On Rad's Radar Archives - Page 163 of 376

Roundup: TDS, Zayo, Birch and the Business Markets

Zayo scooped up some more fiber – dark fiber this time. Zayo adds 1,200 route miles of dark fiber that hits Chicago,Des Moines, Omaha and Denver in its acquisition of Fiberlink LLC. No financial details were available from privately held Zayo.

Birch closed on its Lightyear Networks deal, since Lightyear settled its USF contribution dispute with the FCC – even during a shutdown.

FiberLight secured $97M in financing to help it build out its 8000 miles in Texas. More debt. They had a huge shale up in the last year with everyone I know gone. I guess when neither AboveNet nor Zayo bought them, it was pivot time – or strategy session time with the money managers.

TDS bought MSN Communications for $40 million. MSN is a VAR (managed IT services shop) in the Rocky Mountains Region that will be added to the TDS Hosted and Managed Services division of the company. “MSN Communications generated annual revenues of $99 million in 2012,” according to DCK. That’s a good buy for TDS.

TDS has been following the Windstream playbook of migrating new revenue streams to data centers, out of region business customers and managed services. TDS has acquired OneNeck IT corp and VISI in the past couple of years and is building another data center.

The companies that stand to lose the most from the encroachment of TDS, Windstream, and to some extent C-Link/Savvis/Qwest are the two RBOCs. Ma and Pa Bell (VZ + ATT) used to be alone in the enterprise space for managed services. Then C-Link combined Savvis and Qwest to chase after these deals. Then VZ bought Terremark to nail down even bigger deals. Now with cable – especially Comcast and TWC, which owns Navisite – chasing after small to medium business for network services, the business revenues pies of the RBOCs has to be taking a hit.

The RBOCs will have to launch new bundles of services to take back some of this revenue. For TDS and WIND, it’s all gravy. Even to the cable guys, it is gravy – extra business that they wouldn’t normally get. However, most of this business is being won on price and not technical know how or good customer service, so I wonder how that will play out. Think Geek Squad. Once word gets out that they suck at service, deployment, or in the case of cable being easy to order from, it won’t be hard for C-Link, the RBOCs, Cbeyond, TelePacific, Zayo, Netwolves or maybe MegaPath (if they can solve their issues) to take deals away – and carve out some nice niches.

Tags: mergers, rboc, smb, zayo
Related tags: managed services, savvis qwest, business, services, managed, rbocs

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2 Small Acquisitions – Dec 14, 2012

Zayo Grabs First – Oct 17, 2012

Money, Market, Launch – News – Oct 12, 2012

Zayo Buys AboveNet – Mar 19, 2012

TelePacific Nabs Another – Jun 28, 2011

Why Agents Should Be Pro-Copper – Oct 11, 2013

Vocalocity Acquired by Vonage – Oct 10, 2013

TWC Surprises Everyone by Buying DukeNet – Oct 07, 2013

RingCentral IPO and Other Activity – Oct 02, 2013

Broadvox Sells Cloud Business to Fusion – Sep 16, 2013

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October 15, 2013 , On Rad's Radar

Why Network Matters

High speed broadband, DSL, cable modems, Gigabit, fiber to the home, metro Ethernet, DS3 and T1, even LTG and 4G are just network transport. Yet that is all the advertising is about, right? Why?

Because the most important thing today is access to the network. (Granted, the network in most cases is The Internet.) The network matters more today than ever before.

No one really cares about the network – until it doesn’t work. What they really care about is the packets on that network. Customers care about what the network lets them do.

We wouldn’t have cloud services today if we didn’t have ubiquitous access to the network through wireline broadband, fixed wireless, 4G, 3G, 2.5G, LTE, WiMax coupled with laptops, tablets and smartphones. In some cases, people are buying the smartphones for what they can do with this connected device.

The value of the network is in the connection.

Next time you are talking about the network, ask what they are doing with it.

Tags: broadband, cloud computing, internet, lte, wireline
Related tags: access network, network matters, network, today

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What’s With Wireline? – Apr 27, 2012

Is All Broadband Going Metered? – Dec 05, 2011

Is Rural Wireline Profitable? – Jun 28, 2010

Top Trends for Agents – Oct 11, 2009

Moving Away from the PSTN – Sep 09, 2013

Is It Really Cloud or Bust? – Sep 03, 2013

The Snowden Effect (on Business) – Aug 09, 2013

Will the NSA Hurt US Cloud Revenue? – Jun 10, 2013

Replacing Copper With Gold – Feb 13, 2013

It’s About Stats and Studies – Dec 04, 2012

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October 15, 2013 , On Rad's Radar

Why Agents Should Be Pro-Copper

The IIA is the perfect example of an astroturf trade group funded by and for the ILECs. The IIA put together a study to show that copper maintenance is eating up funds that could be used to deploy fiber-based broadband networks.

Fact: Windstream has penetrated 71 percent of its access lines with broadband and is making revenue from copper based broadband. In rural America, copper based broadband is still gold. Ask Fairpoint, Frontier, HT, C-Link or any rural LEC about how much revenue they make from copper in the form of POTS, T1, EoC, PRI, DSL and DS3.

Why should Agents be pro-copper? Without copper, many CLEC’s will have little access to business locations. CLEC’s access to fiber is unregulated since 2005. In fact, the carriers do not even have to lease it to them. There are already squabbles going on between CLECs and cablecos over fiber loops.

Think about how well the RBOC channel program has run. Go ahead. I’ll wait.

Every quarter the commission schedule changes. Can you shift your business and customers every quarter?

Without CLECs, the marketplace would become a true Duopoly of just cable and ILEC. It wouldn’t leave much choice for the customer or the channel partner.

Without competition, what happens to pricing, innovation and commissions?

Agents should be pro-copper. They should write to the FCC about Verizon’s decisions in NY and NJ to remove copper. Agents should be commenting on the IIA comments to the FCC about the “study”.

ILECs have plenty of motivation to build out fiber networks. One big reason is that they don’t have to share access to fiber with CLECs. The RBOCs – VZ & ATT – have used this strategy effectively over the years to minimize the impact of CLECs.

The other reason to build out fiber is that if they don’t FTTx and cablecos will eat their lunch. It’s future proofing the network.

And we already see where Google Fiber has made ATT, TWC, and C-Link all jump on the FTTx bandwagon of Gigabit access in Kansas City, Utah and Austin.

While I understand that there atre costs to maintain the copper plant and costs to the current FCC regulations for copper, retiring the copper plant is not a smart option for the telecom industry or the American economy. Spin the copper plant off or sell it off – but we need copper for EoC, all flavors of DSL, T1 and even POTS lines. If the ILECs don’t want it, sell it. If there was a buyer for VZ’s crappy assets in Eastern KY and New England, certainly there would be a buyer for the rest of the copper plant.

Agens: for competition and commissions let the FCC know that we still want copper. Unfortuantely, we can’t comment until the government shutdown is over.

Tags: agents, clec, copper, dsl, FCC, fiber, ilec, rboc, wireline
Related tags: copper plant, based broadband, agents should, build fiber, access fiber, copper

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FCC and Broadband Growth – Nov 01, 2010

AT&T’s Big Investment – Nov 14, 2012

US Government Suing AT&T for Fraud – Apr 26, 2012

Are They Reading from the Same Playbook? – Aug 01, 2011

Nutty News Monday – Jan 07, 2013

Beware of Cable – Dec 06, 2012

Promises Broken and Unenforced – Nov 18, 2012

Strategy Matters – Jul 24, 2012

What’s Up With Private Line? – Jul 02, 2012

So Much Stuff I Can’t Get To – Jun 04, 2012

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October 11, 2013 , On Rad's Radar

Savvis and Verizon Go Head to Head

I read a headline today that Amazon took a CIA contract away from IBM. Hmmm. IBM, Amazon, Verizon, Savvis, AT&T and others are all fighting for the same contracts.

Meanwhile Savvis is rolling out new integrated solutions to go head-to-head against IBM and Verizon. I can’t tell the specifics from the press release because it is filled with keywords and buzz terms that mean nothing.

Verizon is going against Amazon for IAAS (computing and storage power) with a story about reliability. Amazon has had some famous outages, but that isn’t why companies use them. It’s because it is easy, flexible, dynamic and cheap. Those words don’t show up anywhere on Verizon stationary.

This space reminds me of the UC space that Cisco and Microsoft are fighting over. There are maybe 15,000 customers in that space. Have at it. Customer acquisition costs will be high. And sales will be like you work at Boeing where you get 20 minutes to pitch an airline to buy your planes – a sale that will make or break your company’s year.

In my experience selling IAAS, most customers don’t know what it is, what they are actually getting, and more importantly what they are not getting. It’s computing power — it’s parts of a server that you piece together. I don’t know how big that market is, but I am sure that IDC or Gartner guess that it is zillions of dollars by 2025.

What set UPS and IBM apart from many companies is managing logistics and professional services. Amazon is doing that today with distribution and marketplace services for many, many partners. Taking care of logistics, deployment, distribution and other nitty gritty is where the sale gets made.

It won’t get made by talking about energy efficient AMD micro-servers or our new data center location or our new integrated solutions portfolio. It all comes down to UX (user experience). I haven’t heard any of those stories yet.

Tags: amazon, centurylink, cloud computing, iaas, ibm, UX, verizon, vz
Related tags: integrated solutions, verizon, amazon, savvis, space

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What Will Happen to the Gear Vendors? – Aug 07, 2012

Do They Even Know Their Business? – Sep 20, 2013

Malls Are Dying – Sep 04, 2013

14 Words on Cloud – Nov 02, 2012

(Another) Cloud Survey – Sep 25, 2012

Cloud Will Be About Integration – Sep 21, 2012

CenturyLink Merger Mania Does Add Up – Aug 15, 2012

Various Tidbits – Jul 11, 2012

What’s With Wireline? – Apr 27, 2012

Savvis Changes Comp Plan – Jan 10, 2012

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October 10, 2013 , On Rad's Radar

Vocalocity Acquired by Vonage

Rich Tehrani has a good analysis of Vonage finally getting in the B2B space by acquiring Vocalocity. Vonage is acquiring Vocalocity for “$130 million, including $105 million in cash and $25 million in Vonage common stock.”

It is interesting to note that Vocalocity was on schedule to hit $56 million in annual revenue this year. That makes this buy 2.3x revenue. M5 had $58M in revenue and sold to ShoreTel for $146M. Of course, Vocalocity is different revenue that M5 – M5 had 2000 enterprise accounts with ARPU above $2000 per month. Vocalocity has business accounts with fewer than 20 employees – which fits with how Vonage fits in the market.

Vonage is on pace to break $800M in revenue this year. With Vocalocity it will be at $900M, which should scare competitors like RingCentral and 8×8. Surprisedly, 8×8’s stock didn’t jump with this acquisition, which is strange because I thought someone would have scooped them up by now. My bet was TWC would buy 8×8, but Rich Tehrani thinks that it is more likely that PBX vendors will buy Hosted VoIP companies. I don’t know. It’s a big pivot to go from hardware vendor to service provider. And ShoreTel is still a hardware vendor – way more than a service provider.

This Hosted VoIP space isn’t easy (or profitable). After two mergers, $13 million in funding and 8 years, Vocalocity got to $56 mill. 8×8 just took in another $30M in equity funding on top of about $65 million in previous funding to get to $120 million in revenue. RingCentral has more than $44 mill in funding since 2003 plus about $95 mill from an IPO from last month to make $120 million in revenue – but no profit!! Nothing but losses. That is the trouble with this whole VoIP business: looks good on paper, execution for profit is just terrible.

Vocalocity received $9.5 million in series C funding backed byTechOperators LLC, Imlay Investments Inc. and Noro-Moseley Partners LLC. (I bet champagne is popping in those offices.) CrunchBase says that the total funding was $13.6 mill. The company also merged with Aptela in 2011. No word on what happens to the 200 employees in Atlanta.

For all the bluster of UC, cloud comms, UCaaS and the other terms, very feew companies have been able to execute on a profitable sales model. Vonage, Vocalocity, 8×8, RC and others automate as much as possible, know their numbers, and don’t worry about quality of service because they can’t really control it. So churn is high and your branding takes a hit. But even the big boys who sell over MPLS can’t figure out how to keep the machine growing. Maybe you can’t. Maybe it is all mobile phones and that’s it. Maybe getting to BPI and productivity is just too expensive, time consuming and elusive.

This sale will not be met by the Cloud Comm Alliance with champagne; probably be drinking bourbon in San Diego as they realize that the multiples are shrinking and the prospective buyers are dwindling too.

Tags: 8×8, cloud communications, hosted pbx, mergers, UC, voip, vonage
Related tags: million revenue, hardware vendor, acquiring vocalocity, service provider, vocalocity, million