Cable Cos
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Vonage reported results for the second quarter of 2006, and they were not pretty. In its first earnings report since going public (May 2006), Vonage reported a loss of $74.1 million ($1.16 a share) versus $63.6 million a year ago.
Sales came in at $143 million, versus $59.4 million in the second quarter of 2005. That all seems good right? Except those numbers missed analyst expectations of around $148 million. Worse news: the company indicated that its 2006 sales will be in $600-to-$615 million, versus analyst expectations of around $636.5 million. More troubling - churn is up to 2.3% versus 2.1% in the first quarter of 2006.
In 2005, Vonage spent nearly $414 million in advertising to gain market traction, according to AdAge. Makes you wonder how much it will have to spend more in 2006 to keep the momentum going. It will have to - it needs to find new subscribers to handle that churn situation properly and show growth across the board.
There was some good news - the number of net new subscribers came in ahead of analyst expectations - 255,936. The company now has 1.85 million subscribers. In other words, the company needs to add about 450,000 or new subscribers to meet its lowered 2006 target of 2.3 million.
Vonage which is down nearly 60% from its IPO price of $17 a share, is heading south again. Why? Company says it will fall short of previously predicted number of subscribers as well - about 2.3 million versus previous expectations of 2.45 million. Who wants to bet that meeting lowered expectations would be tough, now that the cable Goliath Comcast has joined the cable VoIP party? It already has over 700,000 subscribers. Things are going to get ugly… but then you already knew that!
Written by Om Malik on August 1st, 2006 with no comments.
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The FCC just released a list of 168 qualified bidders for the AWS spectrum auction coming up on August 9th, and also announced that the process will not involve the controversial blind bidding. We’ve been following the companies interested in bidding pretty closely, and there were a few surprises in the FCC filings, including a group tied to Rupert Murdoch, DirecTV and Echostar, which put down almost a billion dollars that it can use to bid on spectrum.
Wireless DBS, the consortium tied to Echostar, DirecTV, News Corp, News Corp CEO Rupert Murdoch and Echostar’s Charles Ergen, qualified to bid and paid one of the largest upfront payments out of the list of interested bidders, of $972.55 million. The group’s auction plans might involve WiMAX, and prove to be crucial to these companies future as triple play becomes common place. (The upfront payment is refundable if the company doesn’t win the specturm it desires, but could be an indicator of how much the companies are willing to spend.)
The cable consortium SpectrumCo, tied to cable companies Comcast, Cox, and Time Warner Cable and Comcast CEO and Chairman Brian Roberts, among others, qualified to bid and put down another large upfront payment of $637.71 million. Other cable groups like the Washington Post’s Cable One qualified and paid an upfront payment of $3.5 million. The Dolan Family, tied to Charles Dolan, Cablevision’s Chairman, qualified and paid an upfront fee of $149.98 million.
Most of the largest U.S. phone companies qualified. T-Mobile paid an upfront fee of $583.52 million, Cingular put down $500 million, and a company tied to Verizon paid an upfront fee of $383.34 million.
The company tied to Paul Allen, Bend Cable Communications, that we previously profiled, qualified to bid, and paid an upfront fee of $176,000. At least four companies backed by spectrum speculator “Super Mario” Gabelli qualified to bid, paid a total of $3 million in upfront payments. Controversial wireless bidder Allen Salmasi and Nextwave Telecom, qualified to bid through a company called AWS Wireless, and that group put down $142.83 million.
The group called POP Wireless, backed by BPL company Current Communications, which is funded by Google and Earthlink, that we profiled earlier, was listed as “not qualified to bid.” We’ll follow up with more on the upcoming auction before the big day.
Written by Katie Fehrenbacher on July 29th, 2006 with no comments.
Read more articles on Unwired and Cablevision and Cable Cos and verizon and PhoneCo and spectrum and broadband over powerline.
As part of the on-going trend of big money VC rounds, broadband-over-wireline company, Current Communications raised another $130 million, this time from General Electric, TXU and Sensus Metering Systems. The company in 2005 had received about $100 million from Google, Earthlink and Goldman Sachs.
The latest funding news was dug-up by Wired News. Current, currently provides BPL in Cincinnati and is working with TXU to provide similar service in Dallas. The company is also bidding for advanced wireless spectrum as part of a consortium called, Pop Wireless.
Broadband over Powerline is a technology that allows consumers to connect to the internet by plugging a special modem into their electric outlet, which is part of a power company’s IP network. FCC has seen BPL as the third pipe into the home, though, that has still remained more hope than reality. We have been skeptical of BPL for a while, and that position hasn’t changed. Despite raising hundreds of millions, companies like Current have still not gained any meaningful traction in the marketplace.
Written by Om Malik on July 27th, 2006 with no comments.
Read more articles on Uncategorized and Google and Earthlink and Cable Cos.
The bandwidth speed battles between Cablevision and Verizon are getting bloodier. Cablevision has been pushing the envelope and is forcing Verizon to do things a Bell typically doesn’t like to do - offer real broadband level speeds.
Verizon has announced that it will sell a 50 megabits down and 10 5 megabits up connection for $90 a month. (Thanks Tom, for pointing out that the business offer was 50/10.) The service is available where Verizon FiOS network is live in the states of New York, New Jersey and Connecticut.
This is an interesting move -does this mean Verizon is now just a pipe provider (and there is nothing wrong with that.) I have argued this is the best recourse for the phone companies is to sell more bandwidth at premium prices - turn the Moore’s law to their advantage.
Written by Om Malik on July 18th, 2006 with no comments.
Read more articles on Cablevision and DSL and Cable Broadband and Cable Cos and verizon and PhoneCo.
If you are a San Francisco resident, then you are getting the Comcast phone service pitch, which is the latest in a series of assaults the cable companies have launched against the Bells. While Comcast has been late in joining the party, the two cable big boys, Time Warner and Cablevision have turned voice into a money maker.
TWC has zoomed past the million customer mark, and today Cablevision has announced that it too has joined the “million voiper club.” Cablevision claims that it has saved $500 million for those who use its service. I am not sure if I buy that, but hey its a press release.
This is not good news for Vonage, which now faces even tougher competition from the cable companies going forward. But it also means that the landline losses for phone companies will continue for sometime. As it so happens, Bells have been talking up IPTV and what not, but in reality have few customers to show for all that talk. CableCos, on the other hand are saying we got voice, and we selling it too… in millions!
Also, Cable VoIP, Hotter Than Ever.
Written by Om Malik on July 18th, 2006 with no comments.
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Free SkypeOut might be putting the heat on Vonage and others, but the flat rate international long distance plan introduced by Cablevision is truly a move befitting Machiavelli.
The company introduced a $20 a month plan which allows subscribers of its $35 a month voice service to call anywhere in the world. Since the plan is capped at 500 minutes a month, that works out to about 4 cents a minute. Many believe that it is a way to respond to Free Skype or a blatant attempt to take the wind out of Vonage IPO’s sails. But that’s overlooking Cablevision (and its cable-cos brethren) real enemy: the phone company.
The New York-based cable and broadband service provider is trying to turn the screws on its phone company rival, Verizon. The availability of this plan - will prompt Verizon customers to ask questions, and perhaps seek a similar deal from Verizon. There is a good chance that Verizon will have to respond with a similar if not better offer. (Of course, they can let customers switch!)
Since Verizon’s footprint is much larger that Cablevision, it would have to offer a similar package to its entire customer base, and that could start eating into the voice revenues. Cablevision of course could kill birds with one stone - it will force that hand of the likes of Vonage to respond in kind as well.
This dovetails with my previous arguments that Cable guys can leave the phone guys twisting in the wind. The phone-companies video networks are nowhere close to mass deployment, which leaves them dependent on data and voice revenues. Cable guys, as Cablevision’s announcement shows, can do a handful of things that can inflict financial pain to the phone companies. (Oh how I love the sound of two leviathans - phone companies and cable companies - crashing into each other!)
If you look at the Cablevision announcement, it is publicity ploy which doesn’t cost the company much. And instead the can boast about no hidden fees. Of course there are upfront fees - a monthly $35 voice plan - but that is a minor detail when it comes to reporting. Cablevision will have nothing to lose, because of this little trick that will suck-up those 500 minutes in a jiffy.
One-minute rounding is in effect. We round up to the nearest minute. Example: A 25 second call = 1 minute.
Just to nit-pick, if you look at Cablevision’s geographic footprint - in New York, Connecticut and parts of New Jersey, you will find a heavy concentration of immigrants - the most lucrative segment when it comes to long distance dialing - from South Asia, China, Puerto Rico and rest of Latin America.
The $35 a month voice plan Cablevision sells offers unlimited calls to the U.S., Canada and Puerto Rico. That’s one big demographic segment that really doesn’t need to spend an extra $20 a month. Other countries like say India, Bangladesh, China and many Latin American countries have high termination charges, so perhaps its going to cost Cablevision some money. But the $35 a month voice plan, and those rounding-tricks should ensure that the losses aren’t too much.
As I said, its about Verizon!
Written by Om Malik on May 17th, 2006 with no comments.
Read more articles on VoIP (the New Phone) and Cable Cos.
Cablevision reported impressive growth in its broadband and voice telephony business in the first quarter of 2006.
High-speed data customers up 112,289 or 6.6% from December 2005 and 366,044 or 25.4% from March 2005.
Voice(IP) customers up 133,967 or 18.3% from December 2005 and 500,828 or 137.4% from March 2005.
UBS analyst Aryeh Bourkoff estimates that now Cablevision’s Voice subscribers represented 19.2% of homes passed as of 1Q06 and will reach 26.4% by the end of the year, which implies about 1.2 million voice subscribers by end of 2006.
The company says it will increase its spending in 2006 on equipment that will help with broadband upgrades to compete with Verizon FiOS service.
Written by Om Malik on May 10th, 2006 with no comments.
Read more articles on VoIP (the New Phone) and Cable Broadband and Cable Cos.
It should come as no surprise: Four of the six major cable companies Comcast, Time Warner, Cox and Advance/Newhouse Communications have teamed up with Sprint-Nextel and are now launching the wireless part of their version of “four play” package of video, voice, data and wireless. They had announced this joint venture last year.
…when the venture was announced late last year, they described a future in which customers would be able to watch shows they recorded on their home digital video recorders on their handsets…They also will be able to use that guide, which will look like the one on their TV sets at home, to watch Sprint’s menu of video clips with a few others added by the cable operator.
The service will launch in seven cities, including Austin, Texas, and Raleigh, N.C. The move is clearly an effort to turn the heat on Baby Bells who own their own wireless assets. What I found most amusing about their plans: they are eerily similar to the ones outlined by the big phone companies.
Full Story @ WSJ.
Written by Om Malik on April 10th, 2006 with no comments.
Read more articles on Cellular and Cable Cos.