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.

Look for his innovative ideas and analysis of current technology on his blogs.

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Cable Will Destroy the ILECs

While AT&T and Verizon focus on 5G, acquisitions and almost everything that is not their traditional business, Comcast and Spectrum are eating their lunch!

CenturyLink is too busy with its Level3 acquisition to be effective. Yet they weren’t that effective BEFORE that either retaining business.

Comcast Business is a $6.5 Billion CLEC that started in 2006. Every single dollar that Comcast Business or Spectrum Business gets is taken from the ILEC. Windstream and Frontier cannot afford that at all.

As Comcast (and literally every other provider) rolls out SD-WAN, this will eat revenues from the Big 3 ILECs faster. SD-WAN is mostly rolling out to retail, restaurant and branch offices. It is mostly with a broadband connection and 4G. That is a T1 or other TELCO revenue, now gone to Cable and Cellular.

Granted some of that revenue goes to AT&T or VZW as 4G, but most of it goes to cable for broadband. Also, as SD-WAN starts to replace MPLS and other WAN connections (and as T1 circuits sunset), all of THAT Telco revenue disappears from CenturyLink/Level3, AT&T and Verizon.

They are not going to replace that margin with cellular, ads, TV or other. Everything is not a sunk asset like the telecom network that they have milked since 1900.

You could say this is gloom and doom, but it is the reality.

And it will be tragic for the industry.

At what point does the cable broadband service stop being a reasonable replacement for T1?

At what point does 4G become too congested?

We’ll see it in the analytics, since SD-WAN is supposed to add transparency to the WAN. Should be interesting because cable loves to raise prices, especially when they are the dominant provider in an area.

Consumers are screwed!

But so are the ILECs. All that juicy margin from MARCON contracts with Fortune 5000 going south.

Organic Growth?

Most companies are NOT in growth mode.

Traditionally in our space organic growth is like 4-8%. Fusion Telecom says that organic for them is 2-4%. It is why they chose acquisition as the mode for growth. However, as Birch (now Fusion) has seen especially with the CBeyond purchase, not only do they have poor growth, they suck at customer retention too!

Most M&A results in customer loss. Ask Frontier, Fairpoint, etc.

We are seeing layoffs across the merged world: Windstream, CenturyLink, now Impact (TNCI). Impact has cut its channel.

Hosted VoIP is TOO crowded. Too many providers; not enough good sales people – and more important, not enough demand from the marketplace.

When Hosted VoIP started, several providers offered Retail, Wholesale, White-Label — just anything for revenue. We are back to that now.

There are ways to fix it so there is organic growth. Going Vertical for one!

Unfortunately, VoIP, UC, Conferencing, cellular and now SD-WAN – to the Buyer – look like the drug aisle.

Fiber to the Home folks achieve big growth with each new project; so growth is out there, just maybe not in the puddle of the marketplace that you are choosing to do business.

LogMeIn Buys Jive!

Not Jive Software but Utah based Jive Communications is being acquired by LogMeIn for $342 million in cash plus up to $15 million based on reaching specific milestones in the next two years.

“Upon closing, the deal will accelerate LogMeIn’s overall Unified Communications and Collaboration (UCC) strategy and bolster LogMeIn’s popular collaboration portfolio, bringing together LogMeIn’s market-leading offerings like GoToMeeting, GoToWebinar, OpenVoice, and join.me with Jive’s innovative and award-winning UC products.” [source]

That press release is keyword stuffed!

LogMeIn already owns GoToMeeting and join.me web conferencing and Grasshopper, auto attendant in the sky. This will get them the dial-tone piece that they lack.

Jive is a homebrew softswitch with revenues of approximately $80M. (I thought they had $108M, but the Desert News corrected me.) They were big in the channel with the well-known green vehicle in their booth at shows. Jive took in just $31M in funding since it was founded by CEO John Pope in 2006.

That is a little more than 4x revenue. It is a great exit for a company with 20K customers.

It also goes to show that some of the UC mergers will not be slapping two mediocre UCaaS players together. It will be someone who will treat them as another line of business, like Grasshopper is for LogMeIn.

Grasshopper was acquired by Citrix, who then sold the GoTo division to LogMeIn for $1.8B in 2016 (but included Grasshopper in that basket).

Telecom Tidbits # 2469

From the Global Technology Distribution Council 2018 Outlook report.

More than 70% of vendors (VADs) expect double-digit revenue growth through distribution in 2018
• Cloud, security, IoT and data center focus areas rated at the top for channel progress this year
• Indirect business is rapidly accelerating, outpacing direct for the majority of surveyed companies
• Vendors ranked recruiting new types of solution providers as their #1 objective with distributors
• 64% of surveyed vendors cited vertical markets as primary channel business drivers

Good article on MITEL and how UC can be added to IOT sensors to trigger an Emergency response or customer service or a service call. THAT is where comms has to go. It has to be more than 400+ features from a PBX we slam into a server and call it cloud comms.

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