lineup.”
David Dixon and Neil Macker, CFA

2013 Open Network Summit (ONS) Announcements, Take Aways & Conclusions

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The information packed 2013 ONS (April 15-17th in Santa Clara, CA) saturated my brain with volumes of SDN and Network Virtualization architectures, product pitches, trials, and use cases.  A multi-part series on this important conference will be published in the coming week at viodi.com.  This article will cover a few important announcements, take-aways and key messages from this sold out summit.
1.  Transforming Networks with NFV & SDN by Rose Schooler, VP, Intel Architecture Group and GM of Communications and Storage Infrastructure Group. 
Intel announed three new products related to SDN and Network Virtualization:
  • Open Networking Platform Switch reference design:  a switching platform reference design based on Intel silicon and software intended help product companies build new kinds of infrastructure. It includes Wind River Open Network Software (ONS) – an open and fully customizable network switching software stack using Wind River Linux.  ONS  supports the ONF OpenFlow standard and Open vSwitch.  
  • Data Plane Development Kit:  a software package that works with Open vSwitch and helps engineers with low-level operations (memory, queues) and small packet performance.  Intel’s acceleration targets are 10x for physical port-to-port switching and 5x for VM-to-VM.
  • Open Networking Platform Server:  an x86 server reference design that combines the above hardware and software packages to enable creation of virtual appliances or similar products.

    See Intel’s press release (http://newsroom.intel.com/community/intel_newsroom/blog/2013/04/17/intel-accelerates-the-data-center-and-telecom-network-transformation-with-new-reference-architectures) for more information. 

    • “SDN and NFV are critical elements of Intel’s vision to transform the expensive, complex networks of today to a virtualised, programmable, standards-based architecture running commercial off-the-shelf hardware.  The reference designs announced today enable a new phase in the evolution of the network and represent Intel’s commitment to driving an open environment that fosters business agility and smart economics,”  Ms Schooner said in the press release.

    Rose invited Allwyn Sequeira, VP/CTO of Security and Networking at VMware, on the stage to talk about their ongoing collaboration.  Allwyn talked about the NSX platform, and emphasized decoupling networking from the underlying hardware to “abstract, pool, and automate” network resources like virtualized servers.  NSX is based on overlays and network virtualization.  It doesn’t conform to the strict ONF definition of SDN, nor does it use the Open Flow protocol. Prodip Sen, Director of Network Architecture at Verizon  talked about their collaboration with Intel on a cloud bursting trial with dynamic bandwidth allocation/re-allocation.

    After the conference, Rose made the following comment via email to this author:  “I completely agree that SDN and NFV are complimentary but different – that’s the Intel view as well. We created the 2013 ONS presentation with the assumption that the difference was understood by the audience.”

    2. Open SDN: An Introduction to OpenDaylight, by Inder Gopal – VP of Technology at IBM
    This was the first public discussion of the new Open Daylight initiative since it was announced about one week ago.  OpenDaylight is an open source SDN software project being done under the umbrella of the Linux foundation.  It’s goal is to accelerate the adoption of SDN technologies through creation of a common, industry-supported framework.  It seems to be aimed at creating an open-source, standardized SDN Controller software module and open source software for various applications that use SDN-Open Flow.  Inder explained that there is no “angle” or “hidden agenda” behind the project, e.g. like threatening VMWare or SDN start-ups with software IP.   It was interesting that the consortium chose to use the Eclipse Public License instead of the GPL or Apache-style licenses. 
    Mr Gopal clearly stated up front that the project will be run in a way that is about meritocracy, not politics.  That would be a refreshing change from most consortiums which are often political machines to drive vendor agendas or systems architectures.  If the project is successful, customers implementing SDN controllers or applications will be able to take the OpenDaylight source code and purchase integration and support services from their trusted vendor of choice.  That would make SDN more of a services business.
    Matthew Palmer wrote in a recent blog post that SDN may now stand for Services Defined Networking.  “When we look at SDN and OpenDaylight under a services lens and view SDN technologies as more similar to enterprise software or service provider BSS / OSS software than traditional networking boxes — where every software deployment is custom, it appears the service opportunity for SDN maybe even larger than the software implications to the over all networking market.” 
    3.  Open Networking Foundation-Year 3, by Dan Pitt, Executive Director of the ONF (and for many years IBM’s leader for token ring standardization in IEEE 802.  Also, a colleague of this author for 30 years). 
    Dan gave a general update on the ONF’s progress over the year and their plans for 2013.  The ONF appears to be heavily focused on standardizing OpenFlow v1.4 and v1.5, as well as expanding interfaces like OF-Configuration.  The ONF is wants to create value for its members, which consists of a mix of network equipment vendors, carriers and end users. 
    Dan announced an OpenFlow driver competition (details and prize information were announced on April 17th). 
    The ONF’s plans are to stabilize and expand the OpenFlow ecosystem, by the promulgation of open standards and APIs.  ONF unveiled its technical roadmap for 2013 on April 16th (the same day as Dan’s talk)
    During the Q &A, Dan was asked about ONF’s relationship to the new Open Daylight initiative.  Dan replied by positioning the ONF as a “substrate” that enables frameworks like Open Daylight to exist.  It will be interesting to see if he is proven to be correct.  (4 days after this article was published, Dan elaborated on ONF’s position on Open Daylight. Please read his comment in the box below this article.)
    4.  “Service Provider SDN” is gaining market traction, although it’s not clear if Service Providers (telcos, MSOs, cloud networking providers, etc) will require use of the ONS-Open Flow standard, and/or require strict separation of data and control plane in “SDN” networking equipment. 
    Large telcos such as Verizon, NTT, DT, Telstra, gave talks on their SDN trials and future projects.  Telecom/ network equipment vendors like Huawei, Ericsson, Ciena, Alcatel-Lucent (Nuage Networks), Cisco and Juniper all gave talks and/or had booths in the exhibit hall.  The telco motivation is the same: quicker provisioning of new services, facilties, coping with exponential traffic increases by dynamically allocating bandwidth, reconfiguration/moves and changes, etc.
    That’s a huge change from the last year, where almost all of the SDN buzz was dominated by data center networking or cloud SDN access (Arista Network’s pitch) for delivery of cloud computing and storage services.  But it remains to be seen if telcos wil go the SDN-Open Flow route or not.  Many, like DT, are likely to pursue Network Functions Virtualization (or NFV) which is being defined by an ETSI WG, which was only created three months ago.
    There may also be keen network operator interest in a new ONF Optical Transport WG chaired by Lyndon Ong of Ciena. The new WG will address SDN and OpenFlow™ Standard-based control capabilities for optical transport networks. The work will include identifying use cases, defining a target reference architecture for controlling optical transport networks incorporating the OpenFlow Standard, and identifying and creating OpenFlow protocol extensions.
    [More about this Optical Transport WG and Ciena’s view of SDN in the aforementioned Viodi.com articles to be published later this week. Stay tuned for those.]
    In a follow-up email, Lyndon had this to say about ONS and SDN:
    “SDN is one of the most exciting developments in networking in some time, and has the potential to unlock innovation and upgrade network efficiencies. I’m looking forward to working together with my industry colleagues through the ONF Optical Transport Working Group to address SDN and OpenFlow standards for optical transport network control. From a Ciena viewpoint I think this is very much in line with our focus on streamlined forwarding, software automation and programmability, and will lead to benefits to Ciena’s customers.”
    Joe Berthold, PhD Physics and VP of Network Architecture at Ciena corroborated his company’s committment to ONS-Open Flow:  “Ciena is aggressively embracing openness at both API levels – business applications to network control software, and network control software to network physical equipment – because we firmly believe that openness is the most critical attribute of SDN.  The point of SDN is to unleash productive innovation by making network behaviors more determined by software. Software is relatively malleable, accessible, and quick to change as needed to deliver something new.  But for these properties to be exploited, openness is essential. We are committed to bringing openness  to our network operator customers through our OPn architecture. As such, we are highly active in the Open Networking Foundation (ONF), where the industry’s leading organizations are collaborating to define the openness-based framework. In fact, we have been contributing significant resources to advance the work of the ONF, and currently two of our staff members serve as working group chairs.”
    Acknowledgement:  This author sincerely thanks Jamie Moody, Director of External Communications at Ciena for the interview with Lyndon and follow-up with Joe (who this author first interviewed in the Spring of 1998 on DWDM technology!).
    After an interview at ONS, Ericsson provided this statement (received via email from Dwight Witherspoon) about their ONS 2013 accomplishments (note that there is no mention of ONF-Open Flow compliance or strict separation of control and data planes in their products):
    “Ericsson demonstrated our Virtual Network System (VNS) and Service Chaining (data traffic steering). These live demonstrations added high value to the conference by showing Ericsson Service Provider SDN in action in collaboration with a major operator, Telstra. The VNS use case transforms an optical metro with carrier Ethernet switching capability into a virtual IP metro router using Service Provider SDN without replacing the CE optical nodes. The Service chaining use case optimizes an operator’s service resource usage in real time to lower OPEX and provide a premium end user experience. At ONS 2013, there was universal agreement amongst attendees that SDN is re-energizing telecom and networking in a way we haven’t seen for over a decade, and Ericsson is a leader by using data center SDN principles in the wide area network and to connect operator business systems to the network. Hence Ericsson Service Provider SDN.”
    In a follow up to an ONS interview, Ericsson provided this information via email:
    1. SDN Position from Ericsson:http://www.ericsson.com/news/130221-software-defined-networking-the-service-provider-perspective_244129229_c?categoryFilter=ericsson_review_1270673222_c
    2. Telstra, Ericsson and SDN:http://www.ericsson.com/news/130227-ericsson-demonstrates-service-provider-sdn-vision-at-mobile-world-congress_244129229_c
    3. Telstra and 1 TBPS:http://www.ericsson.com/news/1685811
    “Ericsson’s Service Provider SDN connects operator business systems to their network. Service Provider SDN meshes existing and new network technology with Integrated Network Control, enables efficient operations processes through Orchestrated Cloud and Network Management and catalyzes new revenue with Service Exposure.”
    5.  Network Virtualization: Delivering on the Promises of SDN by Bruce Davie, Principal Engineer at VMware (via the Nicira acquisition earlier this year)
     
    AUTHOR’s NOTE:  This was by far the best presentation of the conference!  It was clear, concise, very informative and with only a subtle sales pitch (vs most vendor presentos which were slam, bang, rat-a-tat-tat sales promotion with ineffective on stage demos).  Bruce is to be highly commended for this straight talk amidst all the ONS hype and promos!
    Bruce presented his main points right up front: 
    1.  Network Virtualization (NV) is not the same as SDN.
    2. You don’t need SDN to deliver NV.
    3. NV currently delivers on the important promises made by SDN. 
    Bruce supported the above points with a systematic   of recent SDN marketing messages – everything from “vendor choice” and “simplified programmability” to “applications can control the network” and “simpler operations / provisioning.”  These are really NOT unique to SDN-Open Flow, but could be accomplished sooner (like now) with Network Virtualization.  While he conceded that SDN is a serious option for developers, he also claimed that the burden of distributed algorithms and network software has just shifted to controllers from individual equipment types.
     
    A NV platform consists of an intelligent edge (virtual) switch, distributed controllers, and tunnels that decouple network services from the physical infrastructure (e.g. VMware’s NSX platform.)  Bruce said that “network overlays solve more problems than they create, they will enable network service innovation at software speeds, and that NV is its own thing (i.e. it delivers its own value, apart from SDN).”  The Microsoft and Ebay ONS presentations certainly supported his favorable view of NV over stictly defined SDN-Open Flow.
    In a follow up email, Bruce expressed a few thoughts on the 2013 ONS:
    “There were three main schools of thought at ONS2013.  As expected, one well-represented school could be called OpenFlow/SDN “Classic”. There were vendors of OpenFlow capable switches, ASICs, and controllers for those switches,
    as well as some customers looking to reap some benefits from SDN. Second, there was the approach labelled “SDN-washing” by Guru Parulkar. This was represented by some of the traditional networking vendors. The basic idea is to retain the full-featured, largely proprietary systems, but to dress them up with some sort of API, be it OpenFlow or something proprietary. As Guru said, this doesn’t really conform to the intent of SDN. Finally, there is the network
    virtualization school, well represented in the session on Data Center applications. As was clear from my talk,  I subscribe to this school of thought. (Microsoft’s) Albert Greenberg’s description of the Windows Azure architecture very much matches our vision of network virtualization, and JC Martin from eBay has already reaped the rewards of deploying network virtualization in his data center.”
    “To recap some points from my talk, I wanted to stress that network virtualization is not the same as SDN, and it does not even require SDN for its implementation. As it happens, we’ve used some SDN techniques in our implementation, but we also rely on other key technologies such as advanced software switching in the vswitch, and overlay tunneling. We also provide a network virtualization abstraction, something that is not delivered by SDN on its own. Network virtualization is delivering many benefits today, such as improved operational efficiency, vendor independence, and the decoupling of
    network services from the underlying physical network. This is all done in a way that is non-disruptive and incrementally deployable.”  For further comments please visit: http://cto.vmware.com/network-virtualization-in-the-software-defined-data-center/  and:  http://networkheresy.com/2013/04/13/what-should-networks-do-for-applications/
    “Thanks for the favorable comments on my talk.”
    References:
    Stay tuned for more ONS articles, including ONF Optical Transport WG, and comments from ONF.  Again, those articles will be published at viodi.com.  All current and previous Viodi View articles by this author can be accessed and read at: 
     
    Top Quality SDN Presentations:
    For those that didn’t attend our EXCEPTIONAL July 2012 ComSocSCV technical meeting on SDN, you can download
    presentos from Guru and Dan at:
    Scroll down to July 2012 meeting and click on the hot link:
    Date:Wednesday, July 11, 2012; 6:00pm-8:30pm

    Title:Software
    Defined Networking (SDN) Explained — New Epoch or Passing Fad?

    Speaker 1: Guru Parulkar, Executive Director of Open Networking
    Research Center
    Subject: SDN: New Approach to Networking

    Speaker 2: Dan
    Pitt, Executive Director at the Open Networking Foundation
    Subject: The Open Networking Foundation

    TiECON 2013 Preview & Insight; Discount for IEEE Members

    Posted on by
    Introduction:
    TiECon is the world’s largest conference for entreprenneurs.  Held each year in Santa Clara, CA, the conference is an exciting, high energy event.  TiEcon 2013 will cover the hottest technology topics delivered by brilliant experts. The 2013 conference will devote Friday May 17th entirely to three high-growth tracks – Mobility, Big Data and Software Defined Infrastructure (SDI).  Saturday May 18th will be entirely devoted to entreprenneurship and mentoring. Attendees can expect the usual high-impact networking opportunities in the Expo Hall and during lunch and cocktail receptions – that have launched many a successful startup or a blazing career opportunity. 
    Information about the TiECON program is at:
    Insight and Perspective:
    TiE-Silicon Valley President Venk Shukla told me that this year’s TiECon is a fundamental change from previous years programs.  There is a distinct and separate focus for Friday and Saturday as noted above. 
    1. Those interested in keeping up with the latest technology trends and professional growth can chose pick and chose from Friday sessions on Mobility, Big Data and SDI.  Here the cutting edge market and technology trends from top companies in each field while networking with colleagues and friends.  30 minute panel sessions will provide a birds-eye view (high level overview) of the topic and subject matter being addressed.
    2. Attendees interested in entreprenneurship, mentoring, social skills, and personal growth should attend on Saturday.  There will be a Youth Forum and Womens Forum also held on Saturday.
    Of course, those interested in both professional and personal advancement can attend on both days.
    -Once registered for the conference, you can participate in a “find your co-founder” session on Friday or Saturday at 6pm. You get to talk for 3 minutes about what type of individual you’d like to be a co-founder of your embryonic start-up.
    -The very popular “mentor connect” program at TiECon has been reformatted.  Attendees will now be able to pick which mentor(s) they want to spend time with. 
    Procedure: After registering for the conference, the attendee should indicate interest in the Mentor Connect program.  They are then sent a url which contains profiles of the various mentors that will be available.ft
    After selecting the mentor(s) they’d like to spend time with, the attendee meets up with the mentor(s) at a networking lunch on Saturday. 
    TiEcon 2013 Highlight Speakers:
    • Jeff Weiner – CEO, LinkedIn
    • Anand Chandrasekhar – CMO, Qualcomm
    • Boyd Davis – GM, Intel Datacenter Software Division
    • Chris Anderson – CEO 3D Robotics and former editor in chief, Wired magazine
    • Rayid Ghani – Chief Scientist, Obama campaign,
    • D. J. Patil – Formerly Chief Data Scientist, LinkedIn
    • Ashish Thakkar – Founder, Mara Group
    • Maya Strelar-Migotti – Vice President, Ericsson SV
    • Ronnie Screwvala – Director, Disney-UTV
    • Manoj Bhargava – Founder and CEO, 5-hour Energy
    • Bharat Desai – Chairman and Co-Founder, Syntel
    IEEE Member Discount
     
    IEEE members can get a $70 discount for 2-day registration till the end of April.  If you are an IEEE member that would like to attend, please email me ([email protected]) for the IEEE member discount code.  Please include your IEEE member number for validation.  Thanks, alan

    References:   2012 TiECON
    Here is the story I did on last year’s TiECon about India’s Father of Telecom- Sam Pitroda
    A slightly different version of that article was published in IEEE GCN- print and on line editions:
    TiECON 2012 Mobile Sessions:

    2013 Ethernet Tech Summit- Market Research Panel & Carrier Ethernet Comment

    Posted on by Alan Weissberger

    Introduction:

    This session covered the prospects for Ethernet in the enterprise, among carriers (especially for cellular backhaul), and in the data center.  The session was chaired by Crystal Black, Channel Marketing Manager, APTARE

    Panelists:
    -Michael Howard, Infonetics Research
    -Casey Quillin, Dell’Oro Group
    -Sergis Mushell, Gartner
    -Jag Bolaria, Linley Group
    -Vladimir Kozlov, LightCounting

    The summary of this panel will be posted at viodi.com shortly

    Comment: Surprisingly, there wasn’t any talk about the Carrier Ethernet market, which was the subject of an all day track at this conference.  Carrier Ethernet lets carrier businesses use low cost Ethernet systems to offer data services with all the operation, administration and Maintenance (OAM) features and benefits, including QoS.  Existing Carrier Ethernet Services include Private Line, Ethernet Tree (point to multi-point) and Ethernet LAN (multi-point to multi-point).  In addition, the MEF is positioning Carrier Ethernet 2.0 for use in wire-line access to Private Cloud services.
    The problem seemed to be that there weren’t any carriers willing to participate in those sessions, so it was just equipment and silicon vendors talking to one another.

    A new report forecasts the Global Ethernet Access Device market to grow at a CAGR Of 13.62% from 2012-2016.
    http://www.businesswire.com/news/home/20130411006525/en/Research-Markets-Global-Ethernet-Access-Device-Market

    Another highlight of the Ethernet Technology Summit was a Wednesday evening award ceremony to the “Unsung hero’s of Ethernet,” chosen by the IEEE Santa Clara Valley (SCV) section.  They were: Dave Boggs who worked with Bob Metcalfe on the original 3M b/sec Ethernet (and whose name appears on the Ethernet patent), Ron Crane who designed the first working 10 Mb/s coax based Ethernet adapter interface at Xerox (which later became standardized by IEEE 802.3 as Carrier Sense Multiple Access with Collision Detection (CSMA/CD) Access Method and Physical Layer Specifications or simply 10Base5) and also co-founded 3Com Corp, Tat Lam who worked on the original version of Ethernet and early 10 Mb/s transceivers and long time IEEE ComSoc contributor Geoff Thompson for his  hard work, long term support and leadership of Ethernet standards work in IEEE 802 (he was chair/vice-chair of the 802.3 WG for many years), TIA and the ISO.

    The Unsung Heroes of Ethernet etched crystal plaques were paid for by the IEEE SCV section (the largest IEEE section in the world).  They include an image of Bob Metcalfe’s original sketch of the Ethernet system.

    Editor’s Note: This author has been a member of the IEEE SCV Executive Committee for many years and decades.  He nominated Ron Crane and Geoff Thompson for their Unsung Hero of Ethernet awards.  More info at:

    http://www.24-7pressrelease.com/press-release/ieee-santa-clara-valley-section-honoring-ethernets-unsung-heroes-at-ethernet-technology-summits-40th-anniversary-of-ethernet-awards-ceremony-336450.php

    References:

    A video of this session is available at:  http://www.papitv.com/ethernet-technology-summit-market-research-marketsinvestors-track-the-panelist-video-by-kc-leung

    2013 Ethernet Tech Summit Presentations can be downloaded from:
    http://www.ethernetsummit.com/English/Conference/Proceedings_Chrono.html

    Dish Network offers to buy Sprint for $25.5 billion cash and stock; DT/T-Mobile rumored to be interested too!

    Posted on by

    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.”

    Read More at:

    http://online.wsj.com/article/SB10001424127887324030704578424200831745578.html#printMode

    http://www.washingtonpost.com/business/dish-network-offers-to-buy-sprint-in-255b-deal-says-bid-is-superior-to-softbanks-proposal/2013/04/15/160eb8e2-a5bb-11e2-9e1c-bb0fb0c2edd9_story.html

    http://www.reuters.com/article/2013/04/15/us-sprint-offer-idUSBRE93E0E620130415

    http://www.rethink-wireless.com/2013/04/15/dt-talks-dish-sprint.htm

    http://www.telegeography.com/products/commsupdate/articles/2013/04/15/sources-dish-the-dirt-on-satellite-firms-t-mobile-approach/

    Cloud as IT Disrupter; SDN as a New Virtual Network Infrastructure

    Posted on by
    Introduction:
    One consistent theme during the Cloud Connect 2013 conference was the cloud as a disrupter of IT organizations.  During the Cloud Executive Summit workshop, Avery Lyford of LEAP Commerce said that there were three huge areas of disruption: the mobile cloud, big data (analytics) and Software Defined Networking (SDN).  Each of these areas were then described by different speakers.   We were especially impressed with the presentation by Andre Kindness of Forrester Research who stated that SDN is an evolution; not a revolution and it will take 5 to 7 years for the technology to mature.  PLUMGrid’s SDN presentation was also very enlightening.  It’s described later in this Cloud Connect wrap-up article.

    While the majority of Cloud Connect sessions focused on building private or hybrid clouds, McKinsey & Company consultants Will Forrest and Kara Sprague proposed a very different, and extremely disruptive scenario for cloud adoption.  Like IDC, McKinsey sees the future of IT (“New IT”) in  public cloud computing.  But McKinsey thinks cloud operations may be managed by a separate IT organization, created specifically to reside outside of the existing “Old IT’ shops.
    Leading-Edge Cloud Research and Industry Analyst View from McKinsey & Company:
    “Current IT, as we know it is no longer a game-changer,” said Mr. Forrest.  In fact, spending on IT is not a differentiator anymore and it doesn’t correlate with business success.  Much of the available improvement made possible by traditional IT has been achieved.  And IT use cases have reached diminishing marginal returns- significant increases in productivity or financial savings are unlikely.  Probably the greatest contribution IT can make today is to trim budgets to the minimum levels pursued by the most cost-conscious peers within a given market segment.  According to Mckinsey, the highest IT priority for most companies should be to move IT spend to the industry average.

    As a result, thought leaders in the technology world are advocating for a rethink of enterprise and corporate IT.   Cloud is seen as a key lever to decrease IT costs and reach the industry average.  Mckinsey’s emphasis on using the cloud for cost reduction is in sharp contrast to the results of Everest Group’s Enterprise Cloud Adoption survey which found that flexibility and agility were much more important.

    Examples of companies pursuing the “New IT” are:  Amazon transforming e-retail by driving customer preference and share of wallet gains (Amazon is the market leader among online retailers in average order size, driven by “push” sales), Deloitte teams using Yammer to collaborate and Google offering digital products (AdWords and AdSense deliver data-driven, custom advertisements, resulting in $36B of annual revenues for Google).

    CEOs are hoping to see improvements from cloud other than current IT cost reductions, such as increased business flexibility and ability for IT to scale up (or shrink) to meet business needs.  They don’t believe their current IT organizations can implement the “New IT.” They’re suggesting public cloud computing for the “New IT” infrastructure and may create a separate, but parallel IT organization to manage public cloud operations.

    McKinsey’s Kara Sprague, stated that a survey will soon be launched to determine the effect of cloud computing on SMB customers.  “Hardware OEMs are increasingly turning to service partners to access the customers, at the same time that independent software vendors are using the SaaS model to go to the customer directly. This is bad news for VARs, integrators and distributors, many of whom are trying to either become cloud service providers themselves or move into a cloud brokerage model,”  said Ms Sprague.

    McKinsey sees significant disruption in many business models.  They say that CEOs recognize that future revenue growth will come from new business models.  Furthermore, economic conditions are changing, demanding business model transformation. “New IT” is rising to fill the place of “Current IT,” according to McKinsey.  The “New IT” drives business model transformation, team and corporate productivity growth and digital-only products. In summary, Forrester said that “Old IT” expects cloud computing to achieve incremental cost reductions within the context of established business practices, while CEOs are looking at public cloud to create new business offerings that are flexible, agile, and scalable.
    In a panel titled, “Disruptive Tools and Technologies,” Scott Bils of Everest Group and Randy Bias, CTO of Cloud Scaling detailed a laundry list of disruptions brought on by cloud computing.  Those included:

    -Public cloud is creating a “shadow IT” organization focused on achieving business agility, flexibility and dramatic time-to-market compression.

    -Open Source Software is causing redesign of cloud resident data centers (e.g. using OpenStack or CloudStack), enables an organization to move faster, reduces vendor lock-in and risk, eliminates licensing fees.  But it dramatically increases reliance upon the community maintaining or improving the open source code.

    -Innovation in Hardware Design, e.g. ARM processors and solid state drives in cloud resident servers, Taiwanese Original Design Manufacturers (ODMs) selling direct to IT enterprise customers.

    -Building a private or hybrid cloud requires building a “net new infrastructure,” according to Mr. Bias.  It should be able to scale up or down, based on workload demand.

    -Software Defined Networking (SDN) is a huge potential disruptor, especially in data center network architecture.  However there are several important questions that have not been answered:  What is it really?  Why is it important? And is it ready for prime time?

    -It was agreed that existing network infrastructure (e.g. IP-MPLS VPNs or private line) “is not going to disappear,” especially for cloud access.  That’s due to its ability to achieve: QoS, bandwidth guarantees, low latency, multi-cast, stability and connectivity.  Therefore, SDN will need to work with that exisiting network architecture, perhaps as an overlay or adjunct.

    In a session titled, “SDN is Here to Stay- Now What?”  PLUMGrid CTO Pere Monclus talked about SDN as a new virtual network infrastructure.  As a way of simplifying operations and enabling a solution view of the networking space, SDN brings the additional value needed in cloud and datacenter environments to complement current hardware trends.  PLUMGrid believes that SDN, rather than traditional switches and routers, is the glue that will hold the new network together.

    SDN is the layer that decouples virtual data centers from physical data centers.  It must be exensible- in both the data and control planes- as a platform to deliver better network functionality.  Those include: multi-tenancy, self service, virtual topologies, faster provisioning, and “Network as a Service.”  When deployed, SDN will result in operational simplicity, capital efficiency, and an elastic, on-demand, self service network.  SDN was said to be able to transform the current network architecture “gridlock” to a “SDN Platform ecosystem,” while facilitating innovation in both the control and data planes.However, there are many real problems to be solved before that vision can be realized.
    On that note, we conclude our three part coverage of the information packed Cloud Connect 2013 conference.  Next week we’ll be attending the Open Networking Summit- the happening of the year for SDN techies and afficionados (this author is NOT one of them). We will be reporting on what we learn to Viodi View readers.  Till next time…….

    References:

    ——————————————————————————————————

    UPDATE: AT&T Finally Launches Digital Life Home Security & Automation system; Emerging Devices & M2M Focus Intact

    Posted on by

    April 26, 2013 UPDATE:  AT&T debuts Digital Life home network in 15 cities
    AT&T is launching its Digital Life home security and monitoring service in 15 cities — some large, some midsize — with
    plans to expand to 50 locations by midyear, the telecom says. In competing with companies such as ADT,

    AT&T will allow people to use either mobile devices or PCs to keep an eye on various activities and appliances through Web-connected cameras and sensors hooked up to a broadband connection.

    http://news.cnet.com/8301-1035_3-57581532-94/at-t-rolls-out-home-security-and-monitoring-service/

    http://gigaom.com/2013/04/25/att-launches-its-internet-of-things-effort-and-its-pretty-big/

    We previously wrote:

    In January 2013, AT&T issued a press release indicating that their Digital Life Home Security and Automation system for “the connected home” would be available to consumers in March this year.

    http://www.att.com/gen/press-room?pid=23652&cdvn=news&newsarticleid=35917

    In mid-March of this year AT&T upped the number of cities it said would be covered at the outset from eight to 15. It has targeted availability in 50 cities by year end.

    http://www.att.com/gen/press-room?pid=23947&cdvn=news&newsarticleid=36199

    AT&T told Telecoms.com that demand following trials in two US cities [Atlanta and Dallas] led to an expansion of launch plans. “In response to customer feedback we’re nearly doubling the number of cities where we plan to introduce Digital Life,” the firm said. “As a result, we’re adjusting the launch timing.  This allows us to align our marketing and operational plans to accommodate the expanded launch. We will share pricing details when we launch the service this spring.”

    But the Digital Life page on AT&T’s website currently displays a static form inviting prospective customers to register for details of future availability in their home area.  https://my-digitallife.att.com/support/digitallife

    Digital Life  will be based around home security and monitoring solutions initially, before expanding into areas like utility management.  It will compete with similar connected home automation systems from Verizon and Comcast. Subscription security services in the US have a far lower churn rate than wireless/mobile services. Industry averages for home security system customer lifecycle was said to be on the order of six to seven years.

    “AT&T Digital Life is a game-changing wireless centric home security and automation experience with its unique integration and an intuitive app to control every feature from your smartphone, tablet or PC,” said Kevin Petersen, senior vice president, AT&T Digital Life.  “Combined with AT&T’s wireless network (http://www.att.com/gen/press-room?pid=2943) and unparalleled distribution channels, Digital Life will offer exciting new innovation. We can’t wait to get it into the hands of our customers.”  In providing an end-to-end security solution, from hardware distribution and retail to installation and after sales support, AT&T aims to “disrupt and remake the security industry,” Peterson said.

    AT&T has not revealed the value of its investment in Digital Life, the scope of the project is extensive. The firm acquired and then internally developed its own management platform for the security service, has built its own monitoring centres and dedicated support facilities and will source third party providers trained to install domestic equipment. These installers will ensure the devices’ connection to AT&T’s network and leave customers’ homes with the end users fully able to manage their new security solution through AT&T’s bespoke, multi-platform User Interface, according to Peterson.
    A typical installation could require 30 or 40 devices, Peterson told Telecoms.com.

    “We’ll subsidise the upfront cost of the kit and installation in exchange for two-year contracts,” he said. “We’ll be very competitively priced upfront, we’ll give lifetime warranties on the services and equipment and we’ll be very competitive on the monthly fee.”  AT&T’s costs will be offset by an international licensing strategy that exploits “owners economics” Peterson added.

    AT&T executives have repeatedly touted home security and automation as one of the company’s new growth opportunities for “emerging devices,” M2M, and the Internet of Things (IoT).  AT&T stated it has been an innovative, proactive, early leader in machine-to machine (M2M) communications and sees exciting potential in this market. The company’s goal is to “help drive wireless capabilities into a wide variety of devices beyond traditional handsets for businesses. AT&T is driving the emergence of new categories of devices and applications that are enhanced by wireless network connectivity. This will create new categories of devices and applications, both for consumers and businesses,” according to AT&T’s website: http://www.att.com/Common/about_us/files/pdf/emerging_devices/M2M_Snapshot.pdf

    Other emerging device applications that AT&T is working on (with partner companies) include the connected car, mobile healthcare/eHealth and mobile safety.  In addition to a global 3G and 4G-LTE cellular network, AT&T has the nation’s largest Wi-Fi network with nearly 27,000 hotspots in the U.S.  Emerging devices could connect to those networks or even wire-line networks for M2M communications.

    AT&T Media kit for “emerging devices” is at:  http://www.att.com/gen/press-room?pid=13434

    For more information, please visit:

    http://www.telecoms.com/134701/att-delays-m2m-home-security-launch/?

    http://www.fiercewireless.com/story/att-remains-silent-digital-life-launch-delay/2013-04-08

    http://www.business.att.com/enterprise/Family/mobility-services/machine-to-machine/

    http://www.business.att.com/enterprise/Service/mobility-services/machine…

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