DMCA Minute

"What Online Service Providers Don't Know Can Hurt Them – Safe Harbors of the Digital Millennium Copyright Act" is an opinion piece written by Angela Doughty is a member of Ward and Smith, P.A. Read it at WRAL. "The DMCA provides qualifying online service providers with a "safe harbor" from liability for copyright infringement if the providers undertake the actions specified in the Act." Today you really need to know this stuff.

FCC Form 477 due Sept. 1

Form 477 is filed twice a year. It is collected by the FCC to determine Broadband Coverage. (IOW, to prove that their flawed strategy for broadband is working. As a former scientist, raw data can be manipulated any way you want - skewed to the results you are looking for.) After much bad press on the data, including rebuke from the GAO, first, the FCC has issued a Notice of Inquiry (NOI) [FCC 07-21] to determine how best to understand broadband and make it more available. Second, the FCC has issued a Notice of Proposed Rule making (NPRM) [FCC 07-17] to explore ways in which the Commission can collect the information it needs to set broadband policy in the future. Comments were due end of May, 2007.

Get Form 477 and the instructions.

According to the 477 FAQ: Who must file it? The form must be filed by the following entities:

1. Facilities-based providers of broadband connections to end-user locations. (See FAQ #5 for definitions of these terms.) Note that a facilities-based broadband provider may – or may not – have a retail relationship with the end user of the broadband connection. Also note that some retailers of high-speed Internet-access service are not facilities-based broadband providers for purposes of Form 477. (See FAQ #10 regarding ISPs.)
2. Local exchange carriers (read as CLECs), including resellers as well as facilities-based carriers.
3. Incumbent LECs (ILECs) and competitive LECs (CLECs) will answer some or all
4. Commercial mobile radio service (CMRS) providers that serve mobile telephone service subscribers using spectrum for which the CMRS provider (or its affiliate) holds a license, or using spectrum that it manages for or leases from a spectrum licensee. Entities that only resell mobile telephone service do not file Form 477; instead, the subscribers to the resold mobile telephone service are reported by the underlying, facilities-based carrier.

There are no exceptions to filing based on the number of connections, lines, or subscribers. However, many filers will find that they are not required to complete all sections of the form.

What is a facilities-based entity and what is broadband in this data collection?

With respect to Part I of Form 477, a facilities-based entity is an entity (including subsidiaries and affiliates) that: owns the portion of the physical facility that terminates at the end-user location as a broadband connection; provisions/equips broadband wireless channels to end-user locations over licensed spectrum or over spectrum that the entity uses on an unlicensed basis; or obtains unbundled network elements (UNEs), special access lines, or other leased facilities that terminate at end-user locations and provisions/equips them as broadband. This entity may – or may not – have a retail relationship with the end user of the broadband connection. A broadband connection is a line (or wireless channel) that terminates at an end-user location and enables the end user to receive information from and/or send information to the Internet at information transfer rates exceeding 200 kilobits per second (kbps) in at least one direction.

What about exceptions? In-house BPL, yes. External, no. WISP's must file. MVNO, no. VoIP, no.

ISP? An ISP that obtains a broadband connection or service from an unaffiliated entity, which it incorporates into its own high-speed Internet-access service, is exempt from reporting broadband connections in Part I of Form 477. Instead, the obligation to report the broadband connection rests with the underlying facilities-based provider. [FCC FAQ]

New Zealand Turning Off PSTN?

Telecomweb reports: "New Zealand may become the first country in the world to turn off its public switched telephone network (PSTN), instead relying entirely on a next generation network (NGN), xDSL and VoIP-based voice service, according to a document released by that country's government late last week.... As an aside, the Ministry also noted that, with the NGN, classic analog dial-up modems won't work.' [loss of dial-up]. I hope everyone is paying attention.

Covad at hotspots

"Covad is rapidly becoming the broadband partner of choice for providers of WiFi hotspots throughout the US. The company supplies back-end broadband connectivity through its national, facilities-based, next-generation broadband network to several prominent hotspot providers, including Wayport, Courtroom Connect, and WiFi Salon." [Covad PR]

Actually, hotspots are moving to ADSL2+ from Covad as backhaul at a time when hotspots are getting more use and the demand for bandwidth is increasing.

Metro Ethernet Market share

AT&T added BST and lost market share. Qwest lost; so did L3 (according to the graph). Cox Cable, TWTC and VZ gained market share. The real point: Are you selling an Ethernet solution?

The Corundum of Backup

My Coach has 300GB of data to back-up. He uses an external hard drive, but that does not help if the house burns down. I burn DVD's and use an external hard drive, which will be helpful if/when the laptop hard drive dies, but not so much if the house floods (I live in Florida) or burns down. So what do you do?

300GB is a huge amount of data to upload to a service like thebox or dataprotection.com. With DSL or Cable you are going to MAX at 384k up. That's max. And after a couple hours of clogging that upstream, they will probably throttle you via prioritization. So what do you do?

One idea is to store an external hard drive at a relative's house. But what a pain to have to truck it back and forth as you update it. (Would a fire-proof safe work?)

Are there any services that would allow me to send in a DVD and they upload the data to the server (my account)? Or even ship them my external hard drive so they can quickly and easier do the upload to their servers locally - and perhaps ship it back? Anyone?

one final rant on censorship

One passing remark about AT&T and Censorship. This company has thrived under the very freedoms that it chooses to take away from others. It is obvious from the remarks of its recently departed CEO; it's secret NSA closet; it's walled garden with the iPhone (which some blame has to go to Apple as well here); and its censoring of the Pearl Jam webcast (listen for yourself at YouTube).

AT&T paid one lobbyist $160k and another $240k - in just 6 months this year. This is just 2 of the hundreds of lobbyists and company employees that have spent years and hundreds of millions of dollars getting laws passed in its favor; getting rate hikes for promises unmet (where's our fiber?); and to decimate the Telecom Act of 1996. In 2006, at&t spent $23 million on lobbying [opensecrets.org]. The other empire, VZ, only spent $13M.

And it paid off, too. Both RBOC were allowed to buy not only the 2 biggest long distance and internet backbones, but the 2 most vocal CLEC's - and silence a majority of the competition in a fell swoop. Meanwhile, LD rates and local rates are increasing. Gee, could that be from lack of competition?

And it paid off in other ways: at&t owns the cellular company with the most subs: 61 million. Even when people decry the handling of the iPhone and the false advertising (no dropped calls, fast data network), Cingular has still been able to rack up 61 million suckers, I mean, customers. I just don't get it. Why spend your money with a company that will snoop on you and censor?

When are you sheeple going to wake up? Nothing seems to get the public excited. Your rights are being trampled upon or stripped away and no one seems to care. Sending an email to your Congress Critter is not the same as protesting. Today, they know you don't have it in you to really protest. It's all about the cheapest, the easiest, the quick fix. [stepping down from the soapbox now, shaking my head].

Lijit Weeekly stats

I signed up for Lijit, a blog search and stats site. On my weekly stats today, the number 1 search term on Google that brought people to my blog is "cbeyond sucks". That's funny. According to the old BellSouth management over at AT&T Southeast, you would think it would be "BellSouth Sucks" or AT&T sucks".

I mention Cbeyond often because the model that brought them success should be examined. (In brief, offering a narrow set of services; feet on the street; know your market; increase ARPU; be different.) In fact, a Tampa-based company is trying to replicate them, but lack the vision and personnel to do that. Cbeyond was started by Intermedia people who had lots of telco experience - and some success. Telovations, on the other hand, not so much. One problem I see for Telovations is that their employees are there stictly for the salary - no one drinks the kool-aid.

Ma Bell bad newz

• at&t $10 DSL is hard to get and TRA is not happy [source]
• the iphone has been hacked - 3 claims that I have seen, but at&t is using legal armholds on at least one - a 17-year old, iPhoneSIMfree.com and iphoneunlocking.com [source1, source2, source3 ].
• "AT&T Inc. is giving up an ad campaign that claims its wireless division has the "fewest dropped calls" among major cellular carriers." - no one believes it any way! [source]
• NASCAR is allowed to drop the logo too.
• In Atlanta, Comcast is hiring to kick old BellSouth butt [ajc]
• the 9th Circuit Court threw out the forced arbitration clause in Cingular contracts -- consumers are free to sue Cingular, now attwireless, in a class action suit. [source]
• at&t censored Pearl Jam and now they are trying to silence me as well [radinfo]

ISPCON Oct. 16-18 in San Jose

I'm speaking in 2 sessions - one on Hiring and one with Jack Brandt, 50 Ideas in 50 Minutes. My book may even be available then, so look for that to launch at the show. Plus a WISPA Reception and ISP-CEO Exchange - lots of reasons to attend.

Which book cover looks better?

For my book that will soon be released - SELLECOM: 101 Marketing Ideas for the Telecom Jungle - I need some help on a cover. Email me whether you like A or C:

This is A

This is C

Censorship

Ma Bell has been delivering some grief all around me for posts on the Phone+ blog. The pressure to push me out of the Agent program is firm. Even my channel manager does not want to speak to me since, as he put, he doesn't want to end up in my blog and I won't listen to reason. Reason being defined as: Don't mention the name of this company.

I read through my posts - and I only mentionMa Bell about 5 out of 20 posts. And in the post that received the most attention, there was no mention of BellSouth, BST, ATT or Ma Bell. Yet they were upset. I do appreciate the readership in Atlanta, Orlando, and San Antonio. You guys are keeping the page views high and giving me content to write about.

Well, I wrote about Reactee a while ago and decided to see if I could put it to good use. Tee shirt marketing is hip. Plus since Ma Bell is still being flamed for censoring Pearl Jam, my design was obvious. Order one here for just $20 - I'll be modeling it at the Channel Partner Expo in NJ on Sept. 26-28. Since we couldn't get any of the ILEC VP's to get on the dias, I guess they will miss the photo op.

Microsoft OCS - Will It Disrupt?

Gary Kim has 2 posts about Microsoft Office Communications Server 2007 (here and here). Gary thinks that this will turn telco on its head:

Microsoft also is bringing to market its own "quality of experience" server that automatically tracks end user voice quality no matter where a call is placed--from inside the enteprise or at a hotel. No network test probes are required.

Between the growing MS Mobile handsets and the number of VAR's around, there is a huge chance that Microsoft will steal share from PBX vendors (already having a hard time); Asterisk vendors (already too many of them); and some VoIP Provider (too many of them that look the same and offer no value).

Hosted PBX for the Under 25 handset group is probably safe, since owning and maintaining MS OCS 2007 will be expensive, but 25 to 99 will be where the fight is.

The monitoring and the presence will be hot buttons for the 100 to 250 IT management set. Overall this is a nice space for ISP's to move into - Hosted MS OSC 2007.

Thanks Bill for the opportunity and watch him here.

Sue Crawford and CALEA

Professor Sue Crawford has written a nice review of the FCC regulation of VoIP in a research paper called The Ambulance, the Squad Car, and the Internet.

The Federal Communications Commission moved swiftly in 2005 to impose E911 and CALEA requirements .....In the CALEA context, law enforcement has persuaded the Commission to rely on extraordinarily weak legal arguments in insisting that online businesses and broadband access providers make their services acceptable to law enforcement - either before these services are launched, thus constraining innovation, or for existing services at great retrofitting expense. In both settings, the FCC has plunged quickly ahead to apply these policies to the internet with little consideration either for the economic impacts of its choices or for alternative strategies that might have been employed. And both policies have been lifted largely unchanged from what they had been in the world of telephony, even though the internet presents a very different technical and economic context.

Sue also has a great blog post: CALEA roundup: 2005-2007 --- a must read.

"Much of the tussle has to do with cost-shifting: the original CALEA statute authorized $500 million to be allocated to paying the carriers back for their efforts in connection with compliance, but there's no money being offered to the internet players. But a lot of the recent tussle has to do with how to move CALEA's obligations into the internet era. The problem is that CALEA was specifically written not to cover online applications like email and other "information services." And saying what online "call-identifying" (non-content) information is presents a difficult task."

Sue goes on to explain that the law and Courts say CALEA is about access, not content. It creates a grey area for the provider since there is no clear definition of what call-identifying obligations are for packet. Sue is a lawyer and a professor of law at Cardozo School of Law and on the ICANN board. She knows of what she speaks.

HP Cloudprint

According to the NY Times:

HP "has quietly introduced a free service designed to make it possible to print documents on any printer almost anywhere in the world. Cloudprint, which was developed over a period of several months by a small group of H.P. Labs researchers, makes it possible to share, store and print documents using a mobile phone."

PCWorld says that it will redefine mobile printing.

I'm thinking I can now print boarding passes for SWAir at the hotel :) Plus, I have been squawking about network printing for your clients for a while. If you have a store, why wouldn't you let your clients print to your network printer? Then they have to come pick it up - that's foot traffic.

Blunders = Telecom Failures

What's in it for you at the Round Table?

What's In It for You at the Round Table?

if this slideshow does not work, please click here

Towerstream numbers

While I don't enjoy financials, it is a learning experience to read them. And half the time, they don't make sense. For example:

1. Towerstream increased ARPU by 1.8% to $669.
2. Towerstream increased ARPU for new subscribers by 13.8% to $984.
3. Reported a net loss of $2.388M compared to a net loss of $130,934 in 2Q06.

Reported quarterly revenue were $1,632,061, that equals $544k per month in revenue, of which $669 is the average per user. So that means there are 813 customers.

XO flat numbers

XO released its 2Q07 numbers. Again XOptions Flex is doing well (even though I think this is the 2nd time they announced: "Surpassed 10,000 XOptions Flex customers in the second quarter 2007) and supposedly so is VoIP O/T (up 4% from $7.2M to $7.5M). Total quarterly revenue is $352M.

They try to paint a rosy picture, but revenue is actually down 1% from last year, while the statements lists all the servcies that grew. Then what died to cause the losses?

"Wholesale network transport business signed with 65 new carrier, content provider and Internet-centric customers in the second quarter 2007. Announced agreements to provide wholesale network services to China Netcom USA, GameRail, NTT America and PCCW Global."

Long-term debt and accrued interest payable is $356M with other long-term liabilities at $64M.

Nextlink with just $300k in revenue is bleeding $2.4M. XO Holdings made $2.5M in CAPEX for Nextlink to bring in $300k, $100K more than last quarter.

Finding that $10 DSL

Here's an article with pictures on how to help your residential users collect the $10 DSL from Ma Bell.

Head Stretch

Killer Services from the Killer App Conference

In the article, "What Eating Bandwidth?" from BB Properties magazine's report from the Killer App Conference in Fort Wayne, there is a listing of many premium services that providers can (and should) offer thier customers to increase revenue.

• Offer ‘communectivity’ – community connectivity.
• There are many concierge programs out there.
• The Nintendo Wii is a runaway hit ...so ..... virtual bowling and so forth.
• Fitlink is in 300 YMCAs across the country.
• There are networked laundry centers by Matt Grey.
• Eaton has monitoring that can be added for any valves in the home.
• There are Web-based thermostats from Webpoint.
• partnering with Support.com to offer remote and onsite services
• We are adding home theater setup.
• Tele-Health.
• Distance Learning and e-Tutoring.

It is time to think beyond selling just connectivity and offer services that require broadband - it increases the take rate and BB penetration.

The Support Challenge

In IT and Telecom, the support issue is becoming a concern. Residential home networks increasingly require set-up and support. This is a catch-22 since you can't just sell services like triple-play and broadband without ensuring that the consumer, especially the affluent older consumer, can operate and utilize the service after the installation. This is expensive. VZ FiOS installs typically require several techs all day plus a follow-up visit to meet the customer's expectations. This is costly to the carrier - and the consumer (who must sit around all day waiting for not one, but 2 days of support).

Typically, problems are user related or tied to user owned equipment - DVR's, older TV sets, VCR's. PC's, laptops, and PDA's. But the service provider has to work through the problem any way or lose the customer. (Acquisition costs are high). Even a contract in many cases can be broken with the help of the state AG due to service issues. (See Maryland, NY State and a few others where Verizon is a frequent visitor to the PSC hearing room).

"Total US consumer spending for home technical support services will reach nearly $1 billion by the end of 2011, according to a report from Parks Associates. This new study predicts that remote or on-site IT support services for home computers and networks will grow from approximately $450 million in 2007 to $977 million by year-end 2011, and that in-home services for installing and configuring new PCs will generate revenues exceeding $700 million. Parks Associates analyst Kurt Scherf says, “Customer service and support are not just critical challenges for retailers, manufacturers, and service providers to overcome but also significant revenue generating opportunities for forward thinking companies.” [BB Prop mag]

This ties in with my last post at Phone+ where the Telecom Agent Channel is shifting to a VAR model. Telecom Agents, especially those running call centers, can no longer hope to fuel their revenues with "We can save you 10%". The smaller businesses are as much a tech support challenge as consumers. If the margin on a small business with 2 phone lines, a mobile and a broadband service is $700 on contract - if you get it all in one sale - and you have to perform any kind of support or service (like a billing correction), you are cutting into margin. If the business owners has virus issues or other LAN or PC problems, your $700 quickly dissipates.

As a service provider, you are facing similar realities. How do you handle PC Tech support or LAN support when you are only charging for the Broadband connection?? The answer is: "You can not." Many of you do as a retention strategy, but it is a costly benefit.

The answer is about expectations. You need to establish realistic expectations early on. Cable won't trouble shoot a problem when the router is connected, since the MSO does not provide routers. Distributing anti-virus, anti-malware, and personal firewall software with installations. Then in a pro-active manner sending reminders and alerts about upgrades, fixes, patches, etc. Prevention is better. Plus the alert allows you to be in front of the customer as an expert. In each alert, you can fine print that if these measures are not taken, the customer would need to pay for repair costs. (Or sell them a maintenance contract, a remote access solution, a desktop self-repair product (like PC-Vive), or insurance. That's right PC insurance or Virus Insurance).

As many VOIP Providers and Customers are finding, the low priced VOIP service means limited tech support. Selling VoIP requires a network assessment and perhaps some installation. At sub-$30 per line, there isn't enough margin for a labor intensive install process.

On a final note, TEM (telecom expense mgmt aka bill auditing) used to be free, but now it is an upsell service. There isn't enough margin left to perform these benefits for no charge.

Nice Ad for Managed Services

Storage No Longer Free?

Google started charging for extra storage this week. Thebox.net and MyFabrik offer a free 1Gb, but charge beyond that. What is your storage strategy? Email storage takes up lots of space - and if you are not backing it up, what happens when you have a crash? Your clients will wonder what happened to their email archives / inbox / saved. Get ahead of it now. "All hard disk drives fail. The only question is when." This quote is from a TechRepublic article about hard drive recovery, especially Get Data Back from Runtime Software. I'll just add that Mozilla.org is looking at what to do with Thunderbird, my favorite email client. Google pays people $1 per download for Firefox. How about adding a link to T-Bird as well? You won't get paid, but you will be saving a wild bird of an email client.

Teleblend Lies

Teleblend is a new VoIP entrant, put together by a venture fund quickly to capture the SunRocket customers. Out of the gate Teleblend experienced a huge outage - and proceeded to blame Global Crossing, their provide. GX must have put some pressure on because Teleblend released an Apology. [TheDigest]. Every con artist in the business has rushed into VoIP. More black eyes to follow.

Back to the topic of IP-PBX

Fonality has taken trixbox Pro free. [phone+] (Of course, trixbox used to be Asterisk at Home). That's one more free PBX software for the SMB space joining Asterisk (and its many variations) and 3cx for Windows. It has a nice list of features.

1. trixbox Pro is stocked with advanced features such as auto-attendant, Outlook integration, voicemail-to-email, conference bridges, CRM integration, detailed reporting, HUD, call center capabilities, and more. Now with a re-branding interface, make trixbox Pro look like your company! (from trixbox site)
2. HUD, the all-in-one presence management tool that allows employees to control business communication from their desktops. HUD enables effective communication across a teleworker enterprise by adding real-time access to employees via private enterprise chat, click to call, click to email, and drag and drop call transfer. (Allows for linking branch offices for four digit calling). (from trixbox site)
3. "trixbox Pro also includes conference calling, unified messaging between voice mail and e-mail, employee presence management, embedded corporate chat server and the ability to integrate with Microsoft Outlook, Salesforce.com and SugarCRM." [phone+]
4. "trixbox Pro includes trixNet, an in-network calling service that lets users call any other trixbox Pro user. Calls over trixNet are not subject to any local or long-distance charges. ... The company said it will extend free trixNet calling to include anybody using GoogleTalk in 2008." [phone+]

All of those features are great, especially for a samll business or for a Reseller looking to offer an inexpensive PBX with a maintenance agreement (say, recurring revenue without being an ITSP). HOWEVER, there is one twist:

trixbox Pro is a hybrid-hosted phone system, which means the free software is first downloaded by a business and installed on a local computer and local IP phones. The local computer connects to the Fonality network. The trixbox Pro also extends the phone system outside the corporate firewall, so an employee’s extension can be used at home, remotely on a laptop or on a mobile phone.[phone+]

Connects to the Fonality network? I guess like a super-peer to allow for free in-network calling.

Credit Card Processing

When selling on razor thin margins, the fees you pay for credit card processing can eat away at your profits. The transaction fee, the percentage, the monthly fee - all add up to reduced margin. Even bank fees chew up margins. And according to Comcast, payment processing of checks and money orders costs money as well. The NFIB has an "article" that is actually a pitch for their CC Merchant. Other ideas are becoming an Authorize.Net agent, working with your own financial institution (bank with your checking account, your financial advisor like Edward Jones, or other money center for leverage).

Bandwidth Crunch for MSO's?

An interesting article about the bandwidth crunch coming to MSO's. Apparently, cable doesn't have the necessary bandwidth for all of the apps, like HD TV channels, gaming, VOD, internet access, and online apps.

Currently, cable providers need close to 750MHz of spectrum to deliver the goods: about 676MHz for downstream applications like analog cable, digital cable, HD programming, video on demand, Internet data, and VoIP service. Upstream spectrum needs are comparatively paltry, totaling about 54MHz. [source]

Cable will need 3GHz of bandwidth to compete with TelcoTV. And DOCSIS 3.0 doesn't change the physics. So look for cableco's to spend another $100B on network upgrades.

DSLReports has more. The race is on for broadband market share. The next auction for 700 MHz spectrum looks to be the last viable waves for a while. Hughes just launched another satellite to provide broadband [dslr]. And DirecTV is working on BPL [dslr].

Surcharges from Comcast

The Digest writes that Comcast is charging customers $2 to pay their bill in person or over the phone. This mainly hits the poor who do not have checking accounts for ACH payment. Charging people extra to just pay their bill. What will they think of next?

I Guess I'm not Average User

This chart came with an article in VoIP Weekly about Yoomba, the newest voice app that is browser based. This chart is alien to me for 2 reasons: on one extreme 10% or more get zero email and less than 10% get more than 50 email. I can't imagine someone not getting spam daily and my email inboxes overflow daily. Even if you discount listserv and news alert traffic, just 50 emails?! Eye opening.

BTW, I tried Yoomba when Gary Kim invited me. Nice. There is a widget download and it takes over your desktop - email client, IM and browser so that you can Yoomba a call to anyone with a click. (They just need to have an email address - no phone number, just email, a browser and a headset for the PC).

Naked DSL

Qwest offers it. Even VZ. Ma Bell was required to offer Naked DSL by year's end. Just like the $10 DSL offer - not many can find it. As per usual with the whole SBC org, every time merger concessions were made, they were flimsy and for the most part unenforcable by the FCC, whose Chairman doesn't want to enforce them anyway. Here's DSLReports.com with a report on the status of the Naked DSL offers.

Going Private

Bell Canada is going private - just like Avaya, Alltel and Chrysler.

Thanks to the flow of money into private equity — in other words, outside of public markets like the New York Stock Exchange or NASDAQ — companies around the Southeast have found willing buyers. Firms that specialize in the niche have prospered, too, because of the relative ease of raising or borrowing money.[AJC]

You save millions when private due to the cost savings of regulatory compliance.

Meanwhile, all the move to private is draining loan / debt reserves and taking money out of the market. Not good long term. And most of it is a cash out for the insiders, a la Blackstone. Reminder: A market cap is not the same as the value of a company or an ROI.

Telecom tidbits

NEON was purchased by RCN. NEON is a wholesale fiber carrier that merged with Globix in 2005.

Judy Reed Smith writes that if Qwest, VZ and Ma Bell didn't price their transport and LD business high, the market would collapse. With their set pricing, carriers like GX and XO can have a small piece of the pie, almost profitably. [Capacity mag]

IP-PBX Market is Crazy

Mitel bought Inter-Tel. Avaya went private. ShoreTel tried to IPO, but Mitel launched patent litigation the night before release. Everyone is guessing about the SMB space. Manufacturers were slow to evolve to IP-PBX (and some are really just TDM with some VoIP). The industry is behind the 8-ball and the smaller, newer, and Asterisk-based and Hosted players are taking market share. (Every week there is at least one PBX announcement about the SMB space).

Really the space is many markets.

• Under 10 employees is probably Hosted.
• Under 25 is not going to buy a Cisco, Nortel, or other Big Brand. Maybe that space buys 3Com or NEC on eBay.
• Under 20 is where Linksys One is aiming.
• In the 25 to 50 employee range, you get more bang for your buck with Asterisk based PBX systems from trixbox, Talkswitch, Digium and many others. And most important the TCO is lower, since maintain costs on the Big Brands is high.
• Yet in the 50 to 99 handsets, it is anyone's game. I just don't think Avaya, Nortel, Mitel/Inter-Tel, Shore-Tel and Cisco can price the system, handsets, and maintenance comfortably - and still make a decent margin. The price pressure from below hurts them, unless the bells and whistles (like FMC) are included.

What's with Savvis?

After selling 2 data centers to Microsoft, Savvis posted a good quarter. But news it that Savvis lost 2 or 3 large customers (Microsoft might be one since they now own the asset they were renting). It won't be a great quarter. Now Savvis is announcing that XO will provide loop. Dum, ta, dum (sound effects here).

An example of dealings with Savvis. I send in a quote request for a GigE or OC-12 port only in Oregon. Two weeks later I get a quote for GigE. Then the following business day I get a note that says: "Oops, that was not a GigE. It was an OC-x. And we can't do that. Our POP is in San Fran." Um. Didn't you kind of know the POP location on the day you received the request?

It's this kind of sales muddle that stifles growth. KNow where your assets are. Know what you CAN sell profitably. Get back to the prospect promptly. Or lose the business to someone who has their kit together. (Granted in telecom, like in the airlines, there will only be a few who have their kit together, but still).

UPDATE: Someone pointed out that a searchable database of assets and lit properties is imperative, especially for wireless and fiber companies. That way, you can tell people right away: yes or no.

Sales Lesson: Disqualifying prospects is just as important as qualifying them. That way you don't waste time on someone you cannot serve.

Extra thought: If takes you more than a week to tell a prospect if you can provide service, he begins to voice concerns about what the installation / implementation process will look like.

Savvis news: Allen & Overy Signs $13.8 Million Expansion Agreement with SAVVIS [source]

LIJIT

A new Web 2.0 site called LIJIT has launched. It was pointed out to me that it was like a Presence Indicator because it tracks your actions and accounts at lots of places - blogs, digg, linkedin, etc.

Maryland PSC Questions VZ

VZ was called before the new Maryland PSC on Customer Service issues. VZ can miss 20% of its customer service calls and be graded fine. But 5 out 6 months this year, VZ missed that mark. The answers from VZ were "I don't know why our service sucks." And when asked if the drive to turn up new triple-play and business customers means that the rank-and-file take it in the chin, VZ lawyer said absolutely not. The PSC Chair thinks otherwise.

Meanwhile, VZ is also getting some pressure from the Mass. PSC, according to the Biz Journal.

Apparently, VZ will need to spend some of it lobbying dollars on PR in MD and MS. VZ spent $420k for one federal lobbyist [source]

VoIP Consumers

All over the blogs and in forums, former SunRocket customers are blasting away at the VoIP carriers that they are migrating to. I have yet to read one positive review. One review for EarthLink TrueVoice states that the user didn't like the tech support from India.

"Excuse me. Um, Mr. Consumer. If you are paying $199 per year for Unlimited Voice service. And your first provider went BK. Doesn't that maybe give you the impression that you can't have it all for $16.58 per month?"

It's funny how many ITSP's followed suit to add SunRocket subs AT THE SAME RATE that put SunRocket down for the count. Even cellco's get that it is now about raising ARPU. Why do so many companies rush to the bottom on price? Total number of subs is not the metric that you need to be looking at. Total profit is. Basic math folks. If you lose $1 on each customer, you eventually close.

UPDATE: Andy wrote a similar post here.

Connect Paging Takes Beating at FCC

Connect Paging Inc. dba GET A PHONE apparently has been ignoring the FCC. Well, that will cost you - about $104,000.

1. The FCC issued a monetary forfeiture in the amount of $4,000 against Connect Paging, Inc. d/b/a Get a Phone for failure to respond to a directive of the Enforcement Bureau on 08/10/2007 (DA No. 07-3581)
2. The Chief of the Enforcement Bureau then issued a Notice of Apparent Liability for Forfeiture in the amount of $100,000 against Connect Paging, Inc. d/b/a Get A Phone for failure to comply with CPNI Carrier Certification Requirements. (DA No. 07-3582)

T-Mobile@Home humming with WRTU54G

Blogs now cull the FCC website for every bit of info on new gadgets, phones, and what-have-you. The FCC just approved the Linksys WRTU54G for the T-Mobile@Home service. It takes 2 SIM cards from T-Mobile. Looks like the new buzz in cellular is not the iPhone.

UPDATE: Andy Abramson writes about the new device. He also notes why first to market may be an advantage.

Online Marketing for Your IT Service

Bitpipe and KnowledgeStorm can be used to market your IT services, according to this post by Patti Wilson. Upload a white paper or e-book and you will land on Google. Use keywords in the title of the whitepaper for maximum effect. Post it on your own website as well with a link to the other 2 sites.

Security - desktop and internet

For the consumer and smaller business, security is an after-thought (if a thought at all until the bite of identity theft or stole credit card numbers hits). TechRepublic has 10 no-charge apps that you might want to start offering your clients.

In similar news, Bits du Jour has DefenseWall Host Intrusion Prevention System for sale.

There are ways to make revenue on Software as a provided or managed service. What are you currently doing to ease the pain of PC problems for your customer base - and make a dollar?

Even if your clients signed up for other back-up services, like thebox.net or myfabrik.com, a reminder service to update Microsoft, update their anti-virus, or to back-up important data would be a way to add value, look like the expert, and keep your name in front of your clients regularly.

Google Apps, Star Office, Postful

No one really knows what Google is doing with its Apps, but Sarah has been watching the Google Pack... and now they added Star Office. Google Apps is available for ISP's to resell.

If you don't want to offer Google Apps (combined with your Google AdSense account), then I would suggest that you start offering Star Office, ThinkFree, ZoHo, or some other similar service. Get your clients thinking about apps and data and storage. This is where your revenue will be coming from in the future.

And another unique app hit the street: Postful. What does that do you ask? Well, Sarah has a nice review of why you would want an email to snail mail service. (The Post Office offers one as well).

If the Bells don't want to be a dumb pipe - chiefly because they believe there isn't enough value there - then why would your company choose to be the dump pipe?

SCO, IBM, Linux

Blogs (here and here and here) are pointing out the SCO has lost its rights to sue IBM over stolen code in AIX and Linux. It seems the rights that SCO said it had to sue, actually belonged to Novell, who licenses its software to SCO. (Novell would have to do the suing).

Dvorak has a nice timeline (here).

Here is the history of UNIX code, which started at Bell Labs and ended up at Novell.

JOIP

deltathree is rolling out VoIP hardware with Panasonic.

joip is the newly formed consumer brand of deltathree that powers the Voice over IP (VoIP) service of Panasonic's GLOBARANGE hybrid landline/VoIP phones. [ delta3]

If only it was this easy: "just connect your joip enabled GLOBARANGE phone to a broadband connection to join the joip community! (No computer or external adaptor required.)"

And so the Censorship in America begins

This goes far beyond Net Neutrality. And this pushes the idea of Ma Bell filtering all of your IP and voice traffic for the government to an extreme. Ma Bell censured a webcast of Pearl Jam at Lollapalooza. GigaOm has the details here.

It is good to see that the company with the Death star logo would so quickly move to such censorship. But what I find even more appalling is the Lack of Response from most Americans!

Wi-Jack™ Duo - Cool AP

The Wi-Jack Duo is a Nifty little thin AP from Ortronics. (data sheet)

Vonage stumbles

Comcast has over 3M VoIP subs. Vonage is stalling at 2.45M. Here's the numbers via Y!ahoo:

• Vonage only added 57,000 lines.
• Vonage rang up a loss of $34M, "Excluding one-time charges, Vonage lost $18 million"
• Marketing was cut from $91M to $68M
• (And when you only add 57k, your losses are less due to the reduction in acquisition costs).
• Acquisition costs: $287
• Revenue is $206M
• "On June 30, Vonage had cash reserves of $344 million, down from $410 million three months earlier. Of the total, $66 million were tied up as collateral for a bond tied to the Verizon patent verdict. The company said it expected its "cash burn" to decline in the third quarter." [yahoo]

No word on the patent case. But these numbers coupled with the SunRocket closure (and maybe the debacle of Amp'ed) means people are getting leary of the start-ups. The Big Boys numbers seem to indicate that they are not having any trouble adding lines.

Sprint's Numbers

Sprint released its quarterly financial report. Phone+ summarizes:

1. Sprint said it earned $19M during the three months that ended June 30.
2. Last year it did $370M for the same quarter.
3. Revenue increased by approximately 2% from $10B to $10.16 billion
4. Sprint added 400,000 new subscribers - 155,000 brought in by wholesale partners and 33,000 from agents - now totals 54M

Sprint is spending on WiMax and 4G - and it is costing them

Sprint is also letting its wireline operations go by the wayside.

Pac-West BK

According to Phone+, Pac-West has closed up operations every where but on the West Coast in an attempt to put together a plan to emerge from bankruptcy.

Meanwhile Broadvox is on the road to BK with this statement from P+:

“Our objective is to offer any customer an equivalent package at less than what they were being charged by Pac-West,” said David Byrd, vice president of marketing and product management for Broadvox.

Ma Bell to start filtering usage

It's costing Ma Bell billions in upgrades for piracy, according to Yahoo News. [Blogger's note: This is bull. The billions the RBOCs are spending is to provide video and triple-play - needed to stave off the march of consumers to cable. I love crappy journalism, Brian Deagon.]

"Various analysts estimate that about 5% of Internet users account for 50% of traffic.... Another reason for AT&T's change of heart is that it wants to partner with the entertainment industry.... Still, AT&T is heading into precarious waters going down the path of filtering content. It could face legal showdowns, and it would likely be savaged in the blogosphere by the millions of people accustomed to free content. The filters might also disrupt the traffic of people surfing the Web in a perfectly legal manner..... [GE Vice chairman Wright says] entertainment industry and telecom providers are now "in the same boat. That is, we are all in the video business, the distribution business and in the advertising business" .... ISPs do forward notices delivered by production companies to the alleged abusers. In the first six months of 2007, for example, NBC Universal said it sent more than 1 million notices of alleged abusers to U.S.-based ISPs, asking them to forward the message." The entertainment industry wants filtering. However, filtering does not work. "Filtering isn't new, says Fred Von Lohmann, an attorney for the Electronic Frontier Foundation. "I think it's a pipe dream."

My points:

1. The duopoly would have to deploy filtering in the same markets at the same time or likely there would be churn to the non-filtering ISP.
2. The DMCA states that if you filter, you are not protected, since you can supposedly see the infractions. So guess who else the RIAA and MPAA can sue?
3. And how about child porn and the FBI?
4. How about the incurred latency of DPI, especially on video and voice? The network will have increased latency due to every packet being checked.
5. Privacy anyone???
6. Of course, Ma Bell would be on-board - it's the next step with their NSA Program.
7. When are consumers going to stand up for their rights?

Packet8 = Churn

FierceVoIP says that 8x8 has a churn of 9%! 8x8 reported a profit last quarter.

"Packet8 losing 17,300 residential customers. The number translates into a gross churn of more than 9 percent of the 181,000-subscriber base. A total of 8,300 new subscribers were added, yielding net churn of around 5 percent." [fiercevoip]

"The first-quarter profit at 8x8 appears mostly to be related to a series of one-time items, including $573,000 in revenue arising from a change in the company's Universal Service contribution."

Packet8 offers a $199 per year plan as well. That will probably not turn out much better for 8x8 than it did for SunRocket.

Alltel and CTC Numbers

CTC is being purchased by Windstream, the former wireline operations of Alltel. Here are the financials of CTCI for 2Q07:

1. Operating revenue increased 5% to $46.3 million vs. year ago quarter
2. 25% increase in broadband customers from second quarter last year
3. Operating income was $4.7 million in the second quarter of 2007

Read the rest at MSN.

Meanwhile, Alltel, which will go private, saw profits drop 50%!

Alltel, which has accepted a $24.7 billion buyout offer [in a a proposed $71.50-a-share buyout by TPG Capital, formerly Texas Pacific Group, and GS Capital Partners, a subsidiary of Goldman Sachs], earned $195 million, or 56 cents a share, in the three months ended June 30, down from $428 million, or $1.10 per share, a year ago.... The year-ago results included income from the company's traditional phone operations, which were spun off in July 2006 to form Windstream Corp. [businessweek]

Alltel by the numbers:

1. Alltel @ 12M subs is the 5th cellco, after Ma Bell, VZW, Sprint, and T-Mobile.
2. "reported gaining 181,000 new contract customers" in the last quarter.
3. quarterly earnings were $195M
4. Revenue was $2.18B

Those numbers are pitiful really. Earnings are just 10% of revenue. The new subs account for 1.5% increase. No wonder they want to go private.

10 Things about VoIP over Wireless

The big 3 out of the 10 Things about VoIP over Wireless:

1. Mixing VoIP and data can degrade call quality
2. Older wireless LAN equipment isn’t ready for VoIP
3. Voice transmission is more sensitive than data transmission

Read the rest here: zdnet and techrep

Wireless in the news

Lots of WiMax and wireless buzz in the news today.

1. Is ELN for sale? [source]
2. Ma Bell turns up Alaska WiMax. [blog, source, fact sheet]
3. Success at 2 muni wi-fi - ELN-Corpus Christi and MetroFi-Portland [source]
4. White Space set-back [source]
5. Google Hiring for Wireless / Mobility [source]

Here's How to Run a Conference

Office 2.0 is a paperless conference. The organizers use some incredible tools (listed here) including:

• EventWax for registration,
• Zoho for apps,
• Facebook & LinkedIN, GoogleMail,
• Eteleros platform,
• ThinkFree office apps, and
• Gaboogie for web conferencing.

Every registered attendee gets an iPhone. The iPhone will be used through the conference as an experiment in paperless collaboration. Now how cool is that?!

This conference shows that many apps are available online for no-charge that NSP's could be capitalizing on. How do you do that? Well, that's the Special Sauce isn't it? Come to a Round Table and I will elaborate on how you can do that.

FCC Commissioner Copps on DowJones-Fox

"It's interesting to hear the "experts" claim the transaction faces no regulatory hurdles. Not so fast! This deal means more media consolidation and fewer independent voices, and it specifically impacts the local market in New York City. What's good for shareholders of huge media conglomerates isn't always what's good for the public interest or our civic dialogue. We should immediately conduct a careful factual and legal analysis of the transaction to determine how it implicates specific FCC rules and our overarching statutory obligation to protect the public interest. I hope nobody views this as a slam-dunk." Statement by FCC Commissioner Michael Copps on the Dow Jones Acquisition by Fox.

Telco's Move into Hosting, SAAS

Paetec is the latest telco to enetr the hosting and back-up space:

"PAETEC Holding Corp. has announced the availability of its data backup and recovery, dedicated server and Web hosting platforms. The PAETEC data backup and recovery product provides businesses with a secure, automated off-site server backup, which copies data to two data centers over a customer’s Internet connection. Recovering data can be made from the Web-based control console, allowing on-demand restoration. The company’s dedicated servers are housed in a PAETEC owned and operated data center with generator and battery-backed power, network access and power grids, and 24/7 monitoring and staffing. ...The above solutions also can include PAETEC’s MPLS VPN, SIP trunk and network firewall services. They are all available through the company’s agents*." [phone+]

Other telcos entering the SAAS pie include:

• XO with a partnership with Jamcracker (one of the earlier entries into the ASP space)
• AT&T bought one of the original ASP's, USinternetworking
• Ma Bell has been in the hosting business for a long while, including back-up and secure email.
• MCI supports web-based HR Software from NOW [source]

I'm sure there are others. But this means that you have to move:

1. design a plan for hosting, back-up, and apps.
2. link up with strategic partners for leverage
3. train staff to sell, implement and track the new offerings
4. market it - and start adding revenue

Strategic Partners. Why do everything yourself? Let experts handle your weaknesses. There is no way to be an expert at everything. Focus on your strengths and partner to fill in the gaps. There are many opportunities to partner: Data Protection Services*, AppExchange*, SalesForce.net, Delaware.Net*, intermedia.net, sparkGroup, everyone.net, HostMySite, YouSendIt, SitePal, and exhibitors at shows like SaaSCon and ISPCON.

Don't forget the Web 2.0 crowd like thebox.net, Amazon S3, Cleversafe, myfabrik.com and various Voice 3.0 companies. And finally there are the bigger players: Hostopia, Google, and Microsoft.

* the asterisk means that RAD-INFO has a relationship with that company and can help you contact and/or partner with them. Call the office at 813 963-5884. RAD-INFO, Inc. suggests that you utilize an attorney for these partnership agreements as well as other legal work. We suggest David Snead, who blogs at The WHIR.

WOW! A VoIP Company shows a Profit

8x8 launched Packet8 VoIP service in Nov. 2002. The company has burned through tens of millions of venture money to create patents as well as acquire 8000 business clients. It posted a GAAP net income of $508,000 on $14.7M in quarterly revenue.

As of March 31, 2006, 8x8 had approximately 133,000 Packet8 lines in service. According to its 2007 annual report (fiscal years 2007 ended in 2Q07), "As of March 31, 2007, we had more than 100,000 Packet8 residential and videophone lines and approximately 7,000 business subscribers to our Packet8 Virtual Office service."

The 8K Biz clients represent 44% of the company's revenues. [source] So the 133k resi lines only contribute 50% of the revenues?? Packet8 offers Unlimited business lines for $50 and Unlimited Resi calling for $25. But then most of the accounting stuff they announced made zero sense to me. (Read it from the source at CNN Money).

Churn approximated 4.2% for the fiscal 2007.

Total revenues for 1Q2008 =$14.7 million ($14.4 in previous quarter)

Subscriber acquisition cost increased to $126 for fiscal 2007. (This may increase as 8x8 made a deal with Sherwood to be the preferred transition company for SunRocket customers - and to give them one free month and free CPE plus all the advertising and hand-holding and LNP).

As of May 30, 2007, 8x8 had 68 United States patents that had been issued and additional United States and foreign patent applications pending.

8x8 has 911 agreements with TCS (TeleCommunication Systems =) for roaming and Level(3). L3 and GX are its main backbones according to an interview on TMC about the SunRocket porting issue.

8x8 has partnered with YouSendIt to power Packet8 Dispatch, which "allows users to easily upload multiple files as large as 2GB each to multiple recipients, on-demand. Recipients receive an e-mail notification with a link to securely download the files." [source] There is a free, limited Lite version and a premium paid version.

Packet8 now offers install via CSI. [source]

Packet8 offers Business Voice Recording Services. "Powered by HOLDCOM, a leading provider of message on hold services and voice production for telecommunications and the Internet, the Packet8 Audio Production Store enables Virtual Office subscribers to tap into a network of professional audio production services to enhance the marketing effectiveness of their external communications. These services include Message-On-Hold, voice-prompt production and voicemail greetings in a wide range of languages and dialects. Additional services such as overhead music and announcements for retail and business applications are also available through a special arrangement with HOLDCOM." [CNN]

It's all about the value add.

Branding Blunders

Right now, I can think of at least 3 Blunders in Branding. Multi-Billion dollar missteps.

First is the Cingular buying AT&T Wireless and re-branding it as Cingular. Then re-branding Cingular as at&t this year. Billions wasted. Diluted brand.

Second is Sprint spending $36B to buy Nextel - its iDen push-to-talk network as well as its high ARPU business customers. Eventually, Sprint can't integrate it. The network is de-valued. The high value customers leave. And Sprint buries the brand name Nextel. R.I.P.

Third is coming amid rumors that Cisco is going to bury the Linksys name.

Toxic Employees

Seth Godin writes about Toxic Employees.

They make two big confusions:

1. They confuse "How can I help this prospect/customer?" with "How can I get rid of this person and get back to work?"
2. They confuse, "How can I have a better day by treating this person with a great deal of respect?" with "Why isn't this person treating me with the respect I deserve?"

These employees can ruin your business. Marketing is as much about Customer Care as it is about selling your product. (You better get this, because the Big Boys certainly do NOT). Every touch of the customer is a chance to win her or lose her. Everyone is in Sales. And, as Brian Tracy shouts: EVERYTHING COUNTS!

Bob Sutton is a professor at Standford who wrote the book The No Assholes Rule. He has a short video at 50 Lessons on the basis for the book, which started as an article for the Harvard Business Review.

Non-Organic Cellular Growth

How do you show gains in cellular growth? Why, you buy it. After its $36B merger with Nextel, Sprint proceeded to settle affiliate lawsuits with multi-billion dollar buy-outs.

In 2005, Sprint Nextel acquired three of its wireless affiliates, US Unwired (deal closed in August), Gulf Coast Wireless (deal closed in October), and IWO Holdings (deal closed in October). Alamosa PCS (WAS) the largest of its affiliate carriers. Sprint Nextel completed the acquisition of Alamosa Holdings on February, 2 2006. Other affiliates include Ubiquitel (acquired), iPCS, Shentel, Enterprise (acquired), Northern PCS (acquired), and Swiftel. [from Wikipedia]

A good example is the purchase of Nextel Partners, in which Nextel owned a 30% stake. Sprint gained 2M subs and licenses (including 2.5 GHz) in 58 tier 2 and tier 3 markets for just $6.5B.

Now VZW is trying to "acquire Rural Cellular in a deal valued at $2.67B that will expand its wireless service coverage in rural markets and add about 700,000 subscribers." VZW will take on about $2B in debt and pay about $750M for the stock. VZW will save a couple million each year in roaming costs. (The Vermont AG and PUC are reviewing this - and these guys are dissatisfied with VZ over the pending sale of the New England wireline business).

[Update] I forgot that Cingular bought Dobson (aka Cellular One) for $2.8B

And if you run out of affiliates to buy, wholesale your network. That's what MVNO is for.

EMBARQ by the numbers

Telephony online has the EMBARQ 2Q report.

1. Second-quarter telecom revenue was down less than 1% from a year earlier, as growth in wireless and high-speed Internet revenue offset declines in traditional voice revenue.
2. The company lost 146,000 access lines in the second quarter, but that number was 5000 lower than the number it reported a year ago. In the consumer market, the company lost 127,000 lines in the quarter—8000 fewer than it reported a year ago.
3. Embarq’s high-speed access service is now available over 77% of its access lines. During the second quarter, the company’s DSL subscriber base grew by 52,000 to 1.15 million.

Smart move: To address what the company called the primary cause of consumer churn—customers moving—Embarq has brokered agreements with six “medium-sized” CLECS that allow customers to transfer their service to their new address, even if it is outside Embarq’s territory.

In other news, Embarq is adding profit by cutting off Health Care Benefits to It's Retirees

Phone+ mag just highlighted Embarq's Agent Channel.

L3 2Q results

Level(3)'s financials for 2Q07 are out, but flat.

• Consolidated Revenue of $1.052 billion
• Net Loss of $202 million
• Consolidated Adjusted EBITDA of $193 million (Huh?)
• Completed acquisition of Servecast Limited, a provider of live and on-demand video management and streaming services in July 2007
• Revenues flat quarter to quarter
• The increase in Core Comm. Revenue was due primarily to the growth in long-haul transport services and Vyvx broadcast services.
• SBC Contract money decreased by just 8%
• Other Communications Services revenue declined by 15% to $71M during the quarter, primarily as a result of expected declines in managed modem services.
• As of 6/30/07, the company had cash and marketable securities of approx. $807M.

ELN Shifting Strategy

Dial-up, BPL, DSL, cable, software, hosting, CLEC, reseller, MVNO, and muni network builder. You look at that list and can't find a winner. It's cash cow (dial-up) is sliding.

For the quarter, revenue from the consumer services segment decreased to $264.1 million, or 7.9 percent. Contributing to this change was a 10.2 percent decline to $231.7 million in our access services driven by declines in premium narrowband and broadband services, partially offset by growth in our value narrowband and voice access services. [source] During the second quarter of 2007, EarthLink's overall subscribers declined by 177,000 net subscribers (excluding the previously announced removal of 753,000 Embarq subscribers) compared to the first quarter of 2007. This was primarily due to a decline in consumer premium and value narrowband access subscribers partially offset by growth in voice and municipal Wi-Fi subscribers. [source]

How about the varying parts that make up EarthLink?

1. Helio, its MVNO, is still bleeding. Just over 100,000 users, but another ELN & SK had to kick in another $100M each?! (A thousand per sub?) With Amp'ed's BK, you have to wonder how loud that clock is counting down.
2. BPL. Cable. Enough said.
3. Dial-up is shrinking (see above). And Wi-Fi customers aren't making up the difference.
4. Software. Apparently, security software sales, like anti-malware, are helping a little bit.
5. Hosting is probably inching up as well. (It is every where else). And Citrix helps.
6. Closing US support centers and moving them to India saved some money -- but probably cost ELN quite a few subscribers.
7. New Edge Networks is the business CLEC ELN bought in April 2006. "For the second quarter, revenue from the business services segment increased to $48.1 million, or 6.0 percent, primarily due to New Edge Networks." [source]
8. ELN is a Reseller of Covad ADSL2+ and line-powered Voice. (I'll get to that later, but reselling VoIP and DSL is not a big money maker - ask any ISP).
9. ILEC DSL can be exemplified by the dissolution of the ELN-Embarq DSL program. How much money can you extract from Naked DSL for $15 in VZ region ?
10. VoIP is tricky as we have seen with Vonage and SunRocket, but it is unlikely that ELN (or any other provider) will amass the subscriber numbers that SunRocket has. And acquiring the cheapo customers of SunRocket at $19.95 for Unlimited TrueVoice is not a revenue generating idea, IMO.
11. That leaves Muni Wi-Fi. ELN was gangbusting in the last year, signing up every town and city it could. Now ELN is re-thinking that strategy. No kidding. Show me one network win here. Phillie? Not yet. San Fran has been a mess that ELN seems to be stepping away from. ELN needs a new stance. The new CEO, Rolla Huff, has called Time-out on Muni projects. St. Pete, Arlington, Austin, Milipitas, Anaheim, Houston, Corpus Christi, and more. Too much money out; not enough coming in. [Toronto is a nice example of the muni progression]. And obstacles like light poles, City Councils, and other hurdles increase expenses.

From what I hear, people are coming and going out of ELN - employees and vendors - so turmoil reigns. Apparently, one lesson for businesses: Have a Succession Plan in place, even if your CEO is just in his 40's. I think Gary Betty had the vision and was juggling all the balls. His death sent a shockwave that knocked over the other jugglers.

Here's some Ideas from RAD-INFO:

1. The Nokia N device marketing move was nice, but there wasn't enough buzz about it - and the devices were not easily found to be purchased. It has to be stupid easy for the consumer.
2. Take a page from Skype. On Amazon.com there are over 50 hardware items for Skype. There should be the same for every Muni Wi-Fi city - lots of wi-fi devices with apps loaded that take advantage of ubiquious wi-fi / mobility. (TrueVoice soft phone?)
3. Bundling: Is ELN utilizing the Retail Channel to push bundles? VoIP should be bundled with all broadband that ELN offers - cable and DSL and TrueVoice. How about Redundant and Mobile Packages? Does ELN have a deal to sell DTV or DISH?
4. Helio + Covad + New Edge = FMC .... Take full advantage of the synergies between the cellular and fixed line / broadband assets.
5. ELN should also be retailing Helio with Naked DSL or cable access. Maybe VoIP too. (Where is Helio for sale?)
6. Helio + Muni = dual-mode phone = Differentiation
7. Adzilla and Bare Fruit should be adding revenue on every network, like it is for this ELN cable modem subscriber: "Earthlink's DNS redirection is annoying enough that I have static alternate servers listed before theirs. (If I type it wrong, I want my browser to act like I'm dumb, instead of the ISP subjecting me to their best guess and a bunch of adverts.)"
8. Ad supported Muni Wi-Fi is even something Microsoft is jumping on with Jiwire and MetroFi.
9. Start looking at ASP services.
10. Hire Peter at RAD-INFO, Inc. to manage the implementation of these ideas for you.

Qwest doubles profit on flat revenue

Net income more than doubled for Qwest in the 2nd Quarter to $246M even with flat revenue of $3.46B. Qwest cut operating expenses by 4% (now $2.93B). (That means worse service). Their former CEO (Nacchio) is going to jail and paying $50+M in fines and fees. Current CEO Notebeart is retiring.

Qwest said its bundle penetration increased to 60 percent in the second quarter, up from 54 percent in the year-ago quarter. Qwest also has completed half of its planned $2 billion share buyback and eliminated $356 million in debt. [source]

FCC 's 700 MHz Band Auction Plan

The FCC 's 700 MHz Band Auction Plan

• Under the new band plan, 62 megahertz of spectrum, divided into five spectrum blocks, will be auctioned for commercial uses.
• The commercial spectrum will be made available at auction in a mix of geographic area sizes, including Cellular Market Areas (CMAs), Economic Areas (EAs), and Regional Economic Area Groupings (REAGs).
• The 10-megahertz Upper D Block will be licensed on a nationwide basis and will become part of a 700 MHz Public Safety/Private Partnership.
• Within the 24 megahertz of public safety spectrum, the public safety wideband spectrum is being redesignated for broadband use to allow for nationwide interoperable broadband communications by public safety users.
• The public safety broadband spectrum is placed in a 10-megahertz block at the bottom of this band and the existing public safety narrowband spectrum is consolidated in a 12-megahertz block at the top of the band. Internal guard bands are placed in between the broadband and narrowband segments.
• There will be a single, nationwide license for the public safety broadband spectrum, assigned to a Public Safety Broadband Licensee, which will work with the adjacent commercial D Block licensee as part of the 700 MHz Public Safety/Private Partnership.
• The Public Safety Band is shifted by downward by one megahertz from 764-776/794-806 MHz to 763-775/793-805 MHz in order to protect public safety narrowband operations in the Canadian border areas.
• To accommodate the shift in the Public Safety Band, the Guard Band A Block is being relocated to a new location between the Upper C and D Blocks, and, to further protect the public safety narrowband operations from potential interference, the Guard Band B Block is being placed above the narrowband block at the top of the 700 MHz Band.

Performance Requirements for Commercial Spectrum

• New, more stringent performance requirements were adopted for commercial licenses that have not yet been auctioned in order to promote better access to spectrum and the provision of service, especially in rural areas.
• For licenses based on CMAs and EAs, licensees are required to provide service sufficient to cover at least 35 percent of the geographic area of their license within four years, and 70 percent of this area by the end of the license term.
• For licenses based on REAGs, licensees must provide service sufficient to cover at least 40 percent of the population of their license area within four years, and 75 percent of the population of the license area by the end of the license term.
• If licensees fail to meet the four-year, interim geographic or population benchmark, the license term will be reduced from ten to eight years, thus requiring these licensees to meet the end-of-term benchmark at an accelerated schedule. Interim reporting requirements have also been adopted to ensure that build out is timely.
• If licensees fail to meet the end-of-term buildout requirements, the FCC will automatically reclaim the unserved portions of the license area and make them available to other potential users.

Open Platform

• The licensees of the Upper 700 MHz Band C Block of spectrum will be required to provide a platform that is more open to devices and applications. This would allow consumers to use the handset of their choice and download and use the applications of their choice in this spectrum block, subject to certain reasonable network management conditions that allow the licensee to protect the network from harm.

Auction Procedures

• In the upcoming 700 MHz auction, the FCC will use “anonymous” bidding procedures, in which any information that may indicate specific applicants’ interests in the auction, including their license selections and bidding activity, is withheld until after the close of the auction. These procedures will be used irrespective of any pre-auction measurement of likely competition in the auction.
• The FCC will use “package bidding” procedures when auctioning the 12 licenses in the Upper 700 MHz Band C Block in order to assist bidders that are seeking to create a nationwide footprint.
• The Order directs the Wireless Telecommunications Bureau to establish reserve prices for the upcoming 700 MHz Band auction.

[source]

700 Mhz, FCC, Google, T-VZ, Jason and Om

Om Malik has been all over the 700 MHz story (here and 700 MHz explained here and here). Susan Crawford has some pre-meeting comments (here).

The FCC, Google, and the pair of Bells have all declared some kind of victory based on this Compromise. The big deal is that 700 MHz is about the last piece of good spectrum left [Specifically the 698-746, 747-762 and 777-792 MHz Bands (WT Docket No. 06-150)].

The gov't wants to make billions (>$10B) from the auction. Supposedly to help pay for DTV set-top boxes.

The Bell pair - VZW & at&t - want to buy that spectrum and either use it for more cellular walled gardens or sit on it so no one else can use it against them (like they did with most other spectrum vis a vis 2.x GHz). The Bell pair figure $10B to keep out competition is a deal - because they will make that back in no time.

At the FCC, Martin declared a victory:

1. The FCC gave some spectrum for Public Safety. Duh! He had no choice. As Copps pointed out: You needed to do this in 2001 after 9/11; by Katrina in 2005, 4 years later, you still did nothing. Finally, by 2010, we will have a public safety net. 9 years. (pause... 9 years). We need a unified, inter-operable network and it has to be funded. As K-Mart stated: "We cannot keep licensing public safety spectrum in the same manner as before and expect a different result." It will be a Public-Private Partnership.
2. Nokia applauded the next part: "In addition, the license winner for about one-third of the spectrum will be required to provide a platform that is more open to devices and apps. Consumers will be able to use the wireless device of their choice and download whatever software they want onto it." [source] This was the Carterphone piece. Take your device from network to network. We did not get that. But who thought we would.

   In the wake of the Carterfone decision, AT&T subscribers went from renting black rotary phones to purchasing competitively priced, innovative phones such as cordless phones with voice mail and caller ID. Investment in the market increased, new phones and calling features were developed and consumers benefited. Ultimately, these rules facilitated the development of the Internet, as consumers were able to attach modems to the network and go anywhere the Internet could take them without interference from the network owner.[source]

   Now, within just the last month, Carterfone and wireless open access have been on the front pages of USA Today, the New York Times, and the Washington Post. They have been the subject of Congressional hearings and industry and academic policy forums, as well thousands of emails and letters to the Commission from citizens across the country. What a striking reminder of just how powerful a good idea can be— especially when coupled with strong Congressional oversight and grass roots activism. I find it extremely heartening to see that an academic paper—in this case by Professor Timothy Wu of Columbia Law School—can have such an immediate and forceful influence on policy. Credit is due to Professor Wu as well as many tireless advocates in the public interest and high-tech communities for bringing this idea to the fore. [Copps]

3. There were 3 speakers before the Commissioners spoke. The Police Chief from DC; the Fire Chief from Arlington County, MD; and Jason Devitt. Jason spoke about why Carterphone is significant: because you wouldn't be locked to one carrier and you wouldn't have to keep buying new devices (which would save disposal problems). Jason spoke before Congress on Wireless Innovation (and here). He mentioned that there is no innovation in cellular except by the handset manufacturers - no YouTube or Google because it is too hard to make a deal with the monopolies. He pointed out that it is not a technical or engineering issue - it is a business issue. "Why are ringtones $2 and the whole song only $1?" Walled Garden.
4. Copps is very pro-safety, but he is also doggedly realistic: "I appreciate my colleagues’ willingness to work with me to build these many safeguards for public safety into today’s order. But I also want to emphasize my belief that our work has really just begun. At the end of the day, we need to ensure that this network actually works for public safety. To me, this cannot and will not happen without strong and ongoing FCC oversight. I have believed this for years." [source] And more: "Let’s get one more thing on the table. The requirements we announce today are very demanding. Building this network will involve costs above and beyond those required to build a typical commercial network. But I think that these are the minimum process requirements necessary to ensure that the network actually works for public safety. If the stringency of the requirements we announce today means that no one shows up to bid on the commercial license, or that the two parties ultimately cannot reach an agreement that ends up being in the public interest, then I am perfectly willing to go back to the drawing board. I won’t be happy if this happens, but I’m not about to cut corners if it means compromising public safety. Far better that public safety remains in control of its spectrum—and free to find another model for funding it—than for this Commission to bless a sharing arrangement that does not fully protect the nation’s citizens and its first responders."
5. And finally the spectrum for Broadband left Copps upset: "America’s broadband performance leaves a lot to be desired. To me, the culprit is clear: a stultifying lack of competition in the broadband market, which in the words of the Congressional Research Service is a plain old “cable and telephone . . . duopoly.” A 22 MHz block of 700 MHz spectrum is uniquely suited to provide a broadband alternative, with speeds and prices that beat current DSL and cable modem offerings. Maybe this can happen yet in this spectrum, but by declining to impose a wholesale requirement on the 22 MHz C-block, the Commission misses an important opportunity to bring a robust and badly-needed third broadband pipe into American homes..... Wholesale would have been good news for them—and for consumers."
6. Yeah, no wholesale requirement. More Copps: "Moreover, due to the Commission’s short-sighted decision a few years ago to eliminate spectrum caps, we have seen a wave of consolidation among wireless incumbents that has substantially increased the hurdles facing potential new entrants. And now we live in a world where the two leading wireless companies are owned in whole or in part by the leading wireline telephone companies. It is no knock on these companies to say that they may be more than a little reluctant to employ their spectrum holdings to put price and quality pressure on their wireline broadband products. What else would we expect them to do? The solution is to encourage an additional wireless competitor that has no affiliation with a wireline provider. A wholesale requirement would have given unaffiliated companies the fighting chance they need...... Several sophisticated companies and financial institutions have concluded that wholesale is indeed a viable economic model.
7. "Use-it-or-lose-it provisions, along with geography-based benchmarks in the lower band, will ensure that licensees have a reasonable period to make use of their spectrum rights, while also allowing third parties a chance to provide service in areas where the original licensees are not."
8. On the details, Copps finds fault: "My deepening concern this afternoon is that this auction might not end up being the stimulus to a third pipe, the right to attach devices, to run applications and to encourage the innovation and entrepreneurship that we all hope for because of some addon provisions. The item now imposes reserve prices on each of the individual spectrum blocks, something without precedent in previous auctions and something, it seems to me, rather at odds with letting the market pick the auction block winners. The procedure in this Order carries chilling risk to the success of the auction. If some of these blocks do not fetch the bid prices stipulated, perhaps because of gaming of the worst sort, they will be re-auctioned with weaker build-out requirements. If the 22 MHz block, where we hope for Carterfone open access principles, fails to elicit a $4.6 billion bid, it will be reauctioned without Carterfone open access. In the end, all of this micro-managing virtually hands industry the pen to write the auction rules and to constrict all the opportunities this spectrum held forth. The end result could be: same old, same old. What a pity that would be!"

That's enough for now. I'll post the auction later.