Dial Zero
A look at what's surprising, silly, scary or stupid in telecommunications and data

Wednesday, August 27, 2008

People pissed off and even suing about huge phone and cable boxes

The road to advanced video, Internet and phone services is bumpy - and the bumps can be almost as big as refrigerators.

As cable and phone companies race to upgrade services or offer video for the first time, they're doing it by installing equipment in boxes on lawns all over America. Telecommunications rollouts have always been messy, but several towns and residents are fighting back with cries of "Not in my front yard!"

AT&T's nearly fridge-sized units, which route its new U-verse video service to customers, are drawing particular ire. Some have caught fire or even exploded. AT&T said it has fixed the problem by replacing faulty batteries.

That's not much comfort to David Crommie, who thinks the boxes are an eyesore. He is president of a San Francisco group called the Cole Valley Improvement Association, and complained after seeing some boxes sprout in town and managed to delay AT&T's plans to install up to 850 of them. AT&T now is expected to reapply for an exemption to the city's environmental-review procedures.

"We have nothing against the technology. We just don't want that delivery system," Crommie said. "It's 19th century packaging for 21st century technology."

AT&T's rival Comcast apparently thought so too. It ran ads in Illinois calling the AT&T cabinets "giant utility boxes." In most locations, U-verse cabinets are 4 feet tall, 4 feet wide and 2 feet deep. AT&T sued Comcast in March for running a "false, deceptive and disparaging advertising campaign." The companies signed a standstill agreement in May.

But Comcast has utility box problems of its own. Several residents in Lower Makefield Township, PA, got upset when new green boxes from Comcast popped up around town, sometimes between driveways. "All of a sudden we have cable boxes appear," said Bernie Goldberg. "They seem to think our community is their open job site."

He wants to know why Comcast can't bury the new boxes, which are about a foot tall and wide, and 2 feet long. Comcast said aboveground boxes can be accessed more easily and are more reliable.

But Goldberg noted that Verizon Communications was able to bury its fiber-optic boxes underground in town - a fact the phone company was more than eager to confirm. Of course, Verizon also has had installation mishaps with its new FiOS service, such as fires at homes in Pennsylvania and Virginia.

For Goldberg and other residents of Lower Makefield Township, arguing with Comcast over cable boxes is a familiar fight. They battled the installation of aboveground boxes in the 1990s with Comcast's predecessor and won.

This time, Township Supervisor Matt Maloney said residents felt Comcast's boxes were an "intrusion." "They're putting it in without permits," he said. "It is their contention they are not required to do so. It's our contention that they are." Comcast, which has installed 50 boxes and doesn't plan to add more, said it is working with the township to resolve these issues.

A resolution has yet to come to Geneva, Ill., where Mayor Kevin Burns is furious with AT&T. A few years ago Geneva passed a 180-day moratorium that effectively stopped installations of AT&T's U-verse cabinets. The phone company sued Geneva and six other Illinois municipalities for restricting its plans. AT&T claimed it had the right to use public rights of way for its telecom network.

Burns said his city merely wanted some say. "If we were going to have our landscape dotted with refrigerator-size boxes, we should have some control over them," Burns said.

Illinois passed a law last year fast-tracking approval for cable rivals to enter the pay-TV market, stripping away much of the clout wielded by municipalities. Geneva dropped a countersuit against AT&T in 2007 and gave it permits for installing U-verse boxes in early August. But all this time, AT&T has maintained its suit against the city. Burns said that "is beyond my comprehension."

There are signs AT&T is learning from its earlier missteps. In Springfield, Ill., AT&T has agreed to pay the city $1,500 for each of the 75 to 100 U-verse cabinets it plans to install. The money will be used for landscaping that can make the boxes blend with the environment.

AT&T also recently installed about 120 U-verse boxes in Santa Rosa, Calif., after that city worked with the phone company and Comcast to find locations for their equipment. Eric McHenry, the city's chief technology officer, said AT&T's units were trickier to place since they were much larger than Comcast's boxes.

But while Santa Rosa had limited say on the cabinets - units go into public utility easements and, like Illinois, California had passed a fast-track video franchise law - McHenry said AT&T relocated boxes when requested. "We didn't theoretically have the ability to say no," he said. "We asked them to move certain locations and they voluntarily did." (info from The Associated Press)

Tuesday, August 26, 2008

American Airlines adds more Web access

American Airlines expanded the availability of in-flight Internet access last Wednesday, launching airborne email, Web and other online services on some of its longer, nonstop flights. The move could create a new stream of revenue as the airline industry faces high fuel prices and other challenges.

American Airlines tested in-flight access on two flights June 25. With Wednesday's launch, the airline is making service available for $12.95 per flight on its Boeing 767-200 aircraft connecting New York with Los Angeles, San Francisco and Miami. American said most flights on those routes use the 767-200.

"Today the days of being cut off from the rest of the world while in the air become history," said Jack Blumenstein, chief exec of Aircell, the company providing Internet services for American. Several other airlines have been testing or considering such services.

The system will block Internet-based phone calls, giving passengers relief from chatty seatmates. However, American and other US airlines have said they will not filter sites based on their content, raising the prospect of passengers viewing porn sites with kids nearby. Airlines have policies to address unruly passengers, and those would apply as they do now to passengers who browse adult magazines.

Aircell's Gogo service is still formally a test, meaning American could drop it or expand it. (info from The Wall Street Journal)

Monday, August 25, 2008

Former Sprint division Embarq firing hundreds

Embarq Corp. said Friday it is cutting between 500 and 700 jobs and eliminating around 300 contract positions as it deals with a continued loss of telephone customers. Spun off two years ago by Sprint Nextel, Embarq is the fourth-largest traditional phone company in the US by number of customers.

The company said the cut jobs are people who install and maintain its network, and is part of the company's attempts to bring down costs. The proposed cuts would amount to about 3% to 4% of Embarq's work force of more than 17,000. More customers are dropping wireline phones for wireless and Internet telephone services while the slowdown in new housing is reducing new customers.

In the second quarter, Embarq lost a net 170,000 access lines to end at 6.02 million, or 7.8% fewer than a year ago. It still believes annual line losses will be similar to last year, when the company lost a little more than 6% of its lines.

"Our rationale is that to ensure the continued success of our enterprise we are constantly evaluating the size and placement of our work force, including the ways we staff and prioritize work," according to spokesman Charles Fleckenstein. "This action allows us to rationalize the size of our work force relative to the size of our customer base." Fleckenstein said the company is first asking management and supervisors in all markets to take a voluntary buyout and will ask regular workers to do the same in a few weeks. If not enough employees take a voluntary buyout, the company will have to make layoffs. The termination charges haven't been determined.

In June, Embarq announced it was handing over four technical service centers to Nokia Siemens Networks, transferring 256 Embarq workers. It also said it planned to close three customer call centers, affecting 210 jobs. (info from The Wall Street Journal)

Friday, August 22, 2008

Kiss & make up: Verizon Mobile may use Google for search

Verizon Communications is nearing an agreement with Google on a wide-ranging partnership in what could be a much-needed jolt for the anemic mobile search business.

It's the latest sign that telecom companies are finally conceding that their homegrown search services have stalled -- and that they need help from the Internet's big guns. Carriers have been reluctant to team up with established Internet players, not wanting to hand over a potentially lucrative stream of advertising revenue.

The deal under discussion, which would make Google the default search provider on Verizon devices and give it a share of ad revenue, is aimed at dramatically simplifying what is now a confusing set of search options for cellphone users. Today, users have to go to different places to look up services such as ringtones, websites and restaurants. Verizon wants a single unified search platform.

The deal isn't yet final and the two sides are still negotiating on key issues, such as Google's desire to save information from user cellphone searches. Carriers prize such information and are reluctant to turn it over. Verizon, the second largest wireless provider in the US by number of subscribers, has considered other Web search partners, including Microsoft.

Google wants closer integration with carriers like Verizon so it can enhance the relevance of the ads it shows -- for example, by making them sensitive to a user's location. Google has tried for more than a year to strike such a deal with Verizon, but the big hang-up has always been how much of a revenue share it would get.

A deal would mark a rapprochement between the companies who have had a testy relationship. Bad blood built up when Google backed regulations that required wireless carriers to begin opening their networks to more services and handsets. Verizon was the most vehement critic of those rules. Verizon also is the only major US carrier that hasn't expressed interest in carrying phones with Google's Android mobile operating system.

Google has managed to take an early lead in mobile Web search, just as it became the dominant search engine on PCs. Most people type Google's URL into browsers to get to the search engine. Google also got a boost when Apple made it the default search bar on iPhones.

Carriers initially focused on building their own search services in partnerships with small providers such as Medio. Rivals JumpTap and MCN also provide search for several operators. Those services have been successful mainly at allowing users to search for digital content like ringtones, but searching the Web isn't their specialty.

Now the industry is rapidly turning to the Web giants for help. But unlike Verizon's new initiative, other carriers so far aren't linking Google and other Internet giants into a broader package of search services that would include offerings like ringtones. Sprint Nextel recently added Google as the default Web search bar on browsers in over 40 of its phones. As part of that deal, Sprint shares revenue from ads Google displays in response to searches. AT&T the largest US carrier, plans to use Yahoo to power Web search through its MEdia Net portal starting later this year. Foreign carriers like T-Mobile and KDDI in Japan already have partnerships in place with Google and Yahoo. (info from The Wall Street Journal)

Thursday, August 21, 2008

Feds will limit annoying automated phone calls

Responding to a wave of consumer complaints, the Federal Trade Commission will bar telemarketers from making prerecorded sales calls unless a consumer explicitly agrees to receive such calls, beginning on 9/1/2009. The FTC also will require all recorded sales calls to provide an opt-out feature to allow consumers to place themselves on the caller's do-not-call list immediately.

The FTC policy "is going to protect consumers from the annoyance and invasion of prerecorded sales messages that seem to be increasing every day," said Susan Grant, director of consumer protection for the Consumer Federation of America.

The commission's rules won't affect automated informational calls, such as recorded calls that alert consumers to flight cancellations or doctor's appointments.

The FTC rejected arguments of industry advocates who wanted permission to make recorded telemarketing calls to consumers with whom the seller had an established business relationship.

The FTC's action finalizes telemarketing rules it proposed in 2006 after receiving more than 13,000 comments from consumers who objected to telemarketers' requests for more leeway to make recorded sales calls. The commission exempted charitable fund-raising calls, but charities will have to give consumers the option to opt-out of future calls.

The FTC's telemarketing rules are stronger than similar rules enforced by the FCC, which allows companies to make prerecorded calls if they have a business relationship with the consumer.

Banks, telephone companies and insurance companies are among those that aren't subject to the FTC's jurisdiction, said attorney Charles Kennedy of Morrison & Foerster. However, he said, the FTC still could go after those industries' telemarketing practices if they work with outside telemarketing companies. (info from The Wall Street Journal)

Wednesday, August 20, 2008

Would-be thief busted by his own cellphone

A man trying to extort $500 from a Pizza Hut in Elko, Nevada was foiled by his own cellphone camera. Police said Jess Long, a former employee of the restaurant, called the manager on Friday and told him he had five Pizza Hut signs that are used on the roofs of vehicles, and wouldn't return them unless he was paid $500.

Police said the manager wanted proof that Long had the signs. So Long sent him a cellphone picture that proved to be his undoing.

Officers were able to zoom in on license plate numbers of two vehicles in the background that are registered to Long. He's been charged with extortion, possession of stolen property and grand larceny. Bail is set at $15,000. (info from The Elko Daily Free Press)

Tuesday, August 19, 2008

Drunken boy jailed for four prank 911 calls and fighting with cops who arrested him

Police in Gastonia, North Carolina arrested a 19-year-old boy for making four 911 prank calls in one day. Robbie Maney faces charges of misuse of the 911 system, obstructing justice and resisting an officer.

According to arrest warrants and an affidavit, Maney called a 911 dispatcher while drunk four times Saturday. Two of the calls were hangups, the third call reported a shooting and the fourth was a call about a husband beating up his wife.

"I observed the defendant walking in the area of 115 Essex," wrote Officer M.B. Watts in the affidavit. "When I approached him he was trying to delete the 911 calls from his phone. Patrolman Peterson and myself attempted to arrest him for 911 violation and he fought officers resulting in the defendant getting Tased."

Maney also had an order for arrest by failing to appear for a worthless check charge. Maney was jailed under a $5,500 secured bond. (info from the Gaston Gazette)

Monday, August 18, 2008

Despite the Web, TV is still main news source

Fewer Americans are reading newspapers -- they are getting their news online instead -- but television remains the leading source of news in the country, according to the Pew Research Center's biannual survey on news-consumption habits.

Younger people tend to get more of their news on the Internet, while older people use traditional media such as television and newspapers, said the survey. The results show an increasing shift toward online news consumption, but there is now a sizable group of more engaged, sophisticated and well-off people that use both traditional and online sources to get news. The Pew researchers referred to these people as "integrators," and say they account for 23% of those surveyed, spending the most time with the news on a typical day.

"Like Web-oriented news consumers, integrators are affluent and highly educated. However, they are older, on average, than those who consider the Internet their main source of news," the survey said.

Pew found that 46% of those polled have a "heavy reliance" on TV for news at all times of the day. This group is the oldest, with a median age of 52.

The group that relies most on the Internet for news is the youngest, at a median age of 35. It is also the smallest, at 13% of those polled. Fewer than half of them watch TV news on a regular basis. Eighty percent of this group has a college education and they are twice as likely to read an online newspaper as a printed version.

Pew found consumers of online news tend to be more educated than those who get their news from traditional sources, with 44% of college graduates saying they read news online every day. Just 11% of those who topped out with a high-school education go online for news. (info from The Wall Street Journal)

Friday, August 15, 2008

Moto sues former employee for helping Apple

Motorola sued a former executive for allegedly violating a noncompete agreement by taking a job as head of global iPhone sales for Apple and helping Apple hire two other former Motorola employees. The suit, which alleges breach of contract and threatened misappropriation of trade secrets, follows a deterioration in Motorola's cellphone business in the past 18 months. That has led to an exodus of employees to rivals including Apple, BlackBerry maker Research In Motion and Cisco Systems.

The suit was filed in an Illinois court against Mike Fenger, who quit Motorola in March as senior vice president of mobile devices for Europe, Middle East and Africa to join Apple. The suit alleges that Fenger agreed when he received stock options to refrain from working for a competitor for two years after leaving Motorola. It doesn't claim Mr. Fenger stole documents, but simply that Mr. Fenger learned about the communications industry through his work at Motorola. "In his new position ... he cannot perform his duties for Apple without inevitably disclosing Motorola's trade secrets," the lawsuit states. The suit didn't name the two employees he allegedly helped Apple recruit. The lawsuit seeks to enjoin Fenger from his job until March 2010, and seeks reimbursement of millions of dollars in stock options. Motorola said it "is seeking all available remedies to protect its trade secrets, confidential information, and customer relationships."

More recently, Motorola's senior vice president for supply chain, Rita Lane, became the latest executive to move to Apple. Apple also has hired a Latin American sales executive, Ornella Indonie.

Among the high-ranking executives who moved to rivals are former Chief Technical Officer Padmasree Warrior, who in December joined Cisco, Motorola's main rival in the cable set-top box business. Motorola also sued an ex-manager who went to work with former mobile-device chief Ron Garriques at Dell.

The company has taken court action against former employees before. In 2005, it filed suit against former Chief Operating Officer Mike Zafirovski when he was hired as chief executive of Nortel. In a settlement, Zafirovski was enjoined from contacting certain customers and from shaping Nortel's strategy to compete against Motorola for 18 months after he left.

More recently, Apple has been among the primary beneficiaries of the exodus from mobile devices, as it has boosted hiring of engineers and others with know-how about mobile devices to help get its iPhone business off the ground. This spring, it held a recruiting fair in a Mundelein, Ill., hotel near the Libertyville headquarters of Motorola's mobile-devices division.

Given his international experience, Fenger was a valuable hire for Apple, which has made global expansion of the iPhone a priority. The original iPhone was available through carriers in only a few markets, but Apple last week began selling the new iPhone in 21 countries, most of them in Europe. By the end of the year, Apple has vowed to sell the new product in more than 70 countries, including markets in Latin America. Before overseeing Europe, Middle East and Africa for Motorola, Fenger had run the Latin American operations. (info from The Wall Street Journal)

Thursday, August 14, 2008

Sprint cancels stock sale

Sprint Nextel said it canceled a $3 billion convertible-preferred-stock sale intended to help the company pay down debt because it didn't like how the deal was priced.

Spokesman Bill White said the interest the company would be paying -- it was expected to carry a coupon of 4.75% to 5.25% -- wasn't attractive, and Sprint ultimately decided it didn't need the money enough to follow through with the deal. "When we didn't get the terms we liked, we pulled it from the market," White said.

Sprint shares fell 14% after the convertible sale was announced. That may have damped investor interest in the convertibles, one person familiar with the deal said, because it made the strike price on the securities significantly higher than Sprint's actual stock price.

Sprint shares rebounded in heavy trading, as rumors spread on Wall Street that the company was canceling the convertible sale. Shares closed up 6.1% to $7.79 in 4 p.m. composite trading on the New York Stock Exchange.

Sprint said the proceeds from the convertible sale would have been used to accelerate its plans to pay down some of its $24.3 billion in debt. When the company reported earnings, it said it expected to reduce gross debt by at least $1 billion by the end of the third quarter. White said those plans are still on track without the convertible sale.

Sprint has been battling to return to subscriber growth and profitability after two years of falling behind rivals AT&T and Verizon Wireless. The company showed some improvements by reducing customer turnover, but it still saw a net loss of 901,000 subscribers for the second quarter and signaled worsening conditions for the third quarter.

In addition to the convertible offering, Sprint has been looking for other ways to raise cash. It recently announced a deal to sell 3,300 cellphone towers to TowerCo for about $670 million in cash. It has been in talks with Korea's SK Telecom over a technology partnership. Last year, Sprint rejected a $5 billion investment proposal by SK Telecom. (info from The Wal lStreet Journal)

Wednesday, August 13, 2008

Best Buy to sell iPhones

Best Buy will start selling the iPhone on Sept. 7, becoming first US chain to do so outside of Apple's and AT&T's own stores.

Wednesday's announcement by Best Buy expands the availability of Apple's vaunted phone to 970 full-size stores and 16 smaller Best Buy Mobile stores. It's also a coup for the Minneapolis-based chain, which has been upgrading its cellphone departments.

"We had a lot of work to do, obviously, to get in a position where Apple and AT&T would feel good about Best Buy Mobile carrying it, and that's what we've done in the last 18 months," said Shawn Score, president of Best Buy Mobile. Best Buy also resells Apple's Mac computers and iPod media players. Apple spokeswoman Natalie Kerris said the long-standing relationship between the companies was the reason Best Buy would now be able to sell the iPhone.

Last week, Best Buy announced it had completed a two-year conversion of its stores to include upgraded cellphone departments under the Best Buy Mobile brand. It has upgraded its computer systems to handle cellphone activation and spent 250,000 hours training its employees.

Score said Best Buy Mobile, which resells phone service under the carriers' brands, now has a 3.6 percent share of the cellphone market, up from 2 percent last year. It is a joint venture with CarPhone Warehouse Group PLC, which sells the iPhone in Britain and is Europe's largest cellphone retailer.

In Europe, independent chains like CarPhone have a much stronger presence, while the US market is dominated by the carriers' own stores. AT&T, the exclusive US carrier for the iPhone, sells it in more than 2,000 stores. Apple has 189 US stores.

"Smart" phones like the iPhone, which does e-mail, Web surfing, and accepts third-party software, are a big focus for Best Buy Mobile. Sales are up tenfold in two years, Score said. It is the only authorized third-party reseller of Sprint Nextel's iPhone-like Samsung Instinct. "The smart phones are what people are heading for," Score said. (info from The Associated Press)

Tuesday, August 12, 2008

Siemens getting out of cordless phone business

Siemens will sell a majority stake in the last remaining telecommunications-equipment business under its control as it restructures to narrow its focus and raise profit. Europe's largest engineering company by sales said that it will sell an 80.2% stake in its cordless phone unit, which had about $1.25 billion in sales last year, to Germany's Arques Industries. Siemens didn't disclose the financial terms but said it expects to book a "double-digit-million" euro loss when the deal closes in September.

The divestment process, carried out in stages since 2005, has reshaped a company that began as a 19th-century manufacturer of telegraphs and still generated about €20 billion in annual revenue from telecom equipment earlier this decade. In more recent years, Siemens's telecom business racked up big losses as lower-cost rivals snapped up market share.

Siemens's telecom unit also sparked a massive bribes-for-business probe that burst into public view after a German police raid in late 2006. The Munich-based conglomerate has since flagged more than €400 million in suspicious transactions in 2000 to 2006 at its telecom businesses and was fined €201 million by a German court last October for bribes paid in Nigeria, Russia and Libya.

The company outlined plans last month to cut 16,750 jobs world-wide, or about 4% of Siemens's work force, and further streamline operations. They said the steps are necessary to bring profit margins in line with rivals and weather toughening business conditions as the global economy slows.

Management said that it had secured guarantees from Arques to maintain the cordless-handset unit's German manufacturing facilities for the next three years. The unit has 2,100 employees, most of them in Germany. (info from The Wall Street Journal)

Monday, August 11, 2008

Verizon forbid email address for real family name with "shit" in it

This past spring, Dr. Herman Libshitz and his wife wanted to upgrade the Internet service in their summer home in Delaware from dial-up to DSL. When it was time to enter their user name and create an e-mail address, Verizon wouldn't let them complete the upgrade application.

Dr. Libshitz said, "We called their help line, and got a wonderful young man in the Philippines who told us, 'We can't install it because your name has shit in it.' " The doctor asked to speak with a supervisor. The Libshitzes got the same answer from the supervisor, who suggested they try misspelling their last name.

The couple uses Libshitz in its e-mail address with Prodigy. So there had to be some way around the rules, they figured. The doctor went for a third opinion. He dialed the Verizon number for billing disputes. He explained his problem, "and the first person said, 'That's outrageous,' and put me on to a second person, who said he'd never heard of such a thing." A third supervisor agreed as well, but said the only person who could help was in Tampa, and that man would have to call India to get them to change the computer code. No one called him back.

Several days later, Libshitz received a letter from Verizon's customer-relations desk in Washington, informing him that he could not have the user name because it didn't comply with company rules. So the couple returned the Verizon DSL kit. "If I can't use my own name, I'm going to stay with my AT&T dial-up," the doctor said. "The hell with them."

A reporter called Sharon B. Schaffer, a Verizon spokeswoman, who offered a refreshing answer to a question as to how this happened. "I don't have a clue," she said. "Actually, I'm kind of surprised. If this is Dr. Libshitz's name, your name is your identity. He's had this his entire life. . . . I think he needs a little bit of personal attention."

A couple days later, she e-mailed a formal response: "As a general rule (since 2005) Verizon doesn't allow questionable language in e-mail addresses, but we can, and do, make exceptions based on reasonable requests. The one from Dr. and Mrs. Libshitz certainly is reasonable and we regret the inconvenience and frustration they've been caused."

The doctor said he was willing to try again, but grudgingly: "These people have no trouble putting me in their phone book. They send me mail with that name, they send me a bill routinely, and they cash my checks with Libshitz on it."

Ultimately, Verizon customer service managers gave the Libshitz family an exemption to use its name in its address, but it took a call from a reporter to get everything pushed through. (info from Philly.com)

In Hyannis, Mass. there was a "Mycock" business. I wonder if they were able to get an email address.

Friday, August 08, 2008

Vonage ad cut cuts subscriber growth

Vonage Holdings Corp. narrowed its second-quarter loss but added far fewer customers, in part because it cut back on advertising. The company reported a loss of $6.9 million, or four cents a share, compared with a year-ago loss of $23.2 million, or 15 cents a share. Revenue climbed 11% to $227.5 million.

The rate of customer defections, or churn, fell to 3% from 3.3% in the previous quarter. Vonage -- which provides phone service to households through Internet access lines -- has struggled to reduce turnover in a saturated and competitive telecommunications industry.

Total wireless churn at competitors such as AT&T and Verizon Wireless was 1.6% and 1.1%, respectively.

"The most important priority right now is to focus our energies on churn reduction programs," Vonage Chief Executive Marc Lefar said. He was named Vonage's CEO last week, in part to address the company's retention efforts.

In a research note, Citigroup analyst Michael Rollins said Lefar "has an opportunity to leverage his experience to improve the selling prospects, while continuing the recent focus of current management to reduce churn." Vonage's cost-cutting campaign has included reduced marketing spending, particularly television advertising, which had an impact on subscriber growth. The company added 2,080 new customers during the quarter, a number much lower than the 56,691 it gained in the year-earlier period. Vonage ended the quarter with 2.6 million subscribers. Average monthly revenue per line rose slightly, increasing 2.3% to $29.04.

Lefar said that over the next few months he will review Vonage's operations to determine where the company can improve its relationship with customers and prospective customers. "A 3% churn rate is not something we're happy with," he said. (info from The Wall Sttreet Journal)

Thursday, August 07, 2008

Cablecos kicking telcos' butts

In the battle for broadband dominance between cable and phone companies, Time Warner Cable's earnings suggest the tide may now be turning firmly in cable's favor. Time Warner Cable posted a sharp jump in its broadband product line, and some analysts now question how competitive phone company DSL services are as customers turn to high bandwidth services like online video.

Time Warner Cable, the last of the major cable and phone companies to report earnings, said it won 208,000 new broadband customers in the second quarter, ahead of analyst forecasts. The results compare to 46,000 and 54,000 customers added respectively by phone giants AT&T and Verizon. Time Warner gains follow a big jump announced last week by Comcast, which added 278,000 broadband customers.

So far this quarter, cable has added three broadband customers for each one customer picked up by the phone companies, says Bruce Leichtman, an analyst at Leichtman Research Group. Previously, the broadband market has been divided almost in half, with cable having a 55% market share, and phone companies about 45%, he says. "This is the first disparity of that type since phone companies got into the business," Leichtman says.

Cable's edge is driven by the growing consumer use of bandwidth-intensive services. While somewhat more expensive, the modems offered by cable companies tend to be substantially faster than the DSL connections that phone companies offer to most of their customers. In AT&T's defense, spokesperson Michael Coe says speed is only one component of what customers are looking for in a broadband service. Customers also take other aspects like price and the dedicated network connection that phone companies offer -- as opposed to cable services, which tend to have shared capacity at the neighborhood level that can slow at peak times. "We offer the best broadband for the price," Coe said.

As consumers hunger for bandwidth, phone companies like AT&T and Verizon are spending billions to build out their own high-speed fiber-optic broadband networks. They have already started pushing customers toward those new, faster connections in regions they are available, Leichtman said. But he noted that even after they have finished building their networks -- several years from now, according to their plans -- only somewhere near half the customers in their footprint will be offered the new services.

The big shift in market share will have major consequences for cable and phone companies. For starters, broadband services are more profitable than either the pay-TV or phone services that the companies offer. But both cable and phone companies are increasingly trying to sell bundles of services to customers. Having a broadband service that is more attractive can help get a foot in the door to sell other services as well, analysts say.

Comcast and Time Warner Cable, the first and second largest cable operators in the country by subscribers, both showed strong growth in the number of customers buying a bundle of services in the quarter. (info from The Wall Street Journal)

Wednesday, August 06, 2008

AT&T, too, will provide cloud computing

AT&T, formerly known as Woodbury Telephone Company and other things, will soon begin service that provides computer networking and storage for business customers, making AT&T the latest company to invest in what is known as "cloud computing."

Cloud computing has become a crowded field in a short period of time, as companies such as Google, IBM, Verizon and Amazon have announced initiatives. Cloud computing's appeal is that it can eliminate a company's need for its own data center. It also lets businesses pay for bandwidth on an on-demand basis.

One of AT&T's first customers is the US Olympic Committee. They run teamusa.org and other Olympics Web sites, and know traffic will leap as fans watch videos and look up event results and then drop sharply as soon as the games are over. It plans to use the AT&T service to increase its network bandwidth temporarily.

Jim Paterson, a vice president of product development at AT&T, said another type of business that could benefit from cloud computing would be an e-commerce retailer that sees a spike in activity on the day after Thanksgiving. Paterson said companies can cut networking and storage costs by as much as 30% with a cloud-based service.

Cloud computing carries risks. Amazon's storage service had an interruption last month, its second outage this year, disabling businesses that relied on it for their operations, and some companies may shy away from using a data center that they don't have physical access to in case of emergency.

Businesses are increasingly concerned with "elasticity" in their technology infrastructure, said Daryl Plummer, a cloud-computing analyst at Gartner Inc. Anticipating those needs isn't easy, he added, and both under- and overestimating them can cause problems ranging from crashes to being stuck with unnecessarily high hosting costs.

"A business has unknown capacity requirements, or maybe believes they know what the capacity requirements are, but is going to be surprised by something," he said. "Worse yet, after they respond to the enhanced need, they scale up to support it, and then it goes away." (info from The Wall Street Journal)

Tuesday, August 05, 2008

Nortel loses even more money,
even though sales are up, sort of

Nortel Networks's second-quarter loss widened sharply, hit by restructuring charges and slower spending by US telecom carriers. Nortel posted a loss of $113 million, or 23 cents a share, compared with a loss of $37 million, or 7 cents a share, in the 2007 quarter.

The latest results include restructuring charges of $67 million, a loss of $21 million primarily from interest-rate swaps and a gain of $34 million from currency fluctuations. The year-earlier results included a regulatory-investigation expense of $35 million, a gain of $69 million due to changes in foreign exchange rates and restructuring charges of $36 million.

Revenue rose 2.3% to $2.62 billion, but $314 million of that was previously deferred revenue, which produces sales in accounting terms but no new cash. Cash flow from operations was negative $74 million in the quarter.

The company said it is on track to meet its targets for the year. After investing heavily in new technologies, Nortel expects sales to grow in the low single digits this year, despite the economic slowdown, because of healthy sales growth in optical-network and Ethernet equipment.

Chief Executive Mike Zafirovski, who has been trying to turn around Nortel for three years, said he was pleased with the results. "The transition from being mostly a wireless company to one that is broader isn't going to be easy, but will be easier than the skeptics think," he said in an interview.

In 4 p.m. composite trading Friday on the New York Stock Exchange, Nortel shares were off 15%, or $1.12, at $6.52.

Nortel's business supplying a wireless technology called CDMA saw a 10% decline in sales in the quarter to $446 million and contributed to a 2% drop in revenue for Nortel's biggest division, carrier networks.

Zafirovski said he was open to combining Nortel's wireless business with that of another company to gain scale necessary to compete in a tight industry. We have great capabilities in our business: It's profitable and we have great underlying technology," he said. "The question is: Can the industry prosper with so many players?"

Earlier this year, Nortel was in talks to combine its wireless business with that of Motorola, which is trying to turn around its cellphone unit. Zafirovski, a former Motorola executive, said no decision had been made as to whether the company would buy or sell more assets, or seek a joint venture with another company. (info from The Wall Street Journal)

Monday, August 04, 2008

FCC slams Comcast but does not fine them

A divided FCC ruled that Comcast violated Federal policy when it blocked Internet traffic for some subscribers and has ordered the cableco to change the way it manages its network. In a precedent-setting move, the FCC by a 3-2 vote on Friday enforced a policy that guarantees customers open access to the Internet.

The FCC did not assess a fine, but ordered the company to stop cutting off transfers of large data files among customers who use a special type of "file-sharing" software. Associated Press reports on Comcast's activities led to the complaints filed with the FCC.

Comcast says its practices are reasonable -- that it has delayed traffic, not blocked it -- and that the FCC's so-called network-neutrality "principles" are part of a policy statement and are not enforceable rules.

The commission's authority to act stems from a policy statement adopted in September 2005 that outlined a set of principles meant to ensure that broadband networks are "widely deployed, open, affordable and accessible to all consumers." The principles are "subject to reasonable network management," a concept the agency has not explicitly defined.

While the FCC action did not include a fine, it does require Comcast within 30 days of release of the order to disclose the details of its "discriminatory network management"; submit a compliance plan describing how it intends to stop these practices by the end of the year; and disclose to customers and the commission its new plan.

Martin said Comcast managers were not "simply managing their network, they had arbitrarily picked an application and blocked their subscribers' access to it." The agency said that Comcast had a motive to interfere. Peer-to-peer applications are used to load video that "poses a potential competitive threat to Comcast's video-on-demand service," it said. Martin was particularly critical of the company's failure to disclose to customers exactly how it was managing its traffic.

Comcast spokeswoman Sena Fitzmaurice said that the company was "disappointed in the commission's divided conclusion because we believe that our network management choices were reasonable...." She said the company believes the order "raises significant due process concerns and a variety of substantive legal questions."

The FCC's action means network operators are subject to the FCC's enforcement process and the agency will act on consumer complaints. The FCC action arose when bloggers reported that Comcast customers who used file-sharing software like BitTorrent were noticing their transmissions were aborting prematurely.

AP ran tests and reported Comcast "actively interferes" with attempts by some subscribes to share files online, and that the practice involved "company computers masquerading as those of its users." The report led to a complaint by public interest group Free Press and others that the company was violating agency principles.

Comcast has said it did not block traffic, but delayed it, and only among users of the file-sharing, peer-to-peer programs that were responsible for taking up a disproportionate share of bandwidth and endangering service for other customers. The company says it will stop using its network management practice by the end of the year and switch to a "protocol agnostic" technique that will not single out any particular type of traffic. (info from The Associated Press)

Friday, August 01, 2008

Not telecom, but important.
Money wasting warning

Most of my company's customers, even the White House and the Pentagon, pay us with credit cards. But we do allow school systems to pay us in 30 days.

Strangely, every year we get five to ten thousand dollars in checks paying for purchases that were already paid for with plastic.

The trend seems to be increasing. It happened three times last week alone, and the redundant payments come from a wide range of customers including small businesses, blue chips and government agencies -- who should have sophisticated accounting systems to avoid double paying. The problem seems to be caused by bookkeepers who mistake paid receipts for invoices requiring payment, and enter them into their systems and then the checks are generated.

We call our customers, explain the situation, have some laughs and shred the checks. But I have to wonder how many busineses are not as honest -- or are just not as careful -- as we are. At a time when profits are elusive and many businesses are slipping into Chapter 11, double payments could be wasting millions, or even billions.

It's impossible to know the total amount of the waste. For some companies on both sides of the sloppy check processing, it could mean the difference between profit and loss.

In addition to the wasted money of the double payments that are not caught, there's the cost of time wasted generating the unnecessary check, and the postage, and the time wasted by the company that received it. I would not be surprised if some companies, especially in this tight economy, quickly deposit every check that comes in and figure that they'll have the use of the money for a few months until the customer notices the error, or maybe keep it forever.

Tell your accounts payable people to pay attention. A receipt is not an invoice!