Worries Over White Space
October 31, 2008
“White Space” is the new cause for musicians to worry about.
The unused bands of wireless spectrum between the assigned sections is known as White Space. The biggest chunk of this space is the spectrum currently used by analog television and which will soon be vacated when the US switches to digital TV.
The technology industry, led by Microsoft and Google, are salivating over this space and want it to be reserved for a new generation of wireless broadband devices. And they may just get their way, as the FCC seems to be steamrolling into a meeting scheduled on the same day as the presidential election - an action that has all the hallmarks of trying to hide something. And that has many in congress and the music industry crying foul.
Concerns over potential device interference has more than 100 musicians protesting over the fear that their wireless microphones could be impacted by devices operating in the White Space. Even country music superstar Dolly Parton is in on this act - sending a letter to the FCC asking them to delay their vote and allow for public comment.
Telecoms Feeling the Credit Heat?
October 31, 2008
The telecommunications industry has long been considered recession proof. After all, everyone needs to communicate, right? But lately many companies have become debt heavy due to extensive network build 
outs for enormously burgeoning bandwidth demands, hardware and technology costs involved in transitioning service to VoIP and lost revenue due to a volatile consumer market attracted to mobile, unified all-in voice/data solutions from smaller vendors. The costs range into the billions.
Rising need for capital expenditures is being met with rising costs of capital and a consequent decrease in profits. As operating capital declines, cost cut-backs will be the order of the day. AT&T, Verizon Communications, Sprint Nextel and others have all had their 2009 earnings estimates lowered by analysts. The bottom line is that everyone is going to pay more for credit.
If an economic slowdown reaches into the telecom market, it will be the technology sector that will feel it first. Reductions in spending plans would directly impact primary equipment makers and that supply line to the industry. This would then affect build out futures of wireless and land networks. iSuppli analyst Steve Rago expects second half capital expenditures on worldwide wire line networks to decline 20% from expectations made earlier this year. Standard & Poor analyst, Ari Bensinger anticipates significant sales weakness over the next couple of quarters. But who can say when the credit markets will settle down, or even if they will snap back to normal?
Verizon executives say they have not seen signs of a slowdown. In fact, they believe a widespread recession could create a heavier reliance on voice, data and video as consumers spend more time at home, both relaxing and working. However they spin it, the industry is facing huge change and a chaotic economy simultaneously.
The question of survival for the most highly leveraged companies may very well rest in their ability to cover their credit needs more than in their ability to roll out new services and grow their customer bases.
Telecom Recipe For Tough Economic Times: Eat More Fiber
October 30, 2008
Small telecom companies are pushing ahead, while larger ones are having a tougher time finding traction. That’s what it seems like this week, as most telecom stocks rose on Wednesday in the face of an expected interest-rate reduction by the central bank but the best motion has been from the smaller guys. Level 3 and Time Warner Telecom rose 17% and 11% respectively on Wednesday, but AT&T and Verizon Communications sank over 1%, and Qwest went down 10%, saying it will cut 1,200 jobs to balance a declining demand for service.
The current economic climate only accelerates a market situation that has been ongoing for years. Large carriers have been losing customers to cable, VoIP and do-all wireless. While smaller telecom companies with fewer extraneous services can quickly package unified communication packages currently in demand, big carriers must first make cuts in order to regain financial flexibility.
While everyone is leaning out their diet, the big move is to a lot more fiber . Although AT&T TDM services continue to recede, they are seeing growth in wireless and data services. Qwest is significantly expanding their fiber network in 2009, justifying the cost with the expectation of reduced churn. When you’ve signed for phone, data and video, you are far more likely to stay on as a customer.
iPhones Get Free AT&T WiFi
October 29, 2008
AT&T has just notified all iPhone users via SMS that they will now receive free Wi-Fi at thousands of AT&T hotspots nationwide.
This includes most corporate owned Starbucks coffee shops. For more information, iPhone users can visit www.att.com/attwifi.
This has been an on again off again story for quite some time. AT&T has twice posted a web site about free Wi-Fi for iPhone users, both times in error and immeadiately retracted. However, this time appears to be the real deal since they have taken the additional step of notifying all iPhone users.
Since the average 3G iPhone surfs the web at nearly the same speed as when they are surfing over Wi-Fi, why is this important news? Because AT&T no longer allows iPhone users to download files or peer to peer file transfer documents via a 3G connection. That means that an iPhone user can’t download music from iTunes via 3G. Lame. However, if the user is near a hotspot, they CAN download from iTunes.
Now, if only my iPhone battery would last through an average Wi-Fi web surffing session, this might be good news. In reality, it’s just a replacement for what AT&T should be allowing users to do via 3G anyway.
Early Termination Fees Terminated
October 27, 2008
We are in the middle of a major change in the way wireless carriers and others handle their Early Termination Fees (ETFs). Until recently, if you ended a Wireless or Internet contract early, you’d be charged an average fee of $200 (or more) to cancel your account. 
An inability to get out of contract with a carrier who has offered poor service or coverage has enraged customers and has resulted in volumes of complaints. States have been moving toward regulating this and other aspects of the wireless industry. Even FCC Chairman, Kevin Martin, has proposed a plan to regulate the fees that wireless carriers charge customers for ending their contracts early.
Suddenly, the carriers are falling over themselves to change their policies and prorate the termination fees of their customers. Sprint, Verizon, AT&T, and T-Mobile have all made changes, or will do so by the end of the year. They argue that since they have changed, no regulation of the industry is necessary.
Now the phenenomon may potentially spread to Internet carriers as well. Two Qwest Communication DSL customers are suing the carrier over Early Termination Fees.
And while the change in practice regarding ETFs may seem like bad news for the carriers, it actually allows them to better compete with each other and fight for customers based upon service, price, and features rather than length of contract. This could have a very positive effect for carriers with popular phones, plans, and customer service. In an age where everyone already seems to have a Cell Phone, carriers are forced to grow their business by offering new services and by stealing customers away from their competitors.
Features and customer service, rather than contracts, may end up determining which carriers customers ultimately choose in the future.
Scorecarding Tech Layoffs
October 24, 2008
As VoIP/SIP Trunking ties the telecommunications industry closer to the IT field, is the fate of the tech industry in the current economic climate a bellwether for the telecom industry? Hard to say for sure. The tech industry is certainly taking some hits from the economic perfect storm that continues to walk across the globe. It’s been said that mid and top tier tech companies are weathering the storm better than online and hardware vendors. 
However, any comparison between the two would have to account for their differences as well. Even without the economic crunch, the IT field has been going through an upheaval in areas such as open coding, application building, unified communications and value chain structure. By having to interop into this field via VoIP and data services, telecom will be affected to a much greater degree by IT than at any time previously.
Cnet news has posted a kind of “tech downturn” scorecard that tracks the tech industry fortunes at its most visible point: layoffs. It’s published by Goggle Docs and updated every 5 minutes. Looks like somebody’s keeping their job. Check it out here
Europe More Ready Than US For Economic Crisis
October 23, 2008
Watson Wyatt reports that nearly a third of US companies were unprepared for the current economic crisis; however, an average 80% of European companies were prepared.
Among the contingency plans that companies had prepared were organizational restructuring, hiring freeze, layoffs, offering early retirement, a reduced working week, sabbaticals, and salary freeze. US companies were more likely than European companies to begin with layoffs.
Interestingly, French companies were nearly 100% prepared for the economic turmoil. Just another reason for some in the US to hate the French - not only are they thinner and better looking, they may just have better business sense as well. I’d order another side of “Freedom Fries” but I can’t afford them anymore.
One in five firms unprepared for the economic downturn
Sprint Can’t Catch A Break
October 10, 2008
It was one of those weeks where for every step you take forward, a monkey jumps on your back and eats your brains. A lot of us are having that week. But Sprint CEO Dan Hesse, is really the guy that you don’t want to be right now. Everything seems to be working against him at the moment.
Sprint has been hinting for quite some time that its problem Nextel unit (and iDEN network) is up for grabs. And Hess has confirmed that he is actively speaking with potential suitors. Which would be great for Sprint if it weren’t likely that the credit crisis will make financing the deal a problem. A Nextel deal is important for freeing up capital to spend on other projects.
Just a year ago, Sprint was trading in the $20 range, since then, it’s value has dropped below $4 a share. That makes it very difficult to value its Nextel assets, and even harder to raise capital for new projects and network investment.
Sprint is in the middle of rolling out its new 4G WiMax network (the oddly named “Xhom”) for which it will need over 5 billion in financing to complete. Even with partners like Clearwire, Comcast, Intel, and Google waiting in the wings with nearly 3 billion of what Sprint needs, but again the credit market is messing things up for Sprint. Xhom is an important project for Sprint and the telecom industry, many view mobile broadband as the future of telecommunications, and a set back for Xhom is a setback for the industry.
Just when it looks like things couldn’t get worse for Sprint, an unexpected pack of rabid Howler Monkeys jump out of nowhere and create some bad press for Hess - Glass, Lewis & Co, an investor advisory firm, has determined that the Sprint Nextel executives are the most highly overpaid in America. Granted that Sprint has some justification (it had to pay off an old CEO and incentivize a new one last year), but stories of of overpaid executives just doesn’t play well when your stock is sitting at $3.40 (at the writing of this article).
As hard as it is for me to feel sorry for Sprint, this is the kind of beating that makes you want to root for the underdog. Perhaps Hess will be able to throw the monkey off his back, complete a sale of Nextel, and focus on the future of their wireless business including their wireless broadband services. Time, and a crazy stock and credit market will tell.
Some guys just can’t catch a break.
Telecom Monthly, The Scary Season
October 6, 2008
Halloween is just a few short weeks away, but the scary season has been with us for months. Banks are failing, companies are finding credit hard to come by, contracts are tightening up or in some cases disappearing altogether, the stock market has recently had “historic” days (in a bad way) . . . and our supply of wooden stakes and garlic is getting pretty low. But all things are cyclical. Today’s challenges are also opportunities for a better future. Don’t dig yourself into the grave out of fear.
AT&T is using this time to reorganize its business units, as is Sprint. As always, tough times help us identify our weak spots. When profits are rolling in, who spends much time economizing? We can all benefit from a downturn by examining products, positioning, expenses, structures, and strategies. Take AT&T’s lead and map a course for success in the coming months and years. Don’t just look at the products and services that are selling well for you today. What should you be selling tomorrow? Downturns create movement, change of positions, new relationships, and new playing fields. What are you doing to stave off the zombies? How are you preparing yourself for the coming market shift?
The telecom industry does not lack focus: we are facing the biggest evolution in our history – the switch from TDM to IP. Customers are rapidly adopting new technologies and need new services from their carriers. Traditional land line carriers are facing challenges in how their customers are using the networks, and the cellular carriers are struggling with a fundamental change in their business models. In the end, they all know that their future is no longer in delivering calls but rather in serving up internet bandwidth (via wire, cable, or wireless) that will support voice, video, content, and applications in a quantity and speed that we could never have dreamed of a few years ago.
As developers, resellers, and content providers build new applications for consumers, they are calling on the carriers to open their networks, lower their prices, and allow for a more competitive environment - one which will permit speedy adoption of new services by consumers and which will ultimately drive more raw bandwidth to the carriers.
Eventually the spooks of Halloween and the crypts of economic demise will give way to reconstruction and prosperity. As an economy we might even learn from our mistakes. But even if takes a few years, those companies who base their business strategy on continuing to delivering the best technology in the most cost effective way have the best shot at coming out ahead.
Here are the stories you shouldn’t have missed from the last few weeks:
- Robots and Apples Destroy Carrier Gardens - The new Google Android phone and the Apple iPhone are revolutionary, but challenge the established model of Wireless phone companies.
- Skype Earns Our Adoration - Skype fights for open carrier networks and earns our praise.
- Carrier Text Rates Highway Robbery - How much is too much. $1,300 per Megabyte?
- Qwest To End Short Calls - Qwest fights to protect its network from Incomplete and short calls, and signals a shift in the telecom industry.
- Google Saves the World - Google turns 10 and decides to celebrate by saving the world.
- AT&T realigns company, creates four separate business segments - Under the new org structure Home, Wireless, and Internet will be combined into a single group, Business in another, Back office in a third, and miscellaneous in the final group.
- Sprint Breaks Out Wireline Business Unit - Sprint consolidates its business products into a single unit.
- Sprint’s Nextel Unit Attracts Buyers - Potential buyers would need to take on 5.4 billion in debt.
Happy Hallowishes – May your profit bowl be filled with treats and your stock portfolio free of tricks,
-iTodd
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