Peter Radizeski is Founder and President of RAD-INFO INC. He is an accomplished blogalyst, speaker, author and consultant. He has helped many service providers with sales training, marketing, channel development and business strategy. He is a trusted source of knowledge about the telecom sector. His honest and direct approach make him a refreshing speaker.

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Windstream Bites Again

Windstream just finished the paperwork on closing EarthLink. Now they are buying Broadview Networks in an all cash deal for $227M, of which $161M is to pay debt. [WIND gets $183M in NOLs though and 4.6x 2016 OIBDA, for you accounting geeks.] This will be WIND’s 6th UC platform – Broadsoft, Metaswitch, Allworx, Avaya, Mitel. Broadview’s OfficeSuiteUC is home built, just like Fuze, 8×8, RC, Broadvoice, Jive and many others.

The surprise was that Broadview only had 20K business customers, of which 7,300 utilize their cloud based services! The ARPU was about $1000. There is about $239M in revenue but not profitable revenue.

You can tell that most people have no idea about the channel at all. The investor deck says Broadview has 300+ master agents. RC had a slide that its 8 master agents provided access to 200K sub-agents. At best, this is naivete; at worst, it is lying to investors.

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    The Quota-Price Collision

    The one question that keeps coming up: How do you hit quota (which incidentally never goes down) when the pricing is declining?

    What do you do when a $60K MPLS network is replaced with a $40K SD-WAN network? And when some of those Internet links are not even on the carrier’s network?

    What do you do when 10GB trans-continental private lines are so ridiculously low?

    Well, the management has to re-adjust their reality for the sales team. It isn’t the salespeople’s fault that price is eroding fast. That is an industry wide executive decision. There are no safe havens for high margin. Even SD-WAN which was hyped just a year ago has fallen under the I Will Save You Money banner (already).

    Much of the merger mania is based on synergies – or that at scale the same amount of people can take care of more revenue, which adds margin. A few of the mergers are due to a debt burden that becomes due. That was Intermedia’s problem in 2001. No one learned that lesson. Avaya faces that problem today with a debt load that cannot be serviced by its revenue.

    But direct sales, channel managers and partners face declining revenues across the board. This means less commissions, less margins, less profitable quarters.

    When cablecos stop paying commissions on modems sales (like ILECs did with anything TDM or DSL), what will the channel do? I ask because all the SD-WAN hype is about a branch office utilizing broadband – DSL, cable modem, fixed wireless, 4G, satellite or a combination – for lowered costs but improved performance via that special little white box of SD-WAN.

    Also with the shackles off at the FCC, we will see bigger mergers and most likely port blocking will become a thing again. OTT VoIP providers will have to figure out how to circumnavigate the waters pf port blocking on broadband circuits at SOHO, branches and rural locations. It will be interesting.

    But that is all down the road. Right now we face consolidation of vendors but price erosion, which may be accelerated by the MPLS to SD-WAN transition. Oh, Goody!

    I say this a lot but we have to sell a lot more, faster to maintain.

    We need to Land and Expand. Get the pipe but start taking apps and voice, backup, DR, security. It will become imperative to take a chunk of the whole customer IT/telecom budget to survive.

    Carriers can help by stopping pushing product and going to a holistic package approach of bundling products into a turn key solution like UC + 4G + Internet + POS + Compliance + backup.

    Or savvy partners will start bundling multi-vendor solutions themselves to get more of the pie. The carrier will be stuck being a component.

    Co-Selling will be a see-saw. The carriers will like it to protect their own offerings and sales numbers but will hate paying twice one the sales.

    We are in for a ride about as smooth as dealing with the airlines! Happy Travels! Back to CP Expo 17 now.

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    Telecom Tidbits (Part 2452)

    Coming at you from the Channel show in Vegas, where TTelePacific reveals its new brand as TPX Communications. Tele and Pacific didn’t fit a managed services provider with a nationwide reach. TPX is more interested in selling UCaaS, managed IT, SD-WAN and managed security these days. The name change is to reflect that.

    This and some other moves clearly closes the book on the era of the CLEC.

    Southern Light got acquired by UNITI Fiber (formerly CS&L which was the Windstream spin-off REIT) for $700M.

    The Intelisys division of Scansource finally revealed that they acquired Kingcom, the exclusive Verizon partner that they run their VZ business through. Just bringing it all in house.

    There were more announcements of companies picking a SD-WAN partner: OneStream picked Versa; Star2Star chose Velocloud; Nitel chose Versa, too. This is quickly becoming like Hosted VoIP/UC. It will quickly become a commodity, faster than any technology the channel has sold.

    AT&T bought Straight Path for a billion dollars for the spectrum. Any spectrum is property with a water view right now.

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    Tidbits #2451

    Charter was supposed to overbuild broadband as part of its merger with TWC and Bright House. The FCC reversed that idea. Competition is not a good idea, I guess.

    John Malone’s Liberty Interactive is buying Alaska’s GCI. GCI is a cellular and triple-play consumer ISP. They are a big Metaswitch client.

    Less than half of households living on under $20,000 are connected (to Broadband Internet) [Time]

    A study on Remote workers from CIO mag: “The study revealed just how prevalent remote work is; nearly three out of every four employees surveyed say their company offers flexible working options and 32 percent of respondents say they regularly work remotely.”

    VZ merged AOL + Yahoo into a new company called Oath.

    How Amazon’s Connect Could Impact Twilio, Zendesk, RingCentral. Amazon is working with Vonage, Level3 and other companies with its Chime and Connect service offerings.

    Extreme Networks does more M&A, buys Brocade’s data-center switching, analytics and routing business for $55M.

    ____ Peter Radizeski is a telecommunications consultant and analyst with RAD-INFO INC. Service Providers have called on RAD-INFO INC for assistance improving sales, managing online marketing efforts, channel sales enablement and overall company strategy. Contact RAD-INFO INC at 813-963-5884 or

    3 Studies You Might Find Interesting

    SpiceWorks study on IT buyers: “The survey results show nearly 90 percent of IT decision makers evaluate and recommend technology solutions while less than 50 percent of business decision makers do the same.”

    In the SpiceWorks IT Buyer guide, “IT pros at small companies are often both the business and IT decision makers.” And no one reads your brochures. Interesting that IT buyers don’t trust social media.

    A CompTIA SMB study “identified the “sweet spot” of the SMB market to be companies with 10 to 99 employees. Those companies represent a 20% slice of the overall market. But it’s a big slice in terms of sheer numbers: 1.8 million businesses fit the sweet spot description.”

    Another interesting point from CompTIA’s study: “CompTIA breaks down the SMB market into three subcategories, the largest of which is “budget conscious” companies that represent 78% of the estimated nine million U.S. small businesses. Herbert said much of what that segment spends on IT boils down to break/fix services and other items such as web design.”

    “Healthcare IT professionals believe their data is safer in the cloud than on premises according to a survey released by Evolve IP.” [source] They mean private cloud though. “Other key results of the survey showed that, on average, healthcare organizations have between two and three services (2.75 average) in the cloud.” If you want to sell to healthcare, UCaaS, data backup and retrieval and hosted email (Exchange, Office365, whatever).

    Bonus material from my friend at MOJO Marketing, whose CEO spoke at MSP World: Anatomy of a Wildly Successful Digital Marketing Campaign.

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