UCaaS is done. The Enterprise Connect Expo has moved past it. This show resembles InfoComm circa 2013. A/V, interactive displays, whiteboards have joined contact center in the cloud for this show.

It is CCaaS with AI. It is CPaaS with AI.  Alexa with AI. Google Assist.

This show is definitely geared to sell to enterprise and to impress the analysts, who are here en masse.

Google Cloud was a surprise booth.

Dolby has a booth?!

There are some names I have never heard of. I wonder if they will be here next year.

Plantronics rolled out the new brand: Poly.  (They own Polycom.)

NEC is showcasing all the IoT that they layer on top of UC, like sound detection, biometrics, smart building and employee experience.

AWS has a big presence, touting AI, which seems to be the magic term here.

Intelepeer is giving out free t-shirts as they tell the story of their CPaaS 2.0/AI/chatbot marketplace.

VoIP Innovations launched their Showcase (marketplace for CPaaS also).

So the hot topic is AI – or intelligence layered on top of 15 year old technology.

Let’s not forget that a lot of these homebrews – 5Nines, Ring, Vonage, 8×8 and others – are approaching 15 years sitting on the same technology. Think SOAP, Java and other language snippets that no longer are used (or supported). In 15 years, your PC was running XP in 2001 to Win10 today. Or more likely to Apple.

Channele2e has a round up of news I left out.

UBM (owner of EC) has chosen to go big with booths. There are a lot of booths larger than 30×30. It makes it all look bigger but it also hides all the smaller booths.

 

Telecom as a culture has been about saving the customer money. From before Sprint’s pin dropped in 1987, the long distance companies were playing take-away from Ma Bell with “savings”. From $1 a minute all the way down to a dime (even to Canada). Then lower, until now we fight over hundredths of a penny as well as billing increments. (The robo-dialers use a rebiller that offers 6 second increments. The business model would collapse with 30 second increments.)

It has been about Replacement Services that cost less.

It has hardly ever been about better service or innovation, really.

T1 being replaced by DSL was about cost, not service delivery. It became about “Good enough” for the cost. Not the value. The price.

Now we are in the era of SD-WAN, which is the new replacement for MPLS. Since many did not truly grasp the MPLS benefits, we now offer SD-WAN service that is just a hidden MPLS network. Funny!  Oh, and for less money, of course.

Why can’t we sell UCaaS? Because it doesn’t fit into this model. It CAN replace a PBX or a key system, but so could Centrex. This was supposed to be so much more than POTS replacement. (That’s what SIP trunks and CPaaS are for).

UCaaS and CCaaS are about customer experience. The promise of cloud is that it will improve business processes. It can’t do that when it is “just” replacing the current phone system.

The reason that seat prices on UCaaS have been stagnant is that as a replacement for an on-premise PBX and a PRI, the seat prices have to be low – or the business will end up paying more per month than they do now. That isn’t the slogan of buying telecom. Our slogan is something similar for less. Integrated T1 anyone? How about a bucket of 20K minutes?

 

Saw this ad in the Nashville airport. Altus is from Nashville. They went back to Cisco Powered!  That #1 Global VoIP Platform is open to interpretation.

$19.95.  I have seen 20 seat deals as low as $14.50 including phones and unlimited calling. It is a race to zero because after 15 years, no UC provider has figured out exactly why business owners should buy UCaaS.  So they sell on price.

The advertising – like the sales approach – are the same as in 2010 or 2006. That’s progress.

Verticals. That’s all I am saying.

People are not buying phones. They are buying service to connect with customers.  In Seth Godin’s new book, This is Marketing, he writes about the drill bit problem.

People don’t want what you make. They want what it will do for them.

All divisions of Windstream have filed for bankruptcy protection this week.

“Windstream has received a commitment from Citigroup Global Markets Inc. for $1 billion in debtor-in-possession (“DIP”) financing. Following approval by the Court, this financing, combined with access to the cash generated by the Company’s ongoing operations, will be available to meet Windstream’s operational needs and continue operating its business as usual.”  [PR]

Channel Partners are hopeful that commission payments don’t get touched.

This isn’t the first ILEC to go BK. Fairpoint did  a pre-packaged BK in October of 2009. They emerged from BK January of 2011. Fairpoint’s trust then sued Verizon for $2B for a bad deal (2011). IN 2014, Verizon settled for $95M. In 2017, Fairpoint was acquired by Consolidated.

This is the only example we have of an ILEC going BK.  Windstream is a complicated mess. It is an ILEC, a CLEC and a holding company and a REIT. The holding company owns the exclusive Master Lease Agreement with Uniti for the fiber and other assets transferred to Uniti (then called CS&L) in a REIT spin-off. This deal is what broke covenants in the bonds and accelerated the debt maturity after the court case between WIND and Aurelius.

The ILEC owns some copper and central offices but most of the assets were transferred to Uniti. The Holding company has the MLA, which is an asset. It will be interesting to see how the courts unravel this. It will take longer than Fairpoint did.

This was an inevitable move by WIND. They kept trying to buy their way out debt but lacked any strategic plan to do so. (Other than adding fees on top of fees to customers’ bills.)

Windstream set up a website to track status:

https://windstreamrestructuring.com

One question: How long does the $1B in financing last if they are taking out $400M on day 1?

AT&T owes $181 Billion – more than most nations – making it the most indebted company in the world.

Verizon total debt is $120B.

CenturyLink has $36B.

Frontier has $17B.

Comcast hit $100B.

Windstream debt is $6B – but market cap is $144 Million. And they just lost a huge lawsuit that

Uniti has $7B from Windstream and acquisitions.

This is like the 1980s – every telco is over-leveraged.

Revenue is not going up for telcos. ARPU is not increasing. How do they generate enough cash flow to pay it off? Mostly they just refinance the debt and kick the can down the road.

The M&A is not adding up. Just looks at AT&T or Birch.

Birch had 24 acquisitions before the reverse merger with Fusion in 2017. They bought Cbeyond in 2014 which was doing about $500M in revenue. They bought Primus in Canada and the US (US is now called Lingo and is on an M&A tear under the Birch Holdings umbrella, creating another ugly mess.)  The combined company “expects annual revenue of $575 million” of which $122M is Fusion (+Apptix). So Birch had $453M in revenue after 24 acquisitions and $458M in debt. Another excellent example of bigger is better (< Sarcasm).

I look at all of this and think we have been played. None of these executives know what the heck they are doing except playing with the stock price for their own personal gains. None of it is about a Vision or a Strategic Plan.

On a side note about the Windstream court case (HERE and THERE), whereby Aurelius Capital Management and U.S. Bank National Association sued Windstream for breaking the covenants of their bonds with the Uniti REIT deal. As it turns out the court ruled they did break it and defaulted on the bond and have to pay it back with interest – about $330M. WIND has less than $99M in free cash. Analysts are predicting bankruptcy but what assets are left under the Windstream Holdings and Windstream Services umbrellas? Not much. Central offices, copper, etc. The only real asset is the Windstream Holdings’ exclusive leaseback deal with Uniti. It won’t be fun to watch this play out.

All the news about Uniti is due to the stat that 64% of its revenue comes from WIND. And that this revenue is high margin.