Broadband
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Mike Volpi, a rising star at Cisco Systems who enjoyed a status rivaled only by Red Sox stud closer Jonathan Papelbon, has decided to leave the company.
Volpi, who was one of CEO John Chambers’ hand-picked men to help Cisco navigate the post-bubble crisis, has not decided where he will go next. The very continental Michelangelo, who was the senior Vice President and General Manager, Routing and Service Provider Technology Group is leaving on a high note – the router sales are strong again.
Volpi is also an ambitious man, would love to add the “CEO” title to his resume. He has done it all for someone so young – he is only 40 - He has made enough money, and has earned enough respect in the networking world to ride into the sunset. But Mr. Five-Lattes-a-Day Volpi isn’t ready for a Starbucks AARP discount just yet.
We had heard rumblings of this exit about three weeks ago, but could not find the second source to provide more background on the exit. Why would Volpi leave? Well, he has got nowhere to go. Even in a best-case scenario Volpi had a good 10-to-15 year wait before he got to the CEO’s office on Tasman Drive.
Chambers is only 56 years old and is going nowhere. The company has recovered nicely from the post bubble setback, and if recent quarter is any indication, is firing on all cylinders. Cisco reported Q2 net income of $1.9 billion on revenues of $8.4 billion, up from $1.4 billion and $6.6 billion in the same quarter last year.
Even if Chambers decides to retire in say five years, his heir apparent, Charlie Giancarlo, the Chief Development Officer and also the president of the Cisco-Linksys business unit — one of the fast growing groups within Cisco — will be in no hurry to leave his gig. He is only 49 as well, and clearly relishes the spotlight.
Interestingly, two other VPs — Pankaj Patel and Tony Bates — will team up to lead the new Service Provider Technology Group (SPTG), according to Light Reading. They are going to be reporting to Giancarlo.
Volpi’s decision highlights two things: first that Cisco has a really deep bench when it comes to filling senior management ranks, and secondly, if you are a Cisco executive with grand ambitions, well don’t stick around too long –- the top slot might not ever be yours for taking.
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Written by Om Malik on February 9th, 2007 with no comments.
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Is the Netherlands the new server hub?
According to a Dutch newspaper report, a massive new server farm is being built in the Eemshaven (Eems harbor) and will be able to store 100,000 servers and will have access to 30 megawatts of power, mostly coming from a huge power plant that is just a stone’s throw from the new proposed server farm. As a comparison, we have heard (not confirmed) Level 3 uses around 40 megawatts of power in all its server farms.
The server farm is pretty close to the Amsterdam Internet Exchange, one of the largest Internet exchanges in the world, and has direct connections to the U.S. The report suggests that Google might be one of the main tenants at this new server farm, even though they are big customers of the Zernike server complex in nearby Groningen City.
The new server farm and its location is part of a larger industry trend: locate data centers close to locations with access to cheap power. Power is viewed as a major bottleneck in the web infrastrucure. Google, Yahoo and Microsoft are spending billions in the Pacific Northwest to build out their web infrastructure. Google also inked a deal to build out a big data center in North Carolina for pretty much the same reasons - power.
Hat tip, Vincent Dekker via The Cook Report.
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Written by Om Malik on February 9th, 2007 with no comments.
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Every time we read a story that details “issues” with AT&T’s IPTV plans, like this article in the Wall Street Journal (subscription required), we think about the DISH Network’s good fortune.
Delays with IPTV mean that AT&T will have to continuously push the HomeZone triple-play package, which in turn means more subscriptions for DISH Network, which is fighting tooth and nail with DirecTV.
So DISH doesn’t have to spend the dollars on marketing and can ride AT&T’s coattails to a bigger subscriber base. For argument’s sake, if things really go to hell, AT&T might have to buy a satellite TV Company, which again is good news for DISH.
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Written by Om Malik on February 9th, 2007 with no comments.
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If you like local politics, bureacracy and a drawn-out waiting game — tune into San Francisco’s ongoing Wi-Fi plans. I did yesterday, and spent three hours sitting through the city’s Budget and Finance Committee meeting, watching community advocates fight and supervisors play politics. One things for sure, the plans are as on-hold as ever, despite the initial approval.
A resolution requiring a more thorough study of citywide broadband options has made it through committee, and now awaits a vote by the full Board of Supervisors in two weeks. If passed, this resolution would delay any finalization of the contract with Google and Earthlink for at least a “couple of months,” according to Supervisor Jake McGoldrick, who sponsored the resolution.
The resolution was drafted after the city’s budget analyst recommended considering alternatives to the deal, which is being championed by the Mayor’s office. The board’s support for the contract is mixed. I have a hunch that the board will vote for further study, but will face a veto from Mayor Gavin Newsom that they won’t have enough votes to overturn.
The hearing brought out a number of familiar faces. McGoldrick, the resolution’s sponsor, sat in attendance along with committee members Chris Daly, Bevan Dufty and Tom Ammiano.
Daly can generally be counted on to oppose moves by Mayor Gavin Newsom, and may feel more strongly doing so now given Newsom’s recent rash of embarrassing personal news; Dufty, long considered a staunch ally of the mayor, has become much less predictable; and Ammiano, the senior member of the board, has been a champion of a municipally owned and operated fiber optic backbone network for years.
Google, which recently made a move into The City, was representated by Megan Quinn. She was joined by Alex Clemens, who’s Barbary Coast Consulting specializes in helping companies navigate the murky waters of San Francisco politics. Google is one of his clients, and I had received an email from him earlier in the week asking folks who supported the Google deal to turn out for public comment at the meeting.
And the public certainly did turn out to comment (video will be available here). In an unscientific survery, I counted about two supporters of the contract for every detractor, though Google hosted
a number of community events to drum up support during 2006. Members of the community who hope the deal includes funding for ‘digital inclusion,’ such as Sister Petra Chavez of Caminos, argued that the faster the deal goes through, the sooner they can begin working on bridging the digital divide.
Thankfully, all the discussion focused on the merits of the case — all too often in San Francisco, policy often boils down into a fight between the mayor’s office and the board, and considering Newsom’s recent struggles, it could have gotten very, very ugly.
For their part, Google doesn’t seem terribly discouraged. “We look forward to continuing our work with the Mayor’s office and EarthLink to provide free Wi-Fi access to the over 1 million residents and visitors of San Francisco,” said Quinn.
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Written by Jackson West on February 9th, 2007 with no comments.
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Project LightSpeed, the much talked about IPTV service from AT&T, is beginning to get some critical scrutiny on Wall Street, with analysts questioning the near and long term potential of Ma Bell’s TV efforts.
Our good buddy John Hodulik at UBS points out that the only thing weighing down on AT&T is Project LightSpeed and the IPTV rollout that is running behind schedule. There have been scalability problems that AT&T hopes will be fixed by later this month. In a note John points out that there are technical snags and that is why AT&T is not marketing the service aggressively.
John predicts that AT&T will have 93,000 subscribers for its IPTV service at the end of 2007, and is generally upbeat about the prospects for AT&T’s U-Verse services that will ride atop the LightSpeed infrastructure. The Wall Street Journal, on the contrary, published a pretty damning update on Project LightSpeed & U-Verse earlier this week, outlining various problems with the company’s IPTV plans. The story noted that:
- AT&T U-Verse had 4,000 users at the end of the fourth quarter 2006, pretty much unchanged from the third quarter of 2006 that ended on Sept. 30. AT&T wants to offer U-Verse to 20.5 million customers by end of next year. (Readers, please add your own choice of snark here!)
- There are problems with the Microsoft IPTV software, which the companies say need fine-tuning. Unfortunately, this fine-tuning has been going on for too long.
- The problem is “channel switching” which is slow according to the WSJ. The fix is to add more servers, which means operational expenses go up, and well the whole thing is a mess, which is not going away with spending some serious dollars. Microsoft has said in the past that it has fixed the problems, and we saw some pretty fast channel switching, but then that was in Microsoft Demo room, so that really isn’t a true real life situation.
- U-Verse apparently needs 20 megabits/second of bandwidth to transmit video, WSJ says. I am not sure on the exact details, but I remember reading somewhere that the bandwidth requirements are much slower.
- There are problems with the video compression technology AT&T is using to cram high definition signals over copper.
So what does this all mean? Over next few months expect AT&T to push the satellite TVit offers via its Home Zone service, something we have written about in the past. They own 2Wire, the set-top box maker, and can easily boost the bandwidth available to the homes to create a rather meaningful interactive experience. That may do for a short-term fix while Ma Bell gets its IPTV act together.
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Written by Om Malik on February 9th, 2007 with no comments.
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Guess who got stuck with a big bill for all those “free” international calls touted by outfits like FuturePhone? None other than AT&T, which has filed a lawsuit in Iowa claiming that “deceitful and unlawful schemes” like FuturePhone’s caused a jump from $2,000 per month to $2 million per month in the fees billed AT&T by an Iowa rural telco.
Filed in the U.S. District Court for the Southern District of Iowa, Central Division, AT&T’s lawsuit seeks to stop FuturePhone as well as the telcos who provide local infrastructure from continuing with their operations that use regulatory-fee arbitrage and VoIP to provide international calls for only the price of a long-distance call to Iowa. Though the case was just filed on Jan. 29, it has already apparently caused FuturePhone to shutter its service, and has produced nothing but “no comment” replies from the Iowa LECs we contacted who were also named in the suit.
“This is just the latest in a long line of get-rich-quick schemes that bilk others to make a profit,” said an AT&T spokesperson. The lawsuit claims that operations like FuturePhone’s are in violation of several statutes, including Iowa state laws as well as previous FCC decisions.
Some background, for those not familiar with how intricate cross-network billing can get: When a long-distance call is “terminated,” if a long-distance provider like AT&T doesn’t own the local lines where that call is going to, it must pay a fee to the company that does. Even though such termination fees are typically higher in rural areas, since there are usually relatively few customers in the sticks big long-distance providers can easily balance the cost with their other businesses.
In Iowa, higher than average termination fees (as much as 13 cents per minute, according to AT&T) have been lately combined with fiber-based Internet access to provide a pretty good place for a VoIP-based gateway, which can then provide a way to cheaply reach foreign PSTNs. The loophole comes from some method of subtracting the money paid for foreign terminations from the amount gained by terminating calls in Iowa. While the margins are pennies-or-less per call, the lure of avoiding the high cost of international calls apparently caught on quickly, to the tune of hundreds of thousands of minutes a month, according to AT&T.
And when AT&T’s average monthly bill to one such Iowa telco, the Superior Telephone Cooperative, went from $2,000 to $2,000,000, it was time for Ma Bell to call the fine-suited folks at Sidley Austin LLP to try to close the loophole down.
Boiled down, AT&T’s main argument is that because the calls are not actually “terminated” in Iowa — AT&T says Iowa is just a midpoint in what is really an international call — AT&T shouldn’t have to pay the LECs the termination fees. Telco legal sources we talked to said that while the suit’s merit can certainly be contested, what it does immediately is give AT&T a legal reason to stall payments of such monthly bills, which could effectively strong-arm the startups out of business.
In FuturePhone’s case it seemed to have done the trick, since FuturePhone’s website still carries a big red “this service is discontinued” banner, and contact numbers for the company have all apparently been disconnected. The person who answered the phone at Superior Coop referred us to another Iowa LEC, Great Lakes Communications, which was also named in AT&T’s suit. There, we talked by phone to someone who would only identify himself as “Josh,” who said when asked about FuturePhone, “I’m not going to tell you that stuff.”
While some free-call operations (including Free Call Planet, also named in AT&T’s suit) still seem to be operating in Iowa, AT&T did leave room for yet-unnamed firms at both the website and telco level to be added to the suit. The bottom line, for firms seeking to make a buck by using regulatory loopholes: Good luck in court, because the legal equivalent of the Yankees just showed up in Mudville.
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Written by Paul Kapustka on February 8th, 2007 with no comments.
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The saying goes that elephants are afraid of mice. Actually that is not true. It is elephant keepers who like to kill mice because they carry disease that can bring down the mighty beast. The story is also true of the telecom industry, where mice aka oddly named voice companies (Jajah, Rebtel, Fring, and Zing), MuniFi, FON, and Clearwire are the disease carriers, the disease that impacts the revenues of the mighty carriers. It is hardly a surprise that the elephant keepers - telecom CEOs worldwide - want to kill these mice.
Regardless of what is the final outcome, the swarm of these little creatures are utilizing the Internet to give the communicating public an alternative to sending checks to the incumbents. What they are doing is challenging the telcos’ share of the relatively fixed time people devote to communication. The telephone network functions more like a giant billing system than a communications platform, and by making people “bill less” on that platform, the mice hurt the elephant.
In the U.S., the Big Four - AT&T, Verizon, Time Warner Cable and Comcast - would get away with their oligopoly unless the mice who represent the Disruptive Communications sector keep doing what they do. The consolidation in the phone business is a sign that they are having an impact.
Consolidation arises from an effort to resist change. Comcast uses a model introduced by Vonage to compete with Verizon for voice customers. Verizon reacts to the same development by deploying VoiceWing as an option for customers calling to discontinue service. These are uncomfortable times for the incumbents, because they now need to adapt and compete with the “mice” despite their size.
When faced with such odds the incumbents resort to using government and legislation as their competitive edge. Government fiat created the telcos. Influence with government remains the primary means of survival. The telcos push government to raise barriers to entry for disruptors (FCC mandates on VoIP companies regarding registration, E911, Calea, and USF), clear obstacles to adjacent markets for themselves (national or state video franchise rules), and facilitate price increases on captive customers (eliminating UNE-P).
Yet, the “mice” keep breeding and coming back. The availability of faster cheaper hardware and software improvements make instant messaging, email, web based communication, and the many flavors of VoIP increasingly better alternatives to plain old telephone service. Consolidation does not change the fact people find fewer and fewer reasons to create a billable event by picking up a telephone. As long as one of them hits the jackpot like Skype did, there will always be funding available to nibble away at the revenues.
You know what they say - there is no mice-free elephant stable.
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Written by Daniel Berninger on February 5th, 2007 with no comments.
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Palo Alto Daily News reports that the two Bay Area cities are close to signing off on trial zones for their MuniFi efforts. Brian Moura, assistant city manager of San Carlos told the newspaper that two “one-square-mile testing spots in Palo Alto and San Carlos may be ready as soon as late February.” Each square mile would have between 35-to-40 access points that would be installed on street poles for four month trial period. This trial is part of the big Wireless Silicon Valley initiative.
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Written by Om Malik on February 4th, 2007 with no comments.
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The Wikipedia profile of Phil Kerpen, a Beltway insider and policy director for Americans for Prosperity, should be enough of a reason for us to not take him too seriously. At least not when it comes to issues pertaining to technology, network neutrality and broadband.
His politics notwithstanding, his column over on Forbes.com, Internet Super Traffic Jam, blaming network neutrality for what he thinks is a coming traffic jam is just asinine piece of drivel, which doesn’t take into account how networks are built and how technology has evolved.
Kerpen uses a study by Deloitte & Touche, which says that the Internet backbone speeds are going to be reduced to a crawl if there isn’t substantial infrastructure investments and deployments, to argue against net neutrality legislation. DT, Accenture, McKinsey and others showed their true worth when they advised companies like Enron. So why take them seriously! But that’s a different rant.
The infrastructure investments in the backbone have been an ongoing process. Level 3 and Global Crossing, despite all their issues, have been using technologies such as boxes made by Infinera to lower their costs, and add more capacity. Since Kerpen doesn’t actually link to the study, we are left to wonder what his conclusions are based on. It looks like DT doesn’t even believe there’s a problem, since another research paper there predicts that “unrelenting progress in processing power, network bandwidth and storage capacity” will let electronic games proliferate.
What you’re seeing in Kerpen’s missive is another offering from the “telco chorus,” a group of bloviators who are paid either by conservative advocacy operations, or indirectly supported by telco contributions. These astroturfers have been outed before, and their goals of trying to provide “expert” or “unbiased” opinion are pretty transparent.
It’s surprising that a generally reputable outlet like Forbes is giving airtime to someone like Kerpen and his by-the-Ma-Bell book net neutrality opinions (service providers need incentives to invest!). Even if Ed Markey & Co. get a net neutrality bill to the President’s desk this year, there’s no guarantee it will be signed. The only thing stopping providers from building the network of the future is their decisions to spend money elsewhere, like in spending $89 billion to buy BellSouth and its networks of the past.
Luckily, the industry has innovators like Cisco building its CRS-1, and deployers like the folks behind the 10-gigabit Internet2, who are helping build the bigger pipes of the future. The “Internet is falling” argument is just another telco talking point, tailor-made to add more FUD instead of clarity to the debate. Too bad Forbes doesn’t have the time to find writers who actually know what they are talking about.
(Om Malik contributed to this post.)
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Written by Paul Kapustka on February 2nd, 2007 with no comments.
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Call it a predictable move — during Verizon’s conference call today, Verizon said the company will unveil a wireless-wireline bundling plan Tuesday. 
While no details were offered, it will most likely be a stay-with-us plea that answers AT&T’s Unity offering of no-extra-cost calls between in-house wireless and wireline phone numbers. “We’re going to bundle wireless into the consumer plan — you’ll see [that] tomorrow,” said COO Dennis Strigl, during the Q&A period of the call. “Stay tuned.”
Like AT&T, Verizon needs to do all it can to retain customers as it slowly rolls out its costly advanced FiOS services. Even though Verizon’s overall numbers from Q4 beat analyst predictions, there’s no hiding the landline losses for the big telcos. Monday Verizon said it lost 366,000 landline customers during the past quarter, just more than 4,000 disconnects per day.
Despite rosy predictions about uptakes for FiOS Internet and TV services, Verizon itself knows that it can ill afford to lose current customers, since those are probably the hardest to win back. Strigl admitted as much in response to another analyst question, claiming that Big Red will have “a significant focus on retention of access lines in ‘07.”
What will be interesting to watch Tuesday is how Verizon structures its wireless bundling plan, since unlike AT&T, Verizon does not own its wireless business outright but rather partners with Vodaphone.
The fiber-based FiOS, Verizon’s big moneymaker for the future, continues to add customers but it won’t be challenging cable anytime soon. While Verizon reported gains of an additional 89,000 FiOS TV subscribers during the quarter, its total of 207,000 TV customers is somewhat dwarfed by say, Comcast’s 24 million TV viewers. Verizon said Monday that it expects to pass another 3 million homes in 2007 with FiOS fiber; even at its current take rates (of around 9 percent, according to the company), that’s at best another 270,000 video customers by next year. Meanwhile, the company expects FiOS spending to dilute earnings by about 35 cents per share in 2007.
Strigl did add, however, that Verizon is doing all it can to make installation quicker and cheaper. “We’re really focused on eliminating wasted [installation] time in the home,” he said. So, you can waste time watching FiOS TV that much faster.
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Written by Paul Kapustka on January 30th, 2007 with no comments.
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There was no mention of the word “broadband” in the President’s State of the Union address last week, an omission of little surprise given everything else that’s going on. Still, it may have been tacit acknowledgment that yet another Bush administration campaign goal — universal broadband access by 2007 — will fall by the wayside.
Granted, the President and the nation should focus first on pressing matters like wars and health care. But that doesn’t mean it’s OK for U.S. politicians to ignore this country’s broadband infrastructure. In fact, without political leadership and national-goal objectives, the current dismal state of American broadband penetration isn’t going to get better soon. The combination of archaic regulations, big monopoly service providers and the perform-now mentality of Wall Street simply won’t allow for any risky experimentation or network buildout that doesn’t have fast, demonstrable ROI. So we need politicians to take charge.
Already, you see such leadership happening on a local level, with municipalities and even some states drafting their own broadband plans, usually revolving around wireless (because wireless technologies offer the attractive if unproven idea of circumnavigating the telco infrastructure to deploy faster technologies more quickly). Maybe starting locally is the best way to go, since experiments can happen faster and more methods can be tested. Given the current President’s preoccupation with weighter matters like Iraq, and the current apparent unwillingness in Congress to take on big-picture telecom reform in 2007, local experiments may be all we have for the near-term future.
Leaving broadband build outs to the big telcos and cablecos — an idea that probably passes as strategy for the current administration — isn’t going to get us to ubiquitous broadband anytime soon. Both Verizon and AT&T are struggling to bring their networks up to speed, and are likely to focus on providing services to high-paying customers first to satisfy Wall Street.
As long as there aren’t too many more Katrina situtations to expose the underlying fragility of their networks, the telcos and their armies of lobbyists and lawyers should be able to stand their ground under the current byzantine structure of telecom laws, moving forward on a timetable that benefits their shareholders first. That’s as it should be for any public company worth its market cap. But is it good policy for all?
In the meantime what’s not happening is anyone building new networks on a national basis for the greater good. Rich folks with disposable incomes should have no problems. The worry should be about the classrooms and homes of mainstream America, and whether or not broadband will allow everyone a chance to participate or prepare for the digital economy of the future.
We are headed for problems as a nation if the best thinking that comes out of Davos is that YouTube is going to pay for videos, or that Bill Gates thinks the Internet will give us better TV. Now that politicians are finding the Internet as a communications vehicle, they should focus a bit on the medium as well as the message. Because it needs their help.
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Written by Paul Kapustka on January 29th, 2007 with no comments.
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Avaya’s bid to acquire SIP application vendor Ubiquity was a tip-off that Voice over IP is becoming the center of importance at the enterprise telephony provider. Tuesday during Avaya’s earnings call the company confirmed that focus, announcing that it had sold more than 1 million IP phone lines for the third straight fiscal quarter, showing that corporate adoption of VoIP shows no signs of slowing.
While Avaya’s overall results seemed in line with analyst expectations, the IP numbers are increasing lines in the sand pointing toward an overall move from TDM to IP in the corporate communications arena. Avaya also said that investments like the Ubiquity buy will help it increase the integration of communications and business applications, a direction Avaya said it will look to for growth beyond its traditional telecom-supply businesses.
During the conference call Tuesday, Avaya gave an example of some early work in this direction, claiming it had helped a manufacturing company build direct communications functionality into a supply-chain application, that allowed the application to communicate levels of inventory and trigger replenishing actions. By “communications-enabling” such core business apps, Avaya is seeking to differentiate itself in the telecom business while seeking bigger margins and more overall growth.
“We’re embedding communications into the fabric of our customers’ core business,” said Avaya president and CEO Lou D’Ambrosio, who added that Ubiquity is “an important element as we extend that functionality in a SIP environment.” Expect to hear more IP telephony news when Cisco announces its financials Feb. 6.
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Written by Paul Kapustka on January 24th, 2007 with no comments.
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Craig Settles, a consultant who studies all things MuniFi, sent out a report last night that says public access of city-wide Wi-Fi networks “will be widely viewed as financially the weakest pillar in the business case for municipal wireless,” by the end of 2007. Instead, mobile workforce applications will be “muni networks’ big ROI generator.”
You didn’t have to tell us that public use of MuniFi networks isn’t likely to be the saving grace it’s often painted as, and carries some real business concerns. The more we test out and examine city-wide Wi-Fi deployments like Milpitas and Mountain View, the more we are starting to realize that resident use based on a $20 plus subscription, might end up being pretty limited. Free services will likely be used more frequently, but the ad-based revenue model for free service is also so far unproven.
What we are starting to realize is that MuniFi isn’t a very attractive replacement for DSL or cable service, as use within homes isn’t always guaranteed, particularly without extra hardware. In San Francisco, EarthLink says a third of the households could need additional hardware ($50 to $100) that pulls in the Wi-Fi signal. When we previously reported on Google’s Mountain View network, the company had said that it is unlikely that a Wi-Fi-enabled laptop or computer with a conventional Wi-Fi card will work indoors at most locations — ie, extra hardware is needed.
For a free service, like in Mountain View and Portland, residents are more likely to use the service, even with some spotty connections. But in a city like San Francisco, (if the deal is approved,) EarthLink’s 1Mbps service will be offered for $21 per month to most residents.
If I lived in San Francisco I’d likely choose any of the other options over that choice — Google’s 300 kbps for free, $15 to $20 for comparable speeds with DSL, or cable’s more expensive but often faster options.
Settles says: “Public wireless access is good political sound-bite marketing, but the beef is mighty hard to round up.” We’re not sure how much of EarthLink’s profits are based on those $21 subscriptions, but given EarthLink is looking for revenues, not running for office, that could be its business model’s biggest concern.
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Written by Katie Fehrenbacher on January 23rd, 2007 with no comments.
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Networking startup Stoke is set to announce a $20 million Series C round of investment Monday, with a heavyweight list of VCs backing the rollout of its so-called multi-access gateway.
While you may not want to dive so deep into the particulars of Stoke’s carrier-infrastructure offering, Kleiner Perkins’ and Sequoia’s willingness to keep investing in Stoke indicates that telco capex spending is back. DAG Ventures leads this round. With this round of funding, Stoke has raised a total of $50 million.
The carrier-closet box, which Stoke says is already in trials, is designed to help service providers better manage subscribers from multiple types of emerging access technologies, including WiMAX and dual-mode Wi-Fi/cellular handsets.
Before we get too bubblicious, even Stoke execs don’t see a huge runup for their Stoke Session Exchange offering, which will likely cost service providers who buy it a couple hundred thousand dollars per box. Stoke marketing VP Keith Higgins, who briefed us last week, notes that the market for new-technology FMC subscriber-management gear (which includes startups like Airvana, Starent and Reef Point) may reach $1 billion total by 2008 or 2009.
“[The market] is not really big enough yet to move the needle at Cisco,” Higgins says, answering why the router giant hasn’t built something similar itself. By that measure, Stoke seems like any number of historical networking startups in the telco infrastructure market, with management experience like Randall Kruep and other ex-Cisco, ex-Juniper folks around who had an idea, got tired of the big campus off Tasman and rounded up some venture dough, and went off to start their own company.
What’s fueling the resurgence? Things like expected WiMAX and dual-mode rollouts, says Higgins, who adds that existing gear can’t handle the expected complicated subscriber management needs as cleanly as a new, focused design.
“We are starting to see the RFPs for access-independent gateways,” says Higgins, who added that Stoke hopes to announce a big OEM partner sometime soon, so it doesn’t have to cold-call Verizon itself.
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Written by Paul Kapustka on January 22nd, 2007 with no comments.
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Didn’t take too long for AT&T to start showing why it’s good to be big: You can use your own network to clobber competitors in the pricing game. Friday morning’s salvo is an offer of free, unlimited in-network calls between Cingular (excuse me, AT&T Wireless!) cellular and AT&T landline accounts.
According to the AP story, the service covers about 100 million numbers, which are phones held by users who are suddenly saving money without doing a damn thing. Sounds like that iPhone just got a lot cheaper, one more excuse for Om to indulge himself come June. And VoIP providers who thought they could win by underpricing the incumbents? Welcome to round two.
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Written by Paul Kapustka on January 19th, 2007 with no comments.
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The recent rain of venture cash on Torrent-related start-ups and other P2P companies is a sign that the market is girding for a major showdown. Mark Cuban had once noted that the “conflicts between different clients might turn users off BitTorrent completely” and he makes a good point. Traditionally the competition amongst Torrent clients was around features, but the main functionality was universal. The problem, as Janko Roettgers points out, is that now start-ups are using the protocol, and as a result there is a plethora of clients that are not interoperable, and are leading to what he describes as the balkanization of BitTorrent, “with clients fighting over filetype associations and vendors introducing one proprietary feature after another.” Continue reading
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Written by Om Malik on January 19th, 2007 with no comments.
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Sprint’s WiMAX investment is one of the most exciting drivers behind the mobile Internet this year. But whether or not Sprint will embrace the open model of the Internet or the traditionally closed way of the phone companies when it comes to its first WiMAX devices is still up for debate within the company — or so said Atish Gude, Sprint’s senior VP of mobile broadband operations, at a wireless conference on Wednesday.
Gude said that while Sprint eventually wants to embrace the open Internet-centric model for devices that connect to its WiMAX network — browseable devices and open platforms — the company is still wrestling with whether it should lean toward a closed or open model when it launches. “Do you start with an open model, or start with a closed model and move to an open model,” he asked. (Don’t ask consumers, that would be too easy.)
For example, Gude wondered whether the open Internet and browsing is necessarily the best service for WiMAX-connected dedicated devices like a camera or a gaming device with no keyboards. Gude seemed to think it was in the consumer’s best interest to take baby steps with a closed model and then slowly open it up. Yuck.
While companies that make consumer electronics like Sony (PSP), and Microsoft (Zune) have been going over this connected devices debate for awhile, it’s funny that U.S. phone companies are just starting to hash out these issues. I guess the carrier’s answer has been so obvious when it comes to mobile devices and the Internet, that it takes WiMAX to start up the conversation again.
Gude said a few other interesting things like how the consumer might pay for its WiMAX service: “An individual customer can have a subscription for multiple devices. . . ‘X’ number of devices. . .say an Internet connection is $30 or $40, then we think there will be a mobility premium of $10 or $15. We’re still figuring it out.”
On the topic of VoIP, Gude says, “In the Internet world VoIP is an application. . . we will be deploying VoIP as a service of our WiMAX network, but a dedicated standalone device? — the point is not to go back to the [voice-only] cellular network.”
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Written by Katie Fehrenbacher on January 18th, 2007 with no comments.
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After we crawled out from under the CES/iPhone news pile last week, we took another look at Sprint Nextel’s update on WiMAX and its new guidance. We knew the news wasn’t too good, projecting that the company will cut 5,000 jobs, but we thought that the company might have lowered some of its WiMAX spending as well. Interestingly enough, Sprint is actually spending a bit more on WiMAX in 2007 than it had previously projected.
Sprint projects it will spend a total of $1.1 billion on WiMAX in 2007, “$300 million of start-up operating costs associated with WiMAX 4G broadband services,” and $800 million on WiMAX capital expenditures this year, according to the latest update. In the original release the company said “Sprint Nextel is expecting to invest $1 billion in 2007 and between $1.5 billion and $2 billion in 2008 relating to the 4G mobile broadband network.”
When I asked a Sprint spokesperson, “Isn’t that actually more than originally projected,” the spokesperson said, “Yes. But to be frank I think most interpreted the original release to read as capex instead of both.”
Splitting up the costs is a nice way to make the company look like they’re spending less on WiMAX, though, in case Wall Street was worried about that. Perhaps this means the company will end up spending over its $3 billion outside figure on the network.
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Written by Katie Fehrenbacher on January 16th, 2007 with no comments.
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Never mind net neutrality, I want my privacy. As in packet privacy. The telcos say they need to sell non-neutral routing of traffic to recover the cost of building broadband networks. Moving from the Internet, where a packet-is-a-packet, to something that looks suspiciously like the 20th century telephone network requires remarrying the content and connectivity that TCP/IP divorced. It requires deep packet inspection. It requires looking at the content of communication.
AT&T does not plan to roll out two physical pipes to every end point in order to sell Google enhanced access. The new telco plan calls for content-based routing to separate traffic into media and destination specific VPNs (Virtual Private Networks). Laws exist to address the substantial privacy threats created by the fact telephone companies know Mr. Smith called Mr. Jones, but the privacy risks associated with “content routing” replacing “end point routing” enter an different realm.
Coping with billing disputes still means retaining data. Under what circumstances might a third party get access to the data derived from content routing? Content routing in one context enables content filtering in another. Lessons Cisco accumulates in providing content filtering equipment for the Great Firewall of China apply to directly to content routing ambitions of telcos in the U.S.
The telcos do not claim a right to listen in on calls to enforce the business versus consumer pricing policies. What makes it appropriate to use packet inspection to accomplish the same thing? The pitch for content routing gets presented in terms of quality of service guarantees that benefit users, but there are other customers for content routing. Law enforcement and criminal enterpises will have plenty of uses for data obtained through deep packet inspection. One can imagine champagne will flow at the NSA should the telcos get their wish.
What is driving telcos’ desires to charge by the application?
The fact that their delivery pipes are being commoditized. Internet access pricing reflects the cost of building broadband networks (e.g. location, bandwidth, performance, and reliability), so moving a video bit costs the same as moving an email or voice bit. This turns the traditional telco pricing model (charging more per service, or per minute) upside down. Packet inspection would allow telcos to charge more for high-bandwidth applications, or to charge for preferential treatment.
One such method is already in practice: The Verizon Wireless EV-DO broadband service does not suffer net neutrality obligations, so the Acceptable Use Policy includes prohibitions against using VoIP applications. Verizon cannot enforce the provision without content routing (aka content filtering). So Verizon can and does track bit consumption and boots customers who take the advertised “unlimited usage” too literally. But just counting bits does not work where bits carry different values.
Content routing does not entirely shift the balance of power toward carriers. People sensitive about who might get access to their communication already implement encryption that, by definition, defeats packet inspection efforts. The decline in trust between carriers and users shows up in the growth of so called Darknets (encrypted communication among a closed group of trusted end points.) Progress toward implementing content filtering will turn the entire Internet dark, so efforts to make encryption illegal will likely follow any success in undermining net neutrality obligations. And then how secure will your bits be?
Daniel Berninger is a Washington, D.C.-based financial analyst working for Tier1 Research. He is a veteran of the telecom industry.
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Written by Daniel Berninger on January 15th, 2007 with no comments.
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Under competitive pressure from local cable competitors like Cablevision, Verizon is fighting speed with speed. The company just announced that it is now offering connection speeds of up to 50 Mbps (megabits per second) downstream and 5 Mbps upstream over its FiOS network.
The previous top speed was 30 Mbps/5Mbps, on the high end. In the medium tier, Verizon upped the speed from 15 Mbps downstream and 2 Mbps upstream to 20/5 Mbps, and the top-tier service was increased from 30/5 Mbps to 50/5 Mbps.
The higher speeds were available in New York, Connecticut and New Jersey previously. Massachusetts and Rhode Island were added to the list recently. Verizon had 522,000 FiOS Internet customers across 16 states at the end of the third quarter of 2006.
Though the company did not announce any more specifics, one has to note that the high end service is expensive, like really expensive. The 30 Mbps service costs $179 a month. There was some talk that this service is going to cost $90 a month, but not sure what price Verizon is offering. In comparison, Cablevision’s 30 Mbps service is a third of that price.
Pssst.. hey Verizon, guys at HK Broadband are selling these kind of speeds for like $20 bucks a month. Come on, how about cutting us all a deal here?
Photo via Flickr by Aschmitt
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Written by Om Malik on January 11th, 2007 with no comments.
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It’s been a long time coming but Earthlink just emailed us to say it has reached an agreement with San Francisco over the terms of the contract for the city-wide WiFi deal. Now all those vocal local critics can renew their protesting. It’s not quite the end of the line for Earthlink, though, as the deal has to be approved by the San Francisco Board of Supervisors. Hopefully that won’t take too long and the company can start building the network this year. We don’t know much of the details at this hour on a Friday, but we’ll bring you more as we know more.
(Disclosure: Earthlink is an advertiser on the GigaOM network.)
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Written by Katie Fehrenbacher on January 6th, 2007 with no comments.
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The ink on FCC Commish Kevin Martin’s Valentine card to AT&T is not even dry, and already we are beginning to see the purging of the BellSouth executives. Just like when SBC Communications bought the real AT&T and then became Ma Bell 2.0. We got hold of an internal memo, but this should be public anytime soon.
Here is what is happening:
Mark Feidler, BellSouth President and Chief Operating Officer, will leave the company to pursue other opportunities. He is not alone. (The company list of departing BLS people is below the fold… enjoy) Some other old skool AT&T guys are also leaving the company. I am going to do an map of who is doing what and where they came from a little later, when there is a little downtime. (Any tools you can recommend for this?)
Herschel Abbott, Jr., Vice President - Governmental Affairs
Valencia Adams, Vice President - Chief Diversity Officer
Barry Boniface, Chief Strategy & Development Officer
Keith Cowan, Chief Field Operations Officer
Francis Dramis, CIO, E-Commerce & Security Officer
Mark Droege, Vice President and Treasurer
Rebecca Dunn, Senior Vice President - Corporate Compliance and Corporate Secretary
Ron Frieson, State President - Georgia
Margaret Greene, President - Regulatory & External Affairs
Don Hallacy, CIO - Communications Group
Donna Lee, Chief Marketing Officer - Business Markets
John McCullouch, State President - Mississippi
William Pate, Chief Marketing Officer - Retail Markets
Eddy Roberts, Jr., State President - Kentucky
Patrick Shannon, Chief Financial Officer
Krista Tillman, State President - North Carolina
Lynn Wentworth, Vice President and CFO - Communications Group
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Written by Om Malik on January 5th, 2007 with no comments.
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A few days ago, there was a lot of talk about customers of Singapore-based Starhub getting 100 megabits per second connections to their home. Some of us were quite jealous at them getting those big honking connections.
The kids in Youngsville, Louisiana, however are not feeling any jealousy, thanks to Lafayette Utilities’ Fiber for the future plan. Youngsville has signed a deal with the utility where LU is going to provide 100 megabit per second connections to the school district.
The bandwidth will be made available to students of three schools in the district by Fall 2007, when the project is set to be completed. Several other school districts are signing up for similar plans, according to a local daily.
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Written by Om Malik on January 4th, 2007 with no comments.
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It was a whopper of a year for technology mergers and acquisitions - close to $600 billion, according to Dealogic. (via WSJ)
For fourth consecutive year, the deal of the year came from the telecom sector, which continues to consolidate in the wake of turn of the century meltdown. In 2006 it was AT&T-BellSouth merger (just approved by FCC); a year earlier it was Telefonica buying O2.
2006 was a hectic year for telecom and broadband merger’s and acquisitions. Here is a list of some of the notable deals. The deal patterns indicate that Ericsson, Cisco, Motorola, Lucent-Alcatel are now the dominant equipment providers. They are increasingly shifting their business focus and trying to capture opportunities offered by the expansion of broadband and video networks.
(Huawei is missing from this list. The Chinese hardware vendor did partner with Nortel and bought DSLAM maker, Harbour networks for an undisclosed amounts of money.)
AT&T-BellSouth.
Lucent-Alcatel.
Cisco Systems-Scientific Atlanta, (also Arroyo.)
Ericsson-Marconi, Ericsson-RedBack Networks, $2.1 bilion.
Motorola bought Broadbus, Netopia, Keratel, and TutSystems.
The chip sector saw some hectic action as well.
- Freescale Semiconductor went private in a $17.6 billion buyout led by Blackstone Group and other private equity investors.
- Phillips Electronic’s chip division went private in a $10 billion-plus deal led by a KKR/Silver Lake consortium.
- LSI Logic