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Do You Have Any Marketing Firms or Banks as Clients?

It was a rough day in Europe with ransonware hitting banks, airlines, utilities and other businesses. Many businesses closed early in Europe. Some businesses in the US with parents in Europe were also infected.

WPP is one of the largest advertising and marketing firms in the world. They are a conglomerate of a number of acquisitions of agencies globally. WPP was hit with a ransonware hack that disabled its network (see HERE and HERE). It shut them down.

No one think it will happen to them, but the ease at which hackers are able to assault ANY computer or Internet-connected device makes EVERYONE susceptible. This gets exacerbated by 4 things that are easy but users are too lazy to do: (1) have a strong password policy; (2) update operating systems as well as anti-virus software and RUN it weekly; (3) back-up data; and (4) stop opening attachments!

You should be on top of your customers today pushing those 3 things: password policy; Managed IT or at the least anti-virus software; and cloud backup. Go make some money while this is still fresh. Or go help your customers so they aren’t helpless tomorrow!

BTW, this would qualify as Disaster Recovery

Tags: backup, disaster recovery, managed it, ransonware, security
Related tags: marketing firms, virus software, password policy, businesses, europe

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June 27, 2017 , On Rad's Radar

The Next Billion Dollar Telecom Player

GTT has been on an acquisition tear lately. They bought Perseus and Giglinx in the last month. “Perseus specializes in the ultra low latency connectivity used by the high frequency trading community,” according to Telecom Ramblings. The purchase price was $37.5M plus the assumption of $3M in capital leases. Perseus comes after GTT bought Hibernia Networks in January.

Then the announcement came that GTT had picked off Giglinx Global, a wholesale reseller of IP and network. Details were not disclosed, but revenue was assessed at $16M.

This morning, GTT announced that they were buying Global Capacity from Pivotal Group. [Pivotal Group acquired GC from Bankruptcy in 2011.] “Under the terms of the agreement, GTT will pay $100 million in cash and issue 1.85 million shares of GTT common stock, to the sellers at closing. GTT said it expects that Global Capacity’s annualized revenue will be about $200 million at close,” according to the press release.

GTT is a stew consisting of WBS Connect, PacketExchange, N-layer, Tinet, UNSi, MegaPath, One Source Networks, Hibernia, and these 3. It has a Tier 1 network according to Dyn. And it is looking more and more like GTT is the new Level3, as L3 goes quietly into the closet of CenturyLink.

Rick Calder, GTT president and CEO has repeatedly expressed that he expects GTT to achieve the “financial objectives of $1 billion in revenue and $250 million in Adjusted EBITDA.”

No idea what the magic is with $1B in revenue for the sake of it. Intermedia Communications hit the Billion dollar mark in 2000 – and collapsed in 2001 selling to Verizon. PAETEC hit $1B in revenue before being scooped up by Windstream. No clear idea who would buy GTT if they hit $1B in revenue.

GTT’s revenue last quarter were $182.4 million, which is $700 million annuallized. Add in GC at $200M and GTT will almost hit a billion in revenue (with a billion in matching debt by the way.)

Another company striving to reach a Billion first is RingCentral. (I think Vonage will hit it first, since they have Consolidated Revenues of $243 Million in the last quarter. Vonage Business revenues are expected to be $486M in 2017.) RC’s quarterly report says Total revenue grew 29% year-over-year to $111.8 million. This makes RC revenue about $450M, a little behind VB.

RC’s CEO Vlad Shmunis says, “As we look ahead, we are excited about the market opportunity for cloud communications as enterprise customers empower their global and distributed workforce to work anywhere, any time, and on any device. This market transition will fuel our growth to $1bn by 2020.”

RC is riding high after Synergy Research marked them as a Leader in the 3 spaces of UCaaS: Retail, Wholesale and Cloud Comms.

“With a 19% market share by revenue, RingCentral is growing twice as fast as the overall UCaaS market, according to Synergy Research.” So where does that put VB? It isn’t even listed. RC is followed by 8×8, Mitel and ShoreTel in the report. That’s why I just love analyst reports. P2P Baby! P2P!

I wish instead of spotlighting the revenue, they could spotlight customer care, trouble free deployment, retention, and ease of doing business. Instead it is a race for revenue, gobbling up companies, and a mess to deal with. Integration is a Myth in Telecom. It is smoke and mirrors with duct tape, foil and pink slips.

Tags: financials, hosted pbx, mergers, numbers, telecom is broken, UC, vonage
Related tags: billion revenue, global capacity, synergy research, pivotal group, billion dollar, revenue

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June 26, 2017 , On Rad's Radar

The Cable Merger World Churns

There was a report that Verizon tried to buy Charter for about $100B. It was rejected for being too low.

The other rumor is that Altice which bought Cablevision and Suddenlink is looking at a nearly $2B IPO and will use those proceeds to buy Cox. But that may not happen because Charter now wants to buy Cox.

John Malone, the pioneer cable consolidator, has been all about consolidating cable, telco and wireless. His Liberty Interactive just acquired Alaska’s GCI for $1B. There is noise that he would flip that to Charter. Cox plus Bright House plus TWC plus Charter plus GCI gives a 49 state footprint and would make that entity bigger than Comcast.

Charter was fined by New York State $13 million for not living up to its merger agreement. The rest of us are enjoying newer, higher pricing.

Meanwhile Comcast is being sued for cutting a small Texas ISP’s lines and putting them out of business after they rebuffed an offer to be acquired by Comcast.

Just to add some notes, a bunch of Senators asked the DOJ to “closely scrutinize AT&T’s proposed acquisition of Time Wamer.” It won’t change the course of this consolidation.

As 5G rolls out — or 4G gets density to satisfy the bandwidth consumption of mobile Americans, you pick — it will require a lot of fiber to towers and small cells. The editor opinion on Fierce makes it sound like the cellcos weren’t hard nosed negotiators before now. Sheesh. There has always been a cap on how much a cellco would pay for bandwidth to a tower. Always.

Nearly 25% of Urban Americans aren’t connected to broadband internet, usually due to cost for broadband. And despite the fact that Americans pay more for broadband than other countries, Wall Street is asking the ISPs to charge more. Greed.

The divide between rural broadband and urban is still large. The short fall at the USF Fund isn’t helping. The telcos, including AT&T, want that funding to do any build outs. A political hot potato to add to the pile with Net Neutrality, mergers, healthcare and the whole American infrastructure (bridges, roads, power grid).

Bigger not Better.

Who thinks that the CenturyLink acquisition of Level3 will be derailed by the $12B lawsuit that C-Link is facingin the wake of charges that they pulled a Wells Fargo accounting scam?

One last thing: GTCR acquired Inteliquent. GTCR also owns Onvoy. They merged them and decided to keep the name Inteliquent.

Tags: broadband, cable, cableco, centurylink, FCC, mergers, telco
Related tags: charter, broadband, cable, comcast, americans, acquired

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FCC Moves on Frontier and the Internet – Sep 14, 2015

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As the Telecom World Spins – Nov 04, 2016

A Big Shift Coming to Telecom – Jul 05, 2016

Telecom Tidbits #2435 – May 16, 2016

Telecom Tidbits (Part 2433) – Apr 25, 2016

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June 23, 2017 , On Rad's Radar

Sangoma Picks Up a Distributor

Sangoma Technologies Corporation is buying Buffalo-based VoIP Supply. VoIP Supply is a distributor of the hardware that goes with VoIP including phones, switches, headsets, et al. Apparently the privately help distributor “in fiscal 2018, will be accretive, will add over C$15m in revenue to Sangoma,” according to the press release.

Sangoma is paying $3M in cash plus about another million in stock and options for VoIP Supply. It borrowed the money. If VoIP Supply is adding C$15m ($11.3M US), then the $4M price tag is pretty decent.

SYNNEX is buying Westcon-Comstor’s $2.18 billion North American and Latin America
businesses for as much as $830M.

Ingram bought NETXUSA for $55M upfront and $10M in earn out for $125M in revenue, according to the 10Q filing in April 2016.

Slim margins in distribution. Slim margins in hardware. The slightly bigger margins are in services.

Sangoma also purchased FreePBX/Schmooze in 2015.

Maybe the parts business of VoIP isn’t enough. Maybe they need to be selling bundles, services, maintenance, etc. Maybe VoIP Supply is a good next progression after FreePBX.

Tags: mergers, pbx, VAD, voip
Related tags: supply, sangoma, margins, distributor, maybe

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June 20, 2017 , On Rad's Radar

POTS and PBX

Recently on LinkedIn and twitter, home for the haters, there has been noise about the death of PBX. Toshiba and Avaya certainly give credence to that thought. However, analyst research demonstrates that PBX seats still outpace Cloud seat sales. That gets muddied by MITEL’s numbers for “cloud” seats (3 million) and Broadsoft’s numbers for both “cloud” and “UC”. A SIP trunk is not a seat or cloud in my book.

I know we are facing TDM sunset but from the looks of advertising from the likes of Birch and Bullseye, POTS is still alive and well – and profitable! POTS is still the reliable choice when it comes to voice lines for alarms, elevators and faxes.

For many scenarios, an on-premise PBX makes more sense than a haphazardly deployed Hosted VoIP scenario. Many a small business replaces POTS with SIP trunks to get mileage out of their aged key system. Switching to a new cloud PBX is not a viable option for some small offices because they don’t want to change behavior. Hosted VoIP does a poor job on key system emulation despite years of partners selling it and providers trying to deliver it. It is one big face palm.

If PBX were indeed dead, wouldn’t one of the leading UC companies have 1 million seats by now? Instead they are struggling to get to 700K seats.

The problem with UC is that it is mass market and it would be better off verticalized.

It would be better for all if Broadsoft wasn’t competing directly with its own customers by selling direct to users at $15 per seat. That smells of desperation.

Someone asked me what I meant by that. Broadsoft selling direct cuts out their 400+ clients – like Vonage, TPX & Nextiva. Now these providers have to face price compression from their vendor. It’s like ISPs and CLEcs who buy wholesale from ILECs and cablecos only to see retail rates are cheaper than their wholesale rates. Isn’t that a crock?

BSFT can’t add any more clients because every carrier on the planet has already picked a softswitch – BSFT, Meta, Netsapiens, or home brew. The only way to maintain revenue is to sell direct. BSFT isn’t exactly raising the ocean or expanding the pie. They are just taking a big bite from the pie that their clients have been baking for 10+ years. Sure, everyone says that cloud comms is starting to take off; that it is hitting high adoption, but is it the UC we have seen or a bunch of variety?

Office 365, Cisco Spark, Dialpad, One Talk, Fuze, Shoretel, 8×8, RingCentral, Grasshopper, Mitel, Avaya, Jive, Intelepeer <- that is a lot of variety under the UC umbrella. With 2000+ providers of some form of UC in the US, even with an accelerated pace of adoption by users, will there be a clear winner soon? Probably not.

In fact, all these choices without a clear winner probably helps Microsoft more than anyone. When in doubt buy from the established.

There are factors: it isn’t a replacement system so much as a change. Extra gear is required (POE switches, QoS Router). It isn’t as reliable as POTS – and can’t be used in all places POTS was. The call quality is often not clear (unless you put it up against cell phones). (It’s why they are touting SD-WAN for UC). It isn’t cheaper than POTS in many cases. The deployments are often messy. (Providers can barely turn up Internet Access without issues let alone something complicated like Hosted PBX.)

And finally it doesn’t pay much in commissions. At $15 per seat and even a 20 seat deal, the MRR is $300. That is a big headache for $300 in billing revenue. Easier, faster and better to sell network still. Or POTS. Or on-premise PBX with higher compensation. 3CX has been doing everything to make a partner’s business model sing.

This isn’t me being a Pessimist. This is me being a Realist. This is just how it is in the street in many places.

I don’t hear anyone hawking white glove service or money back guarantee or no headache install. I hear the talk of zero touch deployment. That’s the wrong way to go except for the CFO who wants to maximize profit per contract. Customer experience is someone else’s domain.

I don’t hear anyone talking about their call quality, their customer experience, their hand holding on deployment, their world class PMO. These are better things to talk about than price and features.

Tags: cloud communications, copper, deployment, hosted pbx, pbx, UC, unified messaging, wireline
Related tags: customer experience, selling direct, numbers cloud, cloud, still, better