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

Thursday, February 28, 2008

Nortel loses more, fires more

Nortel Networks announced a new wave of job cuts after posting a wider loss for the fourth quarter and said it was looking for acquisitions to increase its market share amid slower spending by its US carrier customers.

The Canadian equipment maker posted a loss of $844 million or $1.70 a share, compared with a prior-year net loss of $80 million, or 19 cents a share, after a $1.04 billion charge for increased tax reserves, because of a lower tax rate and the strengthening of the Canadian dollar.

Nortel said it would cut 2,100 jobs and move another 1,000 to lower-cost areas to keep margins high while awaiting growth from its core businesses, investment in new technologies and acquisitions.

"We want to be much more significant in the areas where we compete," Chief Executive Mike Zafirovski said in a telephone interview. "If the right opportunity comes at the right price, there is a management team in place that will be able to integrate that."

Zafirovski stressed that Nortel was trying to transform itself into a company that could compete against much larger rivals based in Europe, such as Ericsson and Alcatel-Lucent, and against lower-cost entrants from China, such as Huawei. It predicted sales growth in the low single-digits for 2008. Nortel has been in discussions with Motorola to combine wireless infrastructure businesses, which would allow Nortel to sell upgrades to more customers

Nortel's results disappointed most analysts. In composite trading on the New York Stock Exchange, the stock was down $1.52, or 13%, to $9.93, after having lost 24% this year before yesterday. (info from The Wall Street Journal)

Wednesday, February 27, 2008

FCC may get tough with Comcast for slowing Web traffic

Federal Communications Commission Chairman Kevin Martin warned cable giant Comcast that the government is "ready, willing and able" to stop companies from improperly hobbling Internet traffic. But beyond requiring more disclosure to consumers, it isn't clear what the government can do to enforce so-called net neutrality, which would ensure that Internet providers offer equal service to everyone.

As more consumers watch Internet video and start-ups vie to deliver high-quality video on personal-computer and television screens, concern has grown at the FCC that Internet providers, mostly phone and cable companies, will find ways to slow or block delivery of data sent via their competitors.

The FCC, spurred by a complaint that Comcast has improperly slowed certain Web traffic to its subscribers, is mulling whether to get into the area of deciding what constitutes "reasonable" network management and how to write new rules that would dictate, to some degree, how Internet providers build their networks. If nothing else, the agency appears poised to rap Comcast for delaying some traffic without telling consumers.

The Internet industry presents a tricky situation for the Republican-controlled FCC, which so far has been loath to venture far into the area of regulating Internet lines or services. The commission is mulling what to do about concerns that Comcast may have already violated the FCC's four net-neutrality principles, which aim to prevent cable and phone companies from blocking traffic or from stopping consumers from attaching legal devices to the Internet.

Last year, the FCC began to investigate complaints that Comcast has been slowing, if not completely blocking, some peer-to-peer Internet traffic. It also launched a broader look at what rules, if any, it should write to regulate Internet providers. The New York attorney general's office also is looking into the matter, Comcast confirmed. It isn't clear that the FCC has the authority to enforce its net-neutrality principles, although bipartisan legislation recently introduced in the House would provide that.

Comcast says it hasn't violated the FCC's principles and acknowledges it slows some peer-to-peer traffic on occasion. Like other Internet providers, the company argues it needs flexibility to design its network. Providers say heavy-handed regulation would do little more than discourage companies from investing to build out and improve existing broadband networks.

Internet companies including Amazon.com, Google and smaller start-ups argue that as consumers depend on the Internet for more services, such as phone and television, Internet providers should be required to deliver Web traffic on an equal basis so that new companies have a chance. (info from The Wall Street Journal)

Tuesday, February 26, 2008

Siemens to cut 7,000 telecom jobs

German engineering conglomerate Siemens plans to fire nearly 4,000 people from its telecom equipment division that supplies corporate customers and transfer about 3,000 other workers elsewhere. The restructuring comes as Siemens continues to seek a partner for the business or to sell it outright. The job cuts highlight the difficulties facing European telecom suppliers, which are grappling with falling prices and rising competition from rivals in countries such as China where labor costs are lower.

The move could spark public outcry in Germany, where unions remain powerful. Earlier this year, Nokia of Finland faced protest marches and criticism from politicians when it announced it would close a German plant, affecting about 2,300 jobs. Siemens, one of Germany's largest employers, also has faced criticism for job cuts.

Siemens already has dismantled most of the unprofitable telecom unit, which was its largest revenue source earlier this decade when it had almost $30 billion in annual sales. Since 2005, the company reshaped its business, narrowing its focus to factory automation, energy and health care.

The telecom-equipment unit has been at the center of a bribes-for-business scandal that erupted in late 2006. The company also is the subject of criminal investigations on several continents. Peter Löscher, who took the helm at Siemens in July, has embarked on a restructuring drive to boost profit and steer the engineering company out of the corruption scandals.

Siemens's remaining telecom business provides equipment to corporate customers, and has about 17,500 workers world-wide. The business has become less labor-intensive in recent years as telecommunications systems rely increasingly on software.

Siemens began dismantling its telecom unit in 2005, when it agreed to transfer its cellphone business and about 6,000 workers to BenQ of Taiwan. In 2006, it transferred tens of thousands of workers into a joint venture with Nokia that now is one of the largest suppliers to telecom carriers. (info from The Wall Street Journal)

Monday, February 25, 2008

Moto plan to sell phone biz hurts stock price

Motorola is trying to break itself up to boost its value, but so far, those efforts have had the opposite effect. Three weeks after company announced it was considering a sale or spinoff of its troubled mobile-devices division, no buyers have emerged. Top handset vendors Nokia Samsung and LG have said they aren't interested, and the consumer electronics companies were expected to step forward so far haven't. That hurt the stock price.

The lack of potential buyers already is changing the perception of the Motorola unit among analysts and investors. It has gone from one that simply needed to roll out new products faster to one whose problems are, some believe, too tough to fix.

Motorola stock is now trading below $11.50, its closing price on Jan. 31, just before the company bowed to pressure from activist investor Carl Icahn, who then held 5% of the company. The stock had been trading in the mid- to high teens for most of the past 12 months. Investors have also reacted coolly to word of Motorola's continuing talks to spin off another of its units, its small and sluggish networks division, into a joint venture with Nortel.

At 4PM Friday, Motorola traded at $11.28. That compares to its 52-week low of $10.01 The shares currently trade at 0.6 times estimated sales for this year, cheaper than its peers.

Not everyone is pessimistic about Motorola's handset unit, however. "All of the ways in which Motorola is a part of this industry aren't going to go away because they have had a bad year on the design side," says George Calhoun, a professor at Stevens Institute of Technology in New Jersey. "That package ought to have a lot of value to someone who wanted to step into the wireless arena."

But to others, it isn't clear that Motorola's handset business, which lost $1.2 billion last year, is worth more as a standalone unit. The company might not be willing to part with the brand, its logo or patents, some of which are used by other divisions at Motorola.

The changing sentiment around Motorola was obvious last week at the Mobile World Congress trade show in Spain. While people waited to get into the booths of Nokia and Samsung, there was little activity around Motorola's display.

A prolonged search for buyers or partners could damage prospects for the division, which makes one of every three phones sold in the US. Suppliers may begin to shy away from doing custom work. Carriers that buy Motorola phones are already hedging their bets. Their ads are featuring more phones from competitors. Verizon expects to introduce more new models made by Nokia than by Motorola. Motorola says its relationships with customers and partners are strong. (info & chart from The Wall Street Journal)

Friday, February 22, 2008

Flat rate cellphone plans are finally here

There's some long-overdue good news for big-time cellphone yackers.

Three of the nation's largest cellphone companies announced flat rate plans for unlimited calling, a significant departure from the traditional model where people purchase "buckets" of minutes. The new plans cost more than most traditional options and are aimed at the heavy users that wireless carriers compete fiercely for.

Verizon Wireless was the first to make the flat rate announcement, and will charge $99.99 a month, for its unlimited voice service. The plan is available immediately. Rivals AT&T and T-Mobile quickly announced similar plans, priced the same as Verizon.

The new plans are a sign that cellphone companies are willing to experiment with the minutes-based model that has been a fundamental part of the industry for years. The carriers are increasingly looking at voice as a commodity and viewing data services like text-messaging and Internet access as the major sources of growth.

Now, customers of the four largest US carriers, which also include Sprint Nextel, typically purchase plans that provide a set number of minutes. Customers face an "overage" penalty for going over the limit, a potentially big charge that consumers detest. At AT&T, for example, the penalty ranges up to 45 cents per minute. Under the new Verizon and AT&T plans, customers would get unlimited voice service, but would need to pay extra for data. T-Mobile's plan will include unlimited text messaging and instant messaging.

News of the plans sent shares of the telecommunications companies lower, as investors worried the new plans could trigger a price war. AT&T fell 5.3%, Verizon was down 6.6% and Sprint Nextel fell 3.6%. Existing Verizon and AT&T subscribers will face no penalty for switching to the flat-rate plan from their current plan, and they can do so at any time without extending their contract. T-Mobile says it won't charge customers to switch, but will require renewing a two-year contract.

The moves by the other carriers could put pressure on Sprint to offer a similar plan or risk losing high-end customers. Sprint, which is already struggling to regain market share lost to the bigger companies, is testing an unlimited plan in a few cities. Sprint's stock fell 4 percent. Helio, a small carrier that uses Sprint's network, is offering a $99 monthly unlimited plan nationwide. It includes unlimited Web use, e-mail and messaging. (info from The Wall Street Journal & Associated Press)

Thursday, February 21, 2008

T-Mobile providing wired home phone service

T-Mobile USA, the fourth-largest US cellphone operator by subscribers, has a Internet calling plan designed to replace home phone service, in a new threat to landline carriers and the latest example of shifting business models in the telecom industry.

The company will make the service available today in two test markets, Seattle and Dallas. The service will be available only to T-Mobile cellphone customers. To sign up, they must buy a $50 Internet router from T-Mobile and pay $10 a month for unlimited local and long-distance domestic calling. Consumers can connect any home phone into the router.

The move comes the same week three of the largest US cellphone companies, including T-Mobile, announced unlimited mobile calling plans for a flat $100 monthly fee.

The new home-phone service is an addition to T-Mobile's HotSpot @Home wireless product, which lets customers make unlimited cellphone calls at home on a Wi-Fi Internet connection, for a monthly charge of $10 on top of a regular cellular bill. That service requires a Wi-Fi router, which users can supply themselves or buy from T-Mobile.

T-Mobile's entry into the Internet calling business with a low-cost service will put added pressure on phone companies such as AT&T and Verizon that have already been dealing with consumers' itch to ditch their landlines. About 12% of consumers in a recent survey said they expect to drop their landline service in the next 12 months and use only a cellphone. T-Mobile's move also creates competition for Internet phone specialist Vonage, which charges $25 a month for unlimited local and long-distance calling.

T-Mobile, with nearly 30 million US subscribers, has a market niche catering to cost-sensitive consumers. It has led in offering ever-larger packages of minutes for low-cost plans. It was an early experimenter with unlimited plans: Its MyFaves service, which has five million customers, lets subscribers make unlimited calls to any five numbers for a fixed fee. (info from The Wall Street Journal)

Wednesday, February 20, 2008

Judge shuts down Website for publishing documents

A federal judge has set off a free speech tempest after shutting down a US Website that posted internal documents accusing a Cayman Islands' bank branch of money laundering and tax evasion schemes. The Bank Julius Baer & Co. said in court papers that a disgruntled executive fired for "misconduct" stole the documents and illegally posted them online. The bank also said a number of the documents have been altered, but it didn't provide details.

Wikileaks.org claims to have posted 1.2 million leaked government and corporate documents that it says expose unethical behavior, including an operation manual for the prison at Guantanamo Bay.

The bank, based in Zurich, sued Wikileaks and its San Mateo hosting company Dynadot on Feb. 6, alleging the Website had posted stolen and confidential financial data. Dynadot agreed to shut down the site and bar Wikileaks from transferring the domain name to another host. Judge Jeffrey White issued a formal ruling the next day.

"This is akin to seizing all the copies of the New York Times, locking the doors and ordering the landlords not to let anyone back in the building," said Julie Turner, a Palo Alto Internet attorney who briefly represented Wikileaks, but not during last week's hearing in front of White. Wikileaks was not represented at that hearing.

Wikileaks said that shutting down the entire Website - instead of narrowly ordering the removal of the disputed materials - amounts to unconstitutional "prior restraint" by the government of an entire publishing organization. Wikileaks vowed to continue publishing the bank's documents on its other Websites hosted by companies outside the United States. "The order is clearly unconstitutional and exceeds its jurisdiction," Wikileaks spokesman Julian Assange said. "Wikileaks will keep on publishing. In fact, given the level of suppression involved in this case, Wikileaks will step up publication of documents pertaining to illegal or unethical banking practices."

David Ardia, an Internet speech expert at Harvard Law School, said a court has never before ordered an entire Web site shut down over a document dispute. He said it struck a nerve. "This is a prior restraint in the most extreme fashion," Ardia said. "This is a judge who doesn't have a good understanding of the Internet." The judge has scheduled more arguments on the issue for Feb. 29. (info from The Associated Press)

Tuesday, February 19, 2008

Motorola and Blackberry suing each other

Motorola and BlackBerry maker Research In Motion are suing each other after an attempt to renew an existing licensing arrangement between the two companies broke down. The matter boiled over after the competitors failed to agree on renewal terms of a 2003 pact that covered a range of wireless patents owned by one company and licensed by the other, according to lawsuits filed by the companies on Feb. 16. The agreement lasted through 2007.

The fight is the latest example of the critical role patents play in the wireless business, and the degree to which even rivals are interdependent when it comes to licensing agreements.

In its complaint, RIM argues that Moto made "exorbitant royalty demands" over its patents on several widely used wireless communications standards, including GSM technology, the world's most common standard.

RIM asked the court to bar Moto from taking measures to block RIM from using the technologies, which could be critical to its ability to implement certain wireless standards; and to determine that Moto has violated its agreement to license technologies on "reasonable" terms. RIM argues that Moto is violating RIM patents, including speech-compression and keyboard design.

Moto moved to defend it position in two suits also filed Feb. 16. Moto asked a court to rule that it hasn't infringed upon any valid RIM patents. In a separate suit, Moto is asking a court to rule that RIM has infringed upon a number of Moto's patents relating to recognizing phone numbers and controlling access to new applications on a wireless device, among other technologies.

The patent war comes as the business rivalry between the two sides intensifies. Moto has been trying to capture more of the market for wireless email devices, which is RIM's turf. At the same time, RIM has been trying to grow by selling more BlackBerry devices to regular cellphone users. Moto said RIM's claims are "entirely without merit and Motorola intends to vigorously defend itself." (info from the Wall Street Journal)

Monday, February 18, 2008

Competitors accuse Verizon of improper marketing

Comcast, Time Warner Cable and Bright House Networks filed an FCC complaint last week against Verizon for improperly taking steps to retain customers that have committed to try cable's VoIP service. They allege that Verizon engaged in “retention marketing” at a time when FCC rules prohibit it by incumbent phone carriers.

The complaint states that in violation of FCC rules, Verizon used its knowledge of switching customers -- through requests to have their phone numbers moved or “ported” to the new provider -- to ply them with “price incentives and gift cards” to stay with Verizon.

“While some customers rebuffed Verizon's inducements to stay while the port requests were pending, thousands of customers accepted Verizon's offers, after which Verizon cancelled their orders for [cable VoIP],” the complaint states.

The cable companies stated that FCC rules permit Verizon to win back customers after they have changed providers. But the rules do not allow retention marketing while the customer is in the process of changing, which in many cases is the period when consumers are waiting for Verizon to transfer an existing phone number to a competing provider. The cable companies also stated that Verizon broke the rules because its knowledge of a customer's intention to switch came from the cable company's number portability request, not from information directly derived from the consumer.

“None of the cancellations at issue in this complaint concerns winback marketing that occurs after the port has been completed, or instances in which Verizon's retail personnel learned of a customer's planned departure directly from the customer,” the complaint said.

Verizon said, “This filing should be seen for what it is -- another cable company effort to block consumer choice as competition heats up. Verizon’s retention marketing is lawful, does not interfere with number porting and, most important, it allows consumers to choose a better alternative. It’s hard to believe that cable would attempt to block consumers from receiving information about additional services and lower prices.” (info from Multichannel News)

Friday, February 15, 2008

Comcast will finally fight back

After months of being assailed by shareholders upset over a plunging stock price and slow response to competition from phone companies, Comcast yesterday answered its critics.

The cable company said it would start paying a 25-cents-a-year dividend (its first since 1999) and buy back $7 billion in stock by the end of 2009, reacting to investors demanding the company return more cash to shareholders. Also, the company is adopting more competitive pricing plans for its TV, Internet and phone services and boosting spending on marketing and customer service.

"We have changed some of our marketing tactics and how we compete," Chief Executive Brian Roberts said. Chief Operating Officer Steve Burke said, "We are budgeting to come out swinging, and that is both on the marketing side and the investment and product development and customer service."

The new attitude that emerged from Comcast executives was a distinct change for a company that last year appeared to be caught flat-footed by Verizon's effort to market and deploy a new TV service. After once scoffing at the threat posed by Verizon, Comcast executives now concede they are losing customers to the phone company. "There's no question Verizon is real and is taking some subscribers from us," Burke said. "We believe we're taking a multiple of the subscribers from them on the phone side that they're taking from us on the video side."

Analysts said Comcast fell short in the fourth quarter in key areas, such as high-speed Internet, which added fewer subscribers than some had forecast. Cable has long been able to offer faster Internet connections than phone companies' digital-subscriber-line offerings, but a new service being built by Verizon is allowing companies to surpass cable with faster speeds. Comcast and other cable companies hope to deploy a new technology in coming months that will help them catch up.

Among the new initiatives Comcast announced yesterday was a new $24.95 tier of high-speed Internet service, well below the $42.95 price that Comcast has charged since introducing broadband several years ago. Phone companies have for some time offered varying price tiers for high-speed Internet services, with lower prices for slower speeds. But Brian Roberts had long held firm to offering a higher price than most phone companies, a strategy that some in the industry think now was a mistake.

Comcast is also broadening the range of product bundles it offers. Instead of a single offering -- $99 for TV, Internet and phone -- it will let consumers subscribe only to phone and Internet for $49 a month, or phone and TV for $69 a month. AT&T recently announced a similar tactic. (info from The Wall Street Journal)

Thursday, February 14, 2008

Starbucks hangs up on T-Mobile,
will offer free AT&T Wi-Fi

Starbucks has struck a deal with AT&T to offer free wireless Internet access to some customers at the majority of its US coffee shops. The move comes as Starbucks is trying to improve the experience customers have and as competing restaurants offer Internet access for little or no cost.

The deal will give AT&T's roughly 12 million broadband customers unlimited free access to Internet service at more than 7,000 Starbucks cafes in the US. People with a Starbucks loyalty card will get two hours of free wireless Internet service a day starting this spring. Other customers will pay $3.99 for a two-hour session, or can buy a monthly membership for $19.99 that will include access to any of AT&T's other hot spots.

The deal bolsters AT&T's effort to shift toward Internet-based services from traditional landline service, a shrinking business. The company wants to make high-speed Internet service as widespread as possible so it can sell more devices and services that benefit from broadband.

Starbucks Chairman and CEO Howard Schultz wants to make better use of the Starbucks card as he attempts to turn around the struggling coffee giant. Starbucks customers have long complained about having to pay for wireless Internet access. McDonald's offers wireless Internet access at 9,500 U.S. restaurants, and gives free access to some AT&T customers and otherwise charges $2.95 for two hours of access.

Starbucks previously had offered wireless Internet access inside its cafes through a partnership with T-Mobile, charging customers $6 for the first hour, then 10 cents per minute. The new pact with AT&T came as Starbucks was reaching the end of an agreement with T-Mobile. Starbucks said T-Mobile HotSpot customers will be able to continue to gain access to wireless Internet services at no additional cost. (info from The Wall Street Journal)

Wednesday, February 13, 2008

Cable company deleted emails for 14,000

Charter Communications officials believe a software error during routine maintenance caused the company to delete the contents of 14,000 customer e-mail accounts in late January. There is no way to retrieve the messages, photos and other attachments that were erased from inboxes and archive folders across the country, said Anita Lamont, a spokeswoman for the company.

"We really are sincerely sorry for having had this happen and do apologize to all those folks who were affected by the error," she said.

Charter is one of the nation's largest cable TV operators, and also provides telephone and high-speed Internet service. It has applied a $50 credit to the bill of each customer whose account was affected by the mistake.

Charter gives each new Internet user a free e-mail account, but some customers opt to use other accounts instead. So every three months the company deletes inactive accounts, Lamont said. "During this maintenance we erroneously deleted active accounts along with the others," Lamont said. "It's never happened before. They are taking steps to make sure it never happens again."

Charter provides service in 29 states, and Lamont said the affected customers were scattered around the country. All told, the company has about 2.6 million high-speed Internet subscribers. Computer experts advise backing up all important e-mail. (info from The Associated Press)

Tuesday, February 12, 2008

Blackberry service crashed Monday

Research In Motion experienced a significant outage of its BlackBerry wireless email service yesterday, its second major North American disruption in the past year, signaling a potentially troubling pattern for the company.

The cause of the outage, which began midafternoon Eastern time and affected customers across wireless carriers and the country for several hours, remained unknown yesterday evening.

Coming 10 months after a similar email blackout, the latest incident could undermine BlackBerry's reputation for dependable service which has won it strong loyalty. While its last widespread outage didn't have a discernible impact on its growth rate, rivals are growing more formidable and RIM can't afford to lose its edge.

The company notified its customers of the problem at around 3:20 Eastern time, saying the outage was affecting about 50% of North American customers using all wireless carriers. AT&T said RIM notified it that problem had been fixed by early evening, although it would take hours for the backlog of messages to clear. Several IT administrators and email-monitoring companies said the problem appeared to be related to the failure of one of the main pathways that connect corporate email servers to RIM's network.

The incident was less severe than last April's outage, which lasted at least nine hours. An explanation for the problem didn't emerge until days later, when RIM said it was caused by an improperly tested software update at the company's data center that handles BlackBerry email traffic for millions of users. RIM also acknowledged that the outage was aggravated by the failure of its backup systems to perform as planned, raising concerns about whether RIM's infrastructure can keep up with its torrid growth. From November 2005 to December 2007, RIM's world-wide subscriber count nearly tripled to 12 million from 4.3 million.

Both outages point to vulnerabilities in RIM's delivery model, which has also been one of the secrets of its success. All emails sent through corporate email servers using BlackBerry software are routed through RIM's network operating center, where the messages are encrypted and pushed out over the cellular networks. (info from The Wall Street Journal)

Monday, February 11, 2008

FBI warns about SWATing

The FBI said there has been a significant increase in the illegal activity know as “swatting” where criminals and pranksters call in a fake 911 in hopes of drawing a response from law enforcement, usually a Special Weapons and Tactics (SWAT) team. Swatters typically spoof phone numbers to conceal their identity.

Swatters often tell tales of hostages about to be executed or bombs about to go off. The community is placed in danger as responders rush to the scene, taking them away from real emergencies. And the officers are placed in danger as unsuspecting residents may try to defend themselves.

The FBI said it has arrested five swatters who, between 2002 and 2006, called 911 in more than 60 cities nationwide, impacting more than 100 victims, causing a disruption of services for telecommunications providers and emergency responders, and resulting in up to $250,000 in losses. Swats that the group committed included using bomb threats at sporting events, causing the events to be delayed; claiming that hotel visitors were armed and dangerous, causing an evacuation of the entire hotel; and making threats against public parks and officials, the FBI stated.

Last year a 19-year-old Washington state man pretended to be calling from the home of a married California couple, saying he had just shot and murdered someone. A local SWAT team arrived on the scene, and the husband, who had been asleep in his home with his wife and two young children, heard something and went outside to investigate—after first stopping in the kitchen to pick up a knife. What he found was a group of SWAT assault rifles aimed directly at him. Fortunately, the situation didn’t escalate, and no one was injured.

In another case a Washington State teenager used his PC to access Orange County, California's 911 emergency response system and convinced the sheriff's department into storming a home with a heavily armed SWAT team.

The DOJ prosecuted a swatter last fall it said involved a swatting conspiracy that involved more than 100 victims, up to $250,000 in losses, and disruption of services for telecommunications providers and emergency responders.

Why did they do it? Kevin Kolbye, Assistant Special Agent said: "Individuals did it for the bragging rights and ego, versus any monetary gain." Basically, they did it because they could. (info from Network World)

Friday, February 08, 2008

Here we go again:
Alcatel-Lucent still can't make money

French-American telecommunications equipment behemoth Alcatel-Lucent reported a fourth-quarter net loss of $3.73 billion and said it would scrap its dividend payment. For the whole year of 2007, Alcatel-Lucent reported a net loss of $5.18 billion.

Revenue grew by about 25%, above the forecast by analysts. The fourth quarter of 2006, during which Alcatel SA of Paris and Lucent Technologies Inc. of Murray Hill, New Jersey, completed their merger, saw the newly minted company post disappointing revenue. The higher revenue in the fourth quarter of 2007, which increased 24% from the previous quarter at constant currency rates, translated into improved profitability due to the company's fixed cost structure. The fourth quarter is traditionally a strong period for telecom equipment companies.

Alcatel-Lucent expects to report a first-quarter loss at the adjusted operating level. For the whole of 2008, the company expects its adjusted operating margin to be between 2.5% and 5% of revenue.

Looking ahead, 2008 "doesn't look pretty," said Richard Windsor, an analyst at Nomura. The margin target "is not good at all," Mr. Windsor said, adding, "it looks to us like there is little or no delivery of savings to investors but rather to customers."

"While the long term prospects of our industry remain good, the macroeconomic environment has created uncertainty in our markets in the last few months," Chief Executive Patricia Russo said.

Before Friday, Alcatel-Lucent's share price had plunged about 60% over the previous 12 months on multiple profit warnings and concern over growth prospects in 2008. Alcatel-Lucent shares closed Thursday down 4.2%. (info from The Wall Street Journal)

Thursday, February 07, 2008

Some 911-only cellphones will soon be useless

Some 911-only cellphones given to crime victims, crossing guards or others will soon be useless. That's because most phones that are five years old or older use analog technology. After February 18th, cellphone companies are no longer required to provide analog service.

Law enforcement officials and various government and public agencies have been distributing the free phones, which will only call 911, for about a decade. A spokeswoman for the Federal Communications Commission says a check of shelters used by crime victims found few 911 telephones still in service that use the outdated analog system, but one report said there are about a million out there.

If you keep an old phone around for emergency use, or have given one to someone, check it to make sure it will work when needed. The National Emergency Number Association advises those who cannot tell if their phones will be affected by this change to take them to a cellular phone store for assistance.

AT&T, Alltel, Cellular One, Verizon Wireless and some other cellular providers will be turning off their analog networks. U.S. Cellular said despite the change in FCC requirements, it would continue providing analog service until late 2008.

Digital phone users will not be affected by this shutdown. Digital phones differ from analog phones in that they can have text or instant messaging capabilities, Internet browsing capabilities, an MP3 player or integrated camera or a SIM card. (info from the Naperville Sun and other sources)

Wednesday, February 06, 2008

Sprint may write of $31 BILLION

Sprint Nextel said last week that it may write off as much as $31 billion related to its 2005 merger with Nextel Communications. If taken in full, the write-off would eradicate all of the "goodwill," or the premium Sprint paid for assets related to the deal.

Sprint said that the write-off would have no effect on its cash balance or future cash flows or result in it violating agreements with lenders. Sprint said it would announce the amount of the write-off when it releases its financial results Feb. 28.

The company has been struggling for more than a year, bleeding customers from its main wireless service to rivals AT&T and Verizon. Sprint lost about 1 million subscribers last year. Many of the losses involved users of the company's push-to-talk services, which were pioneered by Nextel. In December, the company installed a new chief executive, Daniel R. Hesse, who announced last month that the company was cutting 4,000 jobs and closing 125 retail stores. Last week, the company announced the departures of three top executives, including finance chief Paul Saleh.

A $31 billion write-off would likely result in a big fourth-quarter loss. In the corresponding quarter of 2006, the company reported a profit of $261 million.

The $35 billion combination created the third-largest wireless company in the country, but ever since, Sprint Nextel has struggled to integrate the two firms' technology and work cultures. Sprint has its headquarters in Virginia, where Nextel was based, but maintains the bulk of its operations in Kansas. Two corporate cultures have resulted. Clashes as varied as advertising strategy and cellphone technologies have prevented the merger from succeeding, analysts said.

The failure has led to deteriorating service and an exodus of customers. "They are at a big competitive disadvantage," said Bruce Greenwald, a professor of finance and economics at Columbia University. "They don't have a dominant share in any market that they compete in." (info from The Washington Post)

Tuesday, February 05, 2008

Cellphone directory assistance service closed

Intelius, a startup that launched online directory assistance for cellphone numbers, has shut down the service after complaints from consumers and Verizon Wireless. Intelius had 90 million numbers in its database and was selling them for $15 each to anyone who had a name and wanted a number.

The company said that it discontinued the directory service due to "consumer feedback." Several TV stations and MSNBC.com had publicized the directory last week. Verizon Wireless called on Intelius to stop selling numbers. "This is a violation of Americans' privacy. People expect their cellphone numbers to remain private," Verizon counsel Steve Zipperstein said

Intelius still operates a reverse cellphone lookup, which reveals the name of the subscriber for a number. Several other Websites offer the same service. Intelius also conducts background checks, people searches and sells records on property and neighborhoods.

The cellular industry organization CTIA - The Wireless Association attempted to create a cellphone directory, but abandoned the effort after opposition from consumers and legislators.

Liz Murray, communications manager at Intelius, said the company had developed the directory it is now shutting because people are increasingly abandoning landlines in favor of cellphones. "We realize that in this instance, we may have been ahead of our time," Murray said. The company never planned to sell numbers in bulk to businesses, she said. Federal law already prohibits telemarketers from calling cellphones. (info from Associated Press)

Monday, February 04, 2008

Cable theft hurts phone service in Canada

Some 700 Telus customers in Maple Ridge, British Columbia, Canada were left without phone and Internet service Saturday -- for the second time in the past three days.

Thieves stripped 100-meter sections of six copper cables off poles at about 4 a.m., disrupting service and leaving residents without access to 911. In total, more than 1,000 TELUS customers were left without service for the better part of the day. Hall said this is the biggest theft to hit the area recently.

The theft follows one just a few kilometers away on Thursday that left 350 Maple Ridge customers without service for most of the day, and another Friday that affected 50 Surrey customers. Both of those incidents involved just one cable instead of six.

An average repair costs about $50,000, Hall said. The biggest concern, though, is that residents are left without access to 911. "It's dangerous because it puts out customers' lives at risk," he said.

Police and Telus officials are investigating the thefts. In this case, the thieves left much of the cable they cut off the poles on the ground at the scene. Anyone who witnessed suspicious activity between 3 and 4 a.m. at the site of the latest theft are asked to call police. (info & photo from The Vancouver Sun)

Friday, February 01, 2008

Time Warner bills customer $2,000
for cable equipment lost in tornado

Time Warner Cable billed Kansas resident Ann Beam $2,000 for equipment destroyed in the Jan. 7 twister that struck the southeast corner of the state. Beam's bill covered five cable boxes and five remote controls.

She immediately called the cable company, but a man who identified himself as a manager said there was nothing the company could do. "They said I would have to take the bill and turn it in to my insurance company," Beam said. But her cable equipment was nine years old, and the insurance company would pay only a depreciated value that wouldn't cover her bill.

Time Warner Cable spokeswoman Celeste Flynn said Beam's case was a misunderstanding. An unspecified number of customers were charged for unreturned equipment because they canceled or transferred their service without mentioning their requests were tornado-related.

"We understand this is an unusual situation," Flynn said. "All they will need to do is call and we will take the equipment off their account." Time Warner Cable has tried to contact affected customers but privacy laws have impeded those efforts, she said.

Rare winter tornadoes destroyed more than two dozen homes and damaged nearly 80 others in Kenosha County on Jan. 7. The damage was estimated at $18 million. (info from The Associated Press)