It is happening so fast. Here’s this week in M&A:

• FPL Fibernet got bought by Crown Castle
• Still have the Verizon-XO merger comingtoo.
• Rumor that Windstream is looking to buy Earthlink
• Onvoy is getting Inteliquent
• Broadsoft took VoIP Logic off the table
• CenturyLink is buying Level3.
• AT&T is trying to buy TimeWarner
• Broadcom to Buy Brocade Communications for $5.5 Billion
• Frontier had a better couple of quarters after buying Verizon franchises in FL, TX and Cali; hence, laying off one thousand amid a RE-ORG. Because that will fix the books but little else.

CenturyLink just sold off its data center business that was a combo of Qwest Cyber Centers and SAVVIS to a group of PE firms for $2.15B in cash and C-Link keeps a minority stake worth $150M in the new company. CL bought Savvis for $2.5B in 2011. Buy High; Sell Low. Bell-Head Mentality.

The PE coalition that bought the data centers also grabbed 4 cyber-security firms in order to announce this global security co, to be run by Manny Medina, former CEO of Terremark Worldwide.

Wired’s headline says it best: The World’s Telecoms Are Under Threat From All Sides.

Broadband, cellular and voice are all flat or declining markets.

IAAS and PAAS are ruled by Amazon, IBM and Google. Microsoft only got into the game recently and is doing better than all the telco’s combined.

PE firms are buying up data centers as the world adjust to cloud computing, an app market and streaming TV and radio.

DDoS attacks are happening too often. So are Hacks. There are not enough fingers to fill all the holes in this dyke.

UCaaS is ruled by 8×8, Vonage Business, RingCentral, Fuze and a bunch of other providers that are not a telco. The PBX market may be shrinking but not fast enough for the other Hosted VoIP players. Cisco and Microsoft have chunks of the enterprise UCaaS business that the telcos don’t.

Comcast Business is at $6B in annual revenue, which makes it a bigger CLEC than almost all that are left. WIND does $5B. EarthLink less than $1B. Birch and TelePacific are private. Level3 does $8B. CenturyLink does $17B (much of it ILEC revenue). Zayo is $2B.

Apps like Messenger, WhatsApp, Skype and Slack are replacing voice and SMS and even email. It is a topsy-turvy world. What’s a telco to do? Well, merge! Get bigger because bigger solves nothing, but it makes money for top execs in the C-Suite and the Board room and on Wall Street.

Our economy spins on e-commerce and the Internet. When the companies that provide that Internet are too clunky to do it properly, what happens to our economy?

We went from a five nines voice network of reliability to cell phones and VoIP that quite frankly can’t be more than three nines. Have you noticed the number of outages lately by telcos and cablecos?

There is a lot going on. There are many areas of opportunity, but the fall back from these guys is “more of the same”, “do what I know” and “one more quarter!”. None of these transactions is good for the industry, the economy or the consumers. They are stop gap, short term money movers. We are going to wake up shortly and realize that it is 1970 all over again. It makes the NSA job easier when there are few players, but what about the customers?

In the data center space, one master agency contacted me after the C-Link announcement to tell me that the folks at CenturyLink have no details about the sale. How can that be when Monroe has been trying to sell the DC division all year? Great planning, guys!

Whose customer is it? Will the agent still get paid? Will the customer see a price increase? Who is the billing entity? Who will the customer be paying? These are good questions that bothered some TELX customers when Digital Realty took over.

I keep seeing executives at master agencies say these deals are good. Do they say that in print because they have to?

Don’t forget that you can leave a public comment with the FCC on any of these mergers. You can voice your opinion here. You will need a docket number but you can google it after the filings are in the system.

Tags: att, centurylink, data center, earthlink, FCC, internet, level3, mergers, security, strategy, uptime, windstream
Related tags: business, centurylink, voice, world, centers, makes

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This M&A is in what I consider wholesale as the private equity firm that owns Onvoy, GTCR, is acquiring Inteliquent for about $800M, a 37% premium to Inteliquent’s closing stock price. Interesting, $90M in revenue for $800M.

Inteliquent was formerly known as Neutral Tandem, with an initial business plan to be an alternative tandem switching platform for CLECs and VoIP Providers. They re-branded after they bought Tinet adding network to their strong voice service. They sold Tinet to GTT in 2013 for about $55M. Inteliquent has been focused on voice and competing pretty well against both Level3 and Bandwidth.

“As the nation’s highest quality provider of voice and messaging interconnection services, Inteliquent is used by nearly all national and regional wireless carriers, cable companies, and CLECs in the markets it serves, and its network carries approximately 21 billion minutes of traffic per month.” They added some CPaaS capability as well. I have to wonder 21B in minutes and just $90M in annual revenue?

Zayo spun out its voice business as Onvoy. It was acquired by GTCR. Onvoy has acquired ANPI, Broadvox and Layered. Now it will combine Inteliquent into that mix.

These deals have made partners and customers nervous. The uncertainty seems to be a normal now.

These integrations are smooth and often have some customer facing problems. (See Frontier for how that works.) There is so much M&A that as a partner it is difficult to choose who to present to your client as a vendor.

Tags: inter-carrier compensation, mergers, voip, wireline
Related tags: onvoy acquired, inteliquent, voice, onvoy

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Mergers, Acquisitions and Moves – Nov 09, 2015

Wireless Combo is Merger 3 – Aug 20, 2010

Broadsoft Goes Deep in White-Label – Oct 31, 2016

Musings on Ma Bell – Oct 26, 2016

2 Big Mergers and a Smaller One – Oct 24, 2016

Tidbits #2440 – Oct 06, 2016

Tidbits #2439 – Oct 03, 2016

National Harbor: In the Bubble – Aug 17, 2016

A Short Set of Things that Happened – Jun 16, 2016

Tidbits #2438 – Jun 07, 2016

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This M&A is in what I consider wholesale as the private equity firm that owns Onvoy, GTCR, is acquiring Inteliquent for about $800M, a 37% premium to Inteliquent’s closing stock price. Interesting, $90M in revenue for $800M.

Inteliquent was formerly known as Neutral Tandem, with an initial business plan to be an alternative tandem switching platform for CLECs and VoIP Providers. They re-branded after they bought Tinet adding network to their strong voice service. They sold Tinet to GTT in 2013 for about $55M. Inteliquent has been focused on voice and competing pretty well against both Level3 and Bandwidth.

“As the nation’s highest quality provider of voice and messaging interconnection services, Inteliquent is used by nearly all national and regional wireless carriers, cable companies, and CLECs in the markets it serves, and its network carries approximately 21 billion minutes of traffic per month.” They added some CPaaS capability as well. I have to wonder 21B in minutes and just $90M in annual revenue?

Zayo spun out its voice business as Onvoy. It was acquired by GTCR. Onvoy has acquired ANPI, Broadvox and Layered. Now it will combine Inteliquent into that mix.

These deals have made partners and customers nervous. The uncertainty seems to be a normal now.

These integrations are smooth and often have some customer facing problems. (See Frontier for how that works.) There is so much M&A that as a partner it is difficult to choose who to present to your client as a vendor.

Tags: inter-carrier compensation, mergers, voip, wireline
Related tags: onvoy acquired, inteliquent, voice, onvoy

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Related Entries

Mergers, Acquisitions and Moves – Nov 09, 2015

Wireless Combo is Merger 3 – Aug 20, 2010

Broadsoft Goes Deep in White-Label – Oct 31, 2016

Musings on Ma Bell – Oct 26, 2016

2 Big Mergers and a Smaller One – Oct 24, 2016

Tidbits #2440 – Oct 06, 2016

Tidbits #2439 – Oct 03, 2016

National Harbor: In the Bubble – Aug 17, 2016

A Short Set of Things that Happened – Jun 16, 2016

Tidbits #2438 – Jun 07, 2016

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The latest financials came out in the last week. Let’s examine if UCaaS is growing.

RingCentral Office annualized exit recurring software subscriptions (ARR) grew 39% year-over-year to $316.8 million. RC says they are growing margins and revenue, while also increasing their losses. Is buying market share working?

8×8 reports that Total revenue grew 24% year-over-year to $63.2 million; service revenue grew 23% year-over-year to $57.7 million.

8×8’s New monthly recurring revenue (MRR) sold to mid-market and enterprise customers and by channel sales teams increased 30% year-over-year and accounted for 65% of total MRR booked in the quarter. Average monthly service revenue per business customer was $409, compared with $360 in the same year ago period.

Per the PR: Ending seats at Vonage Business were 616,000, up from 514,000 seats in the year ago quarter, a 20% increase. Vonage Business revenue churn was 1.4%, compared to 1.3% in the year ago quarter. (About double what 8×8 reports.)

This is such a spun statement: “Vonage Business revenue, which includes $24 million of Nexmo revenue, was $106 million, an 86% year-over-year increase on a GAAP basis.”

Broadsoft buys VoIP Logic to increase its white-label business, which now pits them directly against wholesalers like CoreDial and Bluip – and other BSFT clients who wholesale like Comcast and Momentum. If UcaaS was growing for the 420+ providers that utilize a BroadWorks platform, would BSFT need to ramp up its white-label and direct to Enterprise sales?

Interesting to note that of the noisy 3 in UCaaS, only Vonage has a BSFT.

Windstream announced yet another UCaaS product This one is called “Windstream Hosted Communications (WHC) for Small Business, a cloud-based phone solution offering enterprise-level capabilities to small and medium-sized businesses. Powered by Broadsoft. WIND also offers Avaya, Mitel and Allworx. Quite the mixture. It might explain why they have 1 million SIP trunks on their Broadsoft.

A couple of bright spots are the cable clan are almost all running Broadsoft. XO is powered by BSFT. (Coming to a Verizon store near you in 2Q2017!)

Both Bells – Verizon and AT&T – run Broadsoft for SIP trunking and UCaaS. In fact, we will see how the Broadsoft powered One Talk drives sales for both VZW and BSFT soon.

Recall that went ANPI was sold to Onvoy, they had just 20K seats on Broadsoft, so not everyone is killing it in the UCaaS space. In fact, if you take a sample from the INC5000, most VoIP providers in the US are doing LESS than $5M in business ($2-$4 million seems to be the median.).

“For 2016, BroadSoft expects the acquisition [of VoIP Logic] to contribute approximately $800,000 in revenue,” that means that VoIP Logic was doing about $3.2M in revenue. BSFT’s 3Q 2016 earnings call was this morning.

There are certainly VoIP Providers with more than $50 Million in revenue. I would argue it is more a pyramid than a bell curve.

Companies are ramping up the SPIFF war to grab market share in the UCaaS space. It is likely easier and cheaper to buy deals from channel partners that acquire a whole provider – and the resulting synergy/culture mess that will ensue with integration after a buy.

Bullseye, Fusion, Star2Star, TelePacific, AireSpring and net2phone are just six of the companies posting SPIFFs for deals to Channel Vision magazine’s email list and other places. And the SPIFFs are designed to skew for larger deals (more than 8×8’s ARPU of $409). Some are specific to a preferred master agency.

At an agent event last week, I was talking to an Avaya partner who is still selling strong. Sure there has been some dip in on-premise PBX but not as much as you would think. Windstream is still selling mid-market deals of Mitel and Avaya boxes.

Do you know where the weak spot is? SERVICE DELIVERY, according to someone whose opinion I value greatly. Barely anyone has that figured out yet! And that is where the Customer Experience starts (and stops). Size doesn’t matter. What matters is deployment, implementation, design, training and UX (user experience).

I keep hearing from folks who say the SAAS model is about OPEX over CAPEX. Well, that is the story but for most businesses, the spend over 4 years for a cloud comms solution is more than buying one. So there is a premium to be had for Hosted UC.

I have said it before: UCaaS is selling Change. You have to change the buyer’s mind from “It is a phone system” to it is a new way to communicate and run your business with employees, contractors, customers and vendors. And then the buyer has to want that too.

I think much of the OTT VoIP is really about cheap dial-tone and one or two features (like conferencing or voicemail to email) as a bonus.

The other factor: CPaaS. Instead of using a desk phone or softphone, people are using Apps to talk to one another – like on Xbox, in Uber’s app, Facebook Messenger, WhatsApp and Slack. This is taking away from some UCaaS sales as well.

The Skype4B noise has finally quieted down. But Greg Plum at PlumUC is running a Skype4B Bootcamp because users still can’t figure out how to get the most out of S4B. All UCaaS providers should be training users constantly to teach/coach them how to improve collaboration and productivity, the two reasons the execs spent the money on UC&C to begin with!!!

FairPoint has entered the fray with Telax software. “Although FairPoint foresees the new service being applicable to all of its customer segments, the company expects the immediate sweet spot customer profile will be those that have 20-100 employees,” per source. I guess in their territory that is mid-market!

Last piece of UC news comes from Broadvoice, who has been approved as a cloud services vendor for all states that participate in the public sector Cloud Service marketplace, created by NASPO ValuePoint in conjunction with the state of Utah.

Broadvoice CEO says that they are one of the only UCaaS providers in that marketplace.

Tags: broadsoft, commissions, customer service, financials, hosted pbx, UC, UX, voip, windstream
Related tags: vonage business, ucaas growing, still selling, market share, deals channel, ucaas

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UC Tidbits #2441 – Jul 05, 2016

The State of UC&C – Part 3 – Sep 14, 2016

What Pain Does UCaaS Solve? – Aug 22, 2016

Why Do You Look at an iPhone That Way? – Apr 07, 2016

The Gist of ITEXPO – Jan 29, 2016

Uh Oh, Microsoft is Closing the Gaps – Jan 15, 2016

Is There Anything Impressive About VoIP? – Jan 11, 2016

End of Year Summary (Tidbits part 2426) – Dec 31, 2015

Unified Hope for UCaaS – Dec 16, 2015

Vonage Picks Up Another One – Aug 20, 2015

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The latest financials came out in the last week. Let’s examine if UCaaS is growing.

RingCentral Office annualized exit recurring software subscriptions (ARR) grew 39% year-over-year to $316.8 million. RC says they are growing margins and revenue, while also increasing their losses. Is buying market share working?

8×8 reports that Total revenue grew 24% year-over-year to $63.2 million; service revenue grew 23% year-over-year to $57.7 million.

8×8’s New monthly recurring revenue (MRR) sold to mid-market and enterprise customers and by channel sales teams increased 30% year-over-year and accounted for 65% of total MRR booked in the quarter. Average monthly service revenue per business customer was $409, compared with $360 in the same year ago period.

Per the PR: Ending seats at Vonage Business were 616,000, up from 514,000 seats in the year ago quarter, a 20% increase. Vonage Business revenue churn was 1.4%, compared to 1.3% in the year ago quarter. (About double what 8×8 reports.)

This is such a spun statement: “Vonage Business revenue, which includes $24 million of Nexmo revenue, was $106 million, an 86% year-over-year increase on a GAAP basis.”

Broadsoft buys VoIP Logic to increase its white-label business, which now pits them directly against wholesalers like CoreDial and Bluip – and other BSFT clients who wholesale like Comcast and Momentum. If UcaaS was growing for the 420+ providers that utilize a BroadWorks platform, would BSFT need to ramp up its white-label and direct to Enterprise sales?

Interesting to note that of the noisy 3 in UCaaS, only Vonage has a BSFT.

Windstream announced yet another UCaaS product This one is called “Windstream Hosted Communications (WHC) for Small Business, a cloud-based phone solution offering enterprise-level capabilities to small and medium-sized businesses. Powered by Broadsoft. WIND also offers Avaya, Mitel and Allworx. Quite the mixture. It might explain why they have 1 million SIP trunks on their Broadsoft.

A couple of bright spots are the cable clan are almost all running Broadsoft. XO is powered by BSFT. (Coming to a Verizon store near you in 2Q2017!)

Both Bells – Verizon and AT&T – run Broadsoft for SIP trunking and UCaaS. In fact, we will see how the Broadsoft powered One Talk drives sales for both VZW and BSFT soon.

Recall that went ANPI was sold to Onvoy, they had just 20K seats on Broadsoft, so not everyone is killing it in the UCaaS space. In fact, if you take a sample from the INC5000, most VoIP providers in the US are doing LESS than $5M in business ($2-$4 million seems to be the median.).

“For 2016, BroadSoft expects the acquisition [of VoIP Logic] to contribute approximately $800,000 in revenue,” that means that VoIP Logic was doing about $3.2M in revenue. BSFT’s 3Q 2016 earnings call was this morning.

There are certainly VoIP Providers with more than $50 Million in revenue. I would argue it is more a pyramid than a bell curve.

Companies are ramping up the SPIFF war to grab market share in the UCaaS space. It is likely easier and cheaper to buy deals from channel partners that acquire a whole provider – and the resulting synergy/culture mess that will ensue with integration after a buy.

Bullseye, Fusion, Star2Star, TelePacific, AireSpring and net2phone are just six of the companies posting SPIFFs for deals to Channel Vision magazine’s email list and other places. And the SPIFFs are designed to skew for larger deals (more than 8×8’s ARPU of $409). Some are specific to a preferred master agency.

At an agent event last week, I was talking to an Avaya partner who is still selling strong. Sure there has been some dip in on-premise PBX but not as much as you would think. Windstream is still selling mid-market deals of Mitel and Avaya boxes.

Do you know where the weak spot is? SERVICE DELIVERY, according to someone whose opinion I value greatly. Barely anyone has that figured out yet! And that is where the Customer Experience starts (and stops). Size doesn’t matter. What matters is deployment, implementation, design, training and UX (user experience).

I keep hearing from folks who say the SAAS model is about OPEX over CAPEX. Well, that is the story but for most businesses, the spend over 4 years for a cloud comms solution is more than buying one. So there is a premium to be had for Hosted UC.

I have said it before: UCaaS is selling Change. You have to change the buyer’s mind from “It is a phone system” to it is a new way to communicate and run your business with employees, contractors, customers and vendors. And then the buyer has to want that too.

I think much of the OTT VoIP is really about cheap dial-tone and one or two features (like conferencing or voicemail to email) as a bonus.

The other factor: CPaaS. Instead of using a desk phone or softphone, people are using Apps to talk to one another – like on Xbox, in Uber’s app, Facebook Messenger, WhatsApp and Slack. This is taking away from some UCaaS sales as well.

The Skype4B noise has finally quieted down. But Greg Plum at PlumUC is running a Skype4B Bootcamp because users still can’t figure out how to get the most out of S4B. All UCaaS providers should be training users constantly to teach/coach them how to improve collaboration and productivity, the two reasons the execs spent the money on UC&C to begin with!!!

FairPoint has entered the fray with Telax software. “Although FairPoint foresees the new service being applicable to all of its customer segments, the company expects the immediate sweet spot customer profile will be those that have 20-100 employees,” per source. I guess in their territory that is mid-market!

Last piece of UC news comes from Broadvoice, who has been approved as a cloud services vendor for all states that participate in the public sector Cloud Service marketplace, created by NASPO ValuePoint in conjunction with the state of Utah.

Broadvoice CEO says that they are one of the only UCaaS providers in that marketplace.

Tags: broadsoft, commissions, customer service, financials, hosted pbx, UC, UX, voip, windstream
Related tags: vonage business, ucaas growing, still selling, market share, deals channel, ucaas

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Related Entries

UC Tidbits #2441 – Jul 05, 2016

The State of UC&C – Part 3 – Sep 14, 2016

What Pain Does UCaaS Solve? – Aug 22, 2016

Why Do You Look at an iPhone That Way? – Apr 07, 2016

The Gist of ITEXPO – Jan 29, 2016

Uh Oh, Microsoft is Closing the Gaps – Jan 15, 2016

Is There Anything Impressive About VoIP? – Jan 11, 2016

End of Year Summary (Tidbits part 2426) – Dec 31, 2015

Unified Hope for UCaaS – Dec 16, 2015

Vonage Picks Up Another One – Aug 20, 2015

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