No April Fool’s Joke. Frontier takes over California, Texas and Florida Verizon territory and wireline network on Friday.

Frontier Communications Corporation was known as Citizens Utilities Company until May 2000 and Citizens Communications Company until July 31, 2008. It is the 4th largest ILEC in the US and also a RLEC (rural exchange carrier) in 28 states, with almost $6B in annual revenue. (Debt is $16B!) Frontier has operations in 28 states with 3.4 million customers, 2.4 million broadband subscribers and 18,600 employees as of September 30, 2015., according to this filing.

As an RLEC, Frontier gets monies from USF and CAF to build out broadband in its rural markets. “Connect America Fund Phase II: The $283 million in CAF Phase II support replaces the $156 million in annual USF frozen high-cost support that Frontier has been receiving pursuant to the 2011 FCC Order. Frontier received one-time true-up payments of $85 million for CAF Phase II support in the third quarter bringing our total CAF Phase II related funding for 2015 to $214 million.”

“Following the close of the California, Texas, and Florida acquisition, the product revenue mix will improve, with less exposure to voice revenue declines. California, Texas, and Florida markets add dynamic geographies, over half of households served with advanced fiber-to-the-home network.” (FiOS) [source] Frontier is rolling out VDSL2 for best effort 100MB broadband.

“As of September 30, 2015, we were able to offer broadband to approximately 7.9 million households, or 93% of the 8.6 million households in our markets.” Broadband revenues prop up Frontier, Wind and C-Link.

Factors that will affect performance going forward include (1) ” the effects of increased medical expenses and pension and post-employment expenses; and (2) “our ability to successfully renegotiate union contracts.” I think that is why VZ is getting out of the wireline game – unions and pensions. It is certainly why Sprint spun out Embarq (now C-Link). It is something that the cablecos do not have to worry about.

Frontier is a hodge podge of acquisitions from GTE, Citizens, Alltel, Verizon, AT&T and Global Crossing! In 2009, Frontier spent $8.6 Billion to “acquire all wireline assets [of Verizon] in Arizona, Idaho, Illinois, Indiana, Michigan, Nevada, North Carolina, Ohio, Oregon, South Carolina, Washington, West Virginia and Wisconsin, placed into a holding company called New Communications ILEC Holdings.”

In 2014, Frontier acquired AT&T’s SNET subsidiary, which offered wireline, DSL, U-verse video and satellite TV businesses in Connecticut. It did not happen pretty. However, it does contribute about $253 million per quarter ($121M in biz rev).

Now Frontier is again buying Verizon assets. “The $10.5 billion acquisition is a big move for Frontier…. The company’s current workforce of 19,200 will increase to about 29,200 and its customer base will jump from 3.4 million people to 7.1 million. The move will also boost Frontier’s annual revenue from $5.6 billion to $11.4 billion.” [source]

One analyst “said much of the infrastructure Frontier is acquiring is old… When you acquire a lot of aging infrastructure there is a cost to maintain it.” Plus pensions, unions, CAPEX, dividends and interest expense. That is a LOT of cash! “Interest Expense Approximately $1.53 billion (including California, Texas, and Florida acquisition).

“Verizon customers who have questions can visit www.meetfrontier.com for information.” That will be one slammed website!

Rumor is Polycom is in merger talks with MITEL due to the incidence of a shareholder, hedge fund Elliott Management.

One VP left Polycom already to be President of Star2Star.

NETXUSA was acquired by INgram. Ingram is being acquired by a Chinese firm It is a fluid world. [Read more hear.]

“Key to the transaction is NetXUSA’s neat fit into Ingram’s 18-month old UCC business unit. Ingram said it placed a high value on NetXUSA’s suite of service offerings, including provisioning and configuration, order management tools, zero-touch warranty handling, consulting and integration development.” [source]

When companies are valuated, systems are a key component. CRM, written policies, BSS, OSS, provisioning – these are check boxes. I often wonder why more VoIP providers don’t use Edgewater, especially for the end-point management system. I get that Edgewater costs more but it is about User Experience and endpoint management.

I advise for a start-up, Phonism, that does Polycom provisioning. Many ITSPs we talk to are funny. They either will build it internally; use the one with the softswitch; or find the pricing too much so do without. End-point management will be a component of hands free deployment and customer care. New configuration or new firmware – BOOM! – done and managed. Save a truck roll or tech support calls, which apparently many companies have not placed a dollar value to yet.

Ingram Micro bought NETXUSA last week. Ingram wanted the platform that NETXUSA uses to handle all the Polycom phones that they distribute for 1200 VoIP providers.

Meanwhile, China’s HNA Group to buy Ingram Micro for $6 billion. Ingram has revenue of $46.5 Billion, but profit is about $256 Million with an M. Ingram has 21,700 employees. To add to its cloud business, Ingram acquired Odin from Parallels last year. It is a wild ride over there.

Dell Survey Reveals Challenges in Providing Unified Communications Capabilities for Remote Workers.
95 percent of IT respondents cite challenges in delivering a quality UC experience to remote workforce. 71 percent of organizations have increased UC investments to better support remote workers. However, many still experience adoption challenges. Training difficulties, quality of service issues and unexpected costs remain the top barriers to adoption.

“The global market for enterprise telephony and unified communications (UC) dropped 5% between 4Q2014 and 4Q2015, according to a new research note from IHS Technology. But the North American enterprise telecom and UC market was up 6%, researchers said. Total market revenue for 2015 amounted to $7.4 billion, researchers said.” [telecompetitor]

Not everyone is moving to Hosted — “Pure IP PBXs were another bright spot amidst the overall market decline. The only market segment to post a gain, pure IP PBX revenue rose 6% YoY in 2015.” Yet “UC platform licenses grew 10 percent in 2015.” [You can see more on this report at TReseller.]

This seems to be the biggest worry: Is Microsoft Becoming a Serious Cloud Telephony Player?

“This means that if only 10 or 20% of the O365 customers/subscribers move their telephony to Microsoft by the end of 2016, Microsoft will have a range of 10 to 20M subscribers to its telephony service at that time. Assuming those are all net new telephony cloud subscribers, Microsoft market share would be 33-50% of the cloud telephony market at that point – with minimal effort. If 50% of the new Microsoft cloud telephony subscribers move to O365 telephony from an existing cloud telephony service, Microsoft share will be even larger at 50%-66%.”

Studies show about 40% of people buy on price. The rest buy on other criteria. A salesperson’s job is to explain the value.

If price was all that mattered in VoIP, these players (pictured below) – Vocalocity, Broadvoice, Jive, OnSip, and VoIP Studio at $4 per seat – would have 500K seats. As we know there are only about 5 players with 500K – Vonage, Comcast, 8×8 to name 3. It wasn’t so much price as it was presentation and promotion. In other words, the marketing and getting in front of people. I will repeat myself but most people don’t know any telecom provider except the Duopoly. Everyone else is an unknown. You have to take every opportunity to get in front of people who can buy from you.

The pricing is all about saving money. That’s great because that is how telecom was built in 1996 after the Telecom Act passed. Which is why most of the CLEC investment went up in smoke. That isn’t selling, that isn’t value, that isn’t innovation — that is arbitrage.

Premise PBX versus Lync versus Cisco versus Hosted VoIP (cheap voice) versus Hosted PBX versus a Broadsoft version. There are enough differences to talk about. Now it is about unified comms and collaboration (UC&C) and is quickly becoming about Workflow. Price won’t matter as much as how the system can interact with the employees – virtual as well as on-prem; other software apps that are critical to business functions,like CRM, email, support, and practice management; and usability so that workers actually use the system to get work done productively, efficiently. That all has nothing to do with price, but if you sell on price, I can get it down to $4 per seat, can you?

Much chatter at the Enterprise Connect show about APIs, Integration and Slack. More from the show here.

In TV, AT&T and C-Link are re-thinking their TV strategy. AT&T got 2 million people to sign up for unlimited cellular data bundled with TV (either U-Verse of DTV). HBO Now hit 1 Million subscribers, which is tiny if you think about it. Netflix has like 60M. VZ is still doing what it can to get go90 off the ground. Skinny TV bundles launched by CinBell and others, blessed by CBS who says that is the way it is trending. Google Fiber has 54K subs – a problem?

ISPs Are Fighting Broadband Privacy Protections.

Think about this: “For every dollar that it loses in legacy revenues, CenturyLink must generate two additional revenue dollars in growth areas in order to maintain its earnings level, said the company’s CFO Stewart Ewing.”

“CenturyLink is pursuing three key tactics in its efforts to stabilize earnings, Ewing said. One is to generate growth in strategic revenues. Another is to lessen the decline of legacy revenues. And the third is cost control.” Note that innovation or selling deeper are not a part of the strategy?

BelAir Internet first to market with Guaranteed Symmetric 100MB Broadband.

BTW, WIND says that by ” upgrading its last mile network with VDSL2 and fiber will help turn around its broadband subscribership….. CEO Tony Thomas said that turning on more customers to its higher-speed 50 and 100 Mbps offerings will put Windstream on a broadband growth path this year. … >>> Windstream expects that most consumers will pick speeds between 10-25 Mbps.” WIND is betting on triple-play in the SMB market to ramp up ARPU. More here.

last tidbit today:

Intelacloud was a CLEC and VoIP provider in Jacksonville, FL. The Owner died without a succession plan in place. The company filed BK. FISPA and Cloud Comm Alliance member, IPfone just won the bid for Intelacloud. They have 2 weeks to close.