Archive by Ed Gubbins

Broadband stimulus draws a wave of muni telecom bids

As major telcos ponder whether broadband stimulus funds are worth the strings attached, a diverse group of other grant applicants are moving forward with their own bids to win federal funds, including a large number of local and regional governments.
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Fairpoint management may need to go, auditors suggest

Fairpoint Communications’ problems in migrating former Verizon customers to its own back office systems are examined thoroughly in a new report issued this week by the Liberty Consulting Group. It’s not pretty.

For starters, while Fairpoint recently promised regulators a return to normal operations by June, Liberty says it will probably take longer than that.

Atop its immediate recommendations, Liberty cites a “lack of unified senior executive leadership” necessary to correct Fairpoint’s problems and suggests the company either bring in outside experts to help or consider “permanent executive level change.”

Notably, Liberty also suggests Fairpoint is not being entirely candid about the extent of the damage. For example, while Fairpoint says about half of its orders are being provisioned late (and that’s after Fairpoint elongated its provisioning schedule), Liberty writes there are “problems with these reported numbers and believes the actual fraction of late orders is much larger.”

VZW Ethernet backhaul built by Cisco

Verizon Wireless is using Cisco’s ASR 9000 edge routers to fulfill its recently announced plans to use carrier Ethernet to boost the capacity of its wireless backhaul networks to accommodate 3G and 4G bandwidth needs.

Cisco isn’t the only vendor Verizon is using for this upgrade, but the carrier won’t identify its other source. (Feel free to make the case for your own guess in the comments section below.)

The ASR 9000, which just became available in this year’s first quarter, is only a carrier Ethernet product if its user chooses to deploy it as such. The edge gear supports either Layer 2 or Layer 3 functions within the same line card, giving carriers the flexibility to establish their own preferred balance of the two technologies.

It also shares the same operating system as Cisco’s giant CRS-1 core router and a distributed control plane architecture that pushes resources from the core to the edge, so it makes sense that VZW, which late last year became the CRS-1’s biggest customer, would follow with the 9000s.

A Verizon spokesperson declined to offer much detail into their deployment of the ASRs. “We use the ASR 9000 for aggregating our cell site routers,” he told Telephony today. “It serves the function of an MLS (multi-layer switch) and a router.”

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AT&T union members gird for weekend strike

With less than three days left to hammer out a contract and avoid a strike, negotiations between AT&T and its union wireline employees don’t appear close to resolution, according to news reports, and about 110,000 employees are preparing to strike when their contract expires at midnight this Saturday.

With health care costs a particular sticking point, one union official told the press this week that negotiations were “not going well at all.”

In a research note published this morning, Morgan Keegan analyst Simon Leopold wrote, “We won’t go as far as predicting a strike [but] we have concluded that the risk feels higher than usual. Our checks indicate that AT&T’s non-union employees have received strike-duty assignments, as is typical in such situations, and training that sounds more extensive than in the past.”

However, both parties have indicated to the media that extending the current contract to let negotiations continue was still a possibility.

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Qwest could become RLEC consolidator, analysts say

Qwest Communications could become a consolidator of rural telcos if and when it divests its long-haul network (as the Wall Street Journal reports it is now looking to do), according to analysts at Stifel Nicolaus, who issued a research note this morning.

“A sale would certainly help alleviate near-term debt maturity concerns for [Qwest] and, we believe, would position the remaining ILEC business to be a player in the M&A game itself going forward,” the analysts wrote.

Qwest has long been imagined as a potential consolidator of rural telcos but has thus far stayed on the sidelines as, for example, CenturyTel acuired Embarq last year.

But the impending maturity of the company’s debt could motivate it to liquidate its long-haul assets sooner rather than later. Qwest has $2.8 billion in debt maturing between now and the end of next year and less than $600 million in cash at the end of 2008. That could pressure the company to sell quickly, Stifel Nicolaus said, and — in today’s tight economy — at a lower price than the carrier might have gotten 6 or 12 months ago.

Splitting off the long-haul assets would essentially undo the merger of Qwest and local incumbent US West enacted in 1999 by Joe Nacchio, who is currently counting on the US Supreme Court to keep him from serving a 6-year prison sentence for insider trading.

Industry prognosticators have cited Level 3, TW Telecom, Global Crossing, AT&T and Verizon as potential bidders for Qwest’s long-haul network.

UBS: Telco spending could be down 20% in Q1

Although telecom service providers in general have suggested they will spend 10% to 15% less this year than they did in 2008, their capital expenditures for the first quarter appear to be down about 20%, UBS analysts said in a research note today, citing discussions with industry sources.
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Fairpoint DSL outage hits as regulators lose patience

Fairpoint Communications customers in New Hampshire lost DSL service today, according to ComputerWorld magazine. A reporter there who lost service says he was told by a Fairpoint customer service rep that “service had been out for the entire state of New Hampshire this morning and was still out as of 12:30 p.m. Eastern time.”

However, a Fairpoint spokesperson told Telephony this afternoon there were no widespread outages in New Hampshire today. “We have about 80 individual reports of interruptions for various reasons,” the spokesperson said in an email. “Those are being handled on a case by case basis.”

Those service interruptions come the day after Fairpoint submitted a plan to Maine regulators for how it will correct service problems that have plagued the company since it transferred former Verizon customers to its own back office and billing systems following an acquisition of network assets in three states. Earlier this month, Fairpoint reported having quickly resolved email problems that followed the systems cutover but admitted it needed to keep working to remedy order flow and billing problems.

Aktino hails 100 Mb/s over copper (lots of copper)

Aktino, which sells Ethernet-over-copper gear for line-bonded broadband, today announced plans to double the rate/reach performance of its products. Starting in May, Aktino’s gear will deliver “up to 100 Mb/s on just five copper pairs (80 Mb/s on four copper pairs).” On five copper pairs, Aktino’s range for 100 Mb/s is 4,000 feet, the company said. And using eight pairs, the range for 100 Mb/s is 9,000 feet.
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Cisco Pure Digital buy a pricey bid for low-end consumers

Here’s what RBC Capital Markets analyst Mark Sue had to say today about Cisco’s decision to acquire Pure Digital Technologies:
“It’s not the best way to spend $590M, in our view, but then again Cisco has $29.5B in cash and needs to strengthen its relevance in the consumer device market.”
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Optical vendor Polatis hires Ellacoya’s ex-CEO

Gerald Wesel
Gerald Wesel, the onetime CEO of DPI pioneer Ellacoya Networks, has become the new CEO of Polatis Networks, according to the optical equipment vendor’s Website.

Polatis was one of many optical switch startups born amid the exuberant fiber backbone buildouts of the turn-of-the-century telecom bubble. Last year it introduced a wavelength-selective switch for core and metro DWDM. And its fast piezoelectrics switch caught Verizon’s eye last year as a possible way to automate central-office fiber patch panels.

Wesel’s last outfit, Ellacoya, was acquired by Arbor Networks last year.

Wesel also co-founded Cresent Networks, an edge routing vendor that went out of business in 2003, citing an “adverse market environment and lack of additional funding.”

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