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“Peter possesses a keen sense and insight for turning telecom services and products into customers and dollars. He is passionate about this industry, his work and the people he serves. Visit his site, read his blog and sign up for his newsletter at marketingideaguy.com and you will discover what makes Peter a sought after marketing consultant.”

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Wireless Combo is Merger 3
On Rad's Radar
Friday, 20 August 2010 06:54

This week has been awash with mergers - the Intel-McAfee merger and the Windstream-Q-Comm merger are the big two. The third interesting merger involves two fixed wireless companies. Airband and Sparkplug announced that they merged and grabbed $20M in financing.

"Fixed-wireless companies Airband Communications and Sparkplug Communications today announced they have merged, creating the largest fixed-wireless company for businesses in the U.S., providing a full suite of voice and data services in 17 markets."

Airband has had its ups-and-downs. It was heavy with Broadwing execs for a while there. It was striving to build an indirect sales channel, but it let some channel managers go a couple of years ago and fell off my radar. I wasn't aware that they were doing Hosted PBX or SIP Trunking.

Sparkplug had some executive changes the beginning of the year. Maybe to make way for this merger. Most fixed wireless mergers don't work well. The roll-ups fall apart. A couple of mergers have worked out, but nothing of this magnitude. Wireless is a labor intensive and detail oriented business. It's not something that is just build it and poof! 

Reading Rob Powell's take on the Windstream merger is interesting how most folks just talk about the finances.  I get the finances are important for the bankers and The Street who drive these mergers. Bankers like to get paid to "create value", which they hardly ever do. Some of those 600 employees are certainly going to be let go. That's the big synergy with these mergers. Get payroll and benefits costs down and work on where else you can eliminate costs. Usually you also eliminate domain knowledge and customer service, but what the heck that bar is pretty low in America any way.

The 5500 SMB customers that they grabbed from KDL/Norlight generated $58M in revenue. That's like $3525 per month per customer, but I think we should point out that KDL, at least in KY, is the main fiber provider, selling to ILECs and MSO's. And Windstream obviously wants to keep that stream running, and hopefully add wireless backhaul.

Everyone is hoping that cellular companies will pay them a fortune for wireless backhaul fiber. (It's the whole premise behind Allied Fiber).  I just don't know how that will play out. I understand the need for fiber to the tower. I just don't see cellcos paying a small fortune for it, especially long-term. Remember who owns the cellcos: ILEC's. They like to own their pipes.

I have to wonder how much more debt the whole telecom industry can take. It's not like the telecom spending is going up enough to cover all of it. Wireline voice revenue is shrinking. TDM revenue will start declining.  Windstream is banking on keeping against other ILEC's for SMB customers -- a take-away game.

It's hyper-competitive and leveraged to the hilt. I smell bubble gum.

Read more... [Wireless Combo is Merger 3]
 
More Mergers
On Rad's Radar
Thursday, 19 August 2010 06:29

Windstream bought Q-Comm this week. Q-Comm owns Norlight and KDL for $782M - cash, stock and debt. Windstream gets 30,000 fiber route miles (whatever the heck that is). It also acquires about 5500 SMB customers to complement what it bought with Nuvox.  Guess what it wants the fiber for? Wireless backhaul business. Shocking. That's something everyone is banking on.

Intel bought security firm McAfee for $7.7B in cash.

More to come later. I have to jump on a plane.

Read more... [More Mergers]
 
Cricket Brought Dave
On Rad's Radar
Sunday, 15 August 2010 20:58

Tonight starting at 10:30 PM Cricket streamed the Mile High Music Festival. 2.5 hours later, Dave Matthews Band is still jamming with a mix of crowd favorites (like Two Step, Ants Marching and Jimi Things) and songs that they don't play often. Tim Reynolds was strumming guitar. I saw DMB live a couple weeks ago in Tampa. My third time and it was the best. They are really having fun as they complete their final tour for a while (they are taking all of 2012 off). 

When they are having fun, the crowd is having a blast. Translated: When your employees are enjoying life, so are your Customers!

Cricket did some smart sponsoring on this one!

Read more... [Cricket Brought Dave]
 
Debt and Finances
On Rad's Radar
Sunday, 15 August 2010 20:43

I'll readily admit that I am not a financial wizard. I am risk adverse and think that playing the stock market is like a casino (the deck is stacked against you). Then I read The Big Short by Michael Lewis and I was amazed that most of the Players on The Street don't know more than me, except they know when the rats are bailing a ship, so they can too.

That being said, I wonder how we have developed such an over leveraged Industry. Cable companies owe more than $100B and still have to upgrade to DOCSIS 3.0 while building out wireless.

Meanwhile Ma & Pa Bell owe almost $100B combined! WTH?

In AT&T's investor briefing, "At the end of the [2Q2010], AT&T's long-term debt was $60.3 billion, total debt was $70.0 billion and cash equivalents totaled $1.4 billion. Over the past 12 months, AT&T has reduced total debt by $6.7 billion."

"Verizon's net debt (non-GAAP; total debt less end-of-period cash and cash equivalents) was $52.7 billion at the end of second-quarter 2010," according to VZ.

The ratings agency is even worried.

How do you pay back $120B in debt in a hyper-competitive marketplace as you cut DSL pricing to the bone, start pitching Naked DSL, and are losing the triple-play battle to Cableco?

Also, Cisco was the warning bell that a lackluster economy is coming, so 2013 should be an interesting year for debts and the bankruptcy courts.

 

Read more... [Debt and Finances]
 
Over 50 Ideas This Week
On Rad's Radar
Sunday, 15 August 2010 10:52

Last week I was traveling for family and to stop into the new TMC offices. It was a beehive of activity as over 40 companies stopped in to tell their stories to bloggers, editors, writers and the video camera. I'll be writing up that stuff in a couple of weeks because this week I am in KY at a client site.

One topic I will be presenting is 50 Ideas. Jack Brandt and I used to do this session at ISPCON called 50 Ideas in 50 Minutes. Just nuggets of collected wisdom on strategy, sales, marketing and plain old business advice. I'm sharing it here. Have a great week!

Read more... [Over 50 Ideas This Week]
 
An Interview With Level3
On Rad's Radar
Wednesday, 11 August 2010 11:41

As a founding member of the Technology Channel Association, I get to interface with some of the channel execs. One that I have a lot of respect for is Craig Schlagbaum, VP Indirect Channels, Level 3. Craig let me interview him about changes in the channel.

1. What is one change that you have noticed in the Channel thus far in 2010?

As the concept of cloud-computing continues to emerge as a viable next-generation solution for businesses, the line between the high tech and telecom service worlds has blurred. VARs and solution providers from the traditional high tech industry are transforming their approach towards serving their customers, shifting away from a "one-time sale" model to become much more solution-oriented in nature with recurring services that are on-demand. In addition, many of the solutions these partners are beginning to offer such as SIP, SaaS, and managed services require carrier services to enable them.

In fact, many of our larger producing partners in 2010 have come from the traditional high tech world and have successfully made the pivot to selling carrier services in conjunction with the value-add components that they're piling on.

2. The Channel Partners are experiencing the shift from TDM to all-IP. Level 3 certainly spends time on training and explaining. Do you think that the Channel learns better peer-to-peer?

As we continue to see the transition from TDM to IP-based products, effective training is critical due to the complexity of the product sets. At Level 3 we offer a wide variety of training opportunities for our indirect channel partners. We understand that everyone learns differently, so we've tried to implement a number of vehicles for our business partners to learn not only our Level 3 service portfolio, but also the technologies associated with these services as a whole.

Our online training platform, which can be accessed through our Business Partner Portal, has become a popular training medium as it is a self-paced tool that allows partners to undergo trainings at their own speed. As this training portal continues to evolve, we will be requiring certain levels of certifications moving into 2011. In addition to our online training platform, we offer monthly service trainings via webcast and face-to-face trainings with our Partner Sales Managers and SEs.

There is no substitution for learning with peers, but in order to scale more effectively, it is crucial that we put the necessary tools and systems in place to allow our partners to become as self-sufficient as possible.

3. How do you foresee TCA's certification program affecting (if at all) the Channel?

Even though the transition from the IT space to the carrier world creates a significant opportunity for the indirect channel holistically, not all partners from the high tech industry can successfully make the pivot. Training and certifications will be an essential ingredient for success and will become more meaningful within the carrier services world as more IT channel partners make the switch.

I think that implementing a TCA standard industry certification positively influences channel partners that are already involved in the carrier services space, raising the bar and allowing committed partners to demonstrate their skills to their customers.

Read more... [An Interview With Level3]
 
Broadsoft's First Public Quarter
On Rad's Radar
Tuesday, 10 August 2010 12:25

So Monday morning I was on the very short investor call for Broadsoft's first quarter being public since it's IPO. Marketwatch has the 2Q2010 results here.

  • "Total revenue was $19.8 million in the second quarter of 2010, compared to $17.7 million in the second quarter of 2009"
  • Net loss for the second quarter of 2010 was $1.8 million
  • Net loss for the first six months of 2010 was $4.4 million

"During the second quarter, our license revenue increased 20%, to $10.6 million, compared to the first quarter of this year, reflecting service providers' demand, as they transition from TDM to IP-based communications, for our flagship product, BroadWorks, which enables carriers to deliver feature-rich IP-based communications services to their enterprise and consumer customers."

More than 50% of revenue is coming from licenses. Mainly VZ FiOS, Comcast, XO and Brazilian MSO, it seemed like from the call.

The key is selling licenses. Many more licenses, since 400+ service providers already own the softswitch. How many more prospective softswitch buyers are out there? Broadsoft clients have to start selling Hosted PBX in droves. Two hurdles:

  1. In our TDM-based world, most sales people can't sell IP Communications.
  2. ISP's are blocking port traffic which disrupts the voice applications of Hosted VoIP Providers.
The timing seems right. Maybe we'll hear some promising messages at ITEXPO in LA on Oct. 4-6, 2010.

Read more... [Broadsoft's First Public Quarter]
 
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