Archive by Ed Gubbins

Recovery priming carrier M&A, CEOs say

Now that the economy is regaining its footing, mergers and acquisitions in the service provider space should heat up, two carrier CEOs said this week.

Market conditions have become much more favorable to mergers in the last three months, Global Crossing (NASDAQ:GLBC) CEO John Legere said during the company’s third-quarter earnings call today, pointing to its refinancing of $750 million in debt last month as a sign of receptiveness in the capital markets. “I believe we’re in a different environment than even the last time we spoke,” he said. “The biggest change is more

Mass. blesses 3 stimulus projects, none private

The Massachussetts governor’s office has endorsed three recipients to receive federal broadband stimulus funds. Though some of those efforts involve private partners, none of the three applications were filed by private companies. more

Are RLECs giving up on broadband stimulus?

Tier-two and tier-three carriers may be giving up on the federal broadband stimulus program, according to one broadband equipment vendor CEO.

Several such carriers, such as CenturyLink (NYSE:CTL) and Windstream (NYSE:WIN), did not apply for stimulus funds due to the requirements attached, such as network neutrality and data disclosure. (Frontier Communications applied, but only in one state.) But some industry observers expected those carriers to try applying in later rounds once changes in the qualification process were made. Windstream, for example, said last month that it was working to convince federal administrators to change those rules.

However, as federal agencies have held their ground on net neutrality and other issues lately, carriers may have lost confidence in their prospects for changing policy.

“Some of those [tier-two and tier-three] carriers have no intent [to apply] at this point in time; they may not qualify for whatever reason,” said Tom Stanton, CEO of Adtran (NASDAQ:ADTN), during the equipment vendor’s earnings call today. “Those carriers that we’re in discussions with are talking about how they’re going to move forward with broadband expansion outside of the stimulus plan.”

Stanton’s comments came in response to a question about whether RLECs that had previously put broadband spending on hold while they evaluated their stimulus prospects might now increase spending. “The answer is yes,” Stanton said. “Some of those players went on a diet going into this year, and definitely in the first half of this year, trying to see how they would position themselves for broadband spend.”

UPDATE: A spokesperson for Windstream today said the company has not ruled out applying in round two: “It depends on how the rules are structured for the second round. We are waiting to participate in the agencies’ upcoming RFI process (request for information).”

UPDATE 10/15: Geoff Burke at Calix responded this way:

About 40% 0f U.S. tier 2 and 3 service providers are already our customers. To date, we’ve seen about a quarter of our U.S. customers apply for Stimulus funds in round one. Those who chose not to apply fall into four categories:
1) Those who did not qualify based on the definitions set forth in the NOFA
2) Those who feared the strings attached to the funds
3) Those who couldn’t wait for competitive reasons
4) Those who are already executing on all cylinders and saw the Stimulus as a distraction

For the first two groups, many are still waiting on the fence to see how dramatically the rules change in the next NOFA – this includes some very large ILECs. For the service providers in the third and fourth groups, they continue to charge ahead with broadband expansion and upgrade plans, and in some cases have hastened their expansion and upgrade plans to counteract potential Stimulus-funded incursions into their service territories.

New optical, Ethernet gear spills out before Supercomm

Equipment vendors are beginning to unveil new optical and carrier Ethernet products in advance of next week’s Supercomm trade show. more

Finding the connected consumer’s new loss leader

The quickly shifting roles of devices and services has some of the best minds of the tech world struggling to figure out which are the razors and which are the blades of the connected consumer economy.

In an interview this week, Google CEO Eric Schmidt said, “The iPhone has proven that you can sell a phone with a subscription. The contract cost is greater than the cost of the phone. So what do you think: Do those prices remain higher from AT&T and those guys? Does the hardware become free?” more

Ciena nears ‘transformative’ Nortel deal

Ciena (NASDAQ:CIEN) is getting closer to what analysts say would be a “transformative” acquisition for a company with a long history of bold M&A. The equipment vendor now appears to be the front-runner to acquire Nortel Networks’ optical and carrier Ethernet business, analysts say, having announced being in negotiations yesterday.

[UPDATE 10/7/09: Ciena bids $521M.]

According to Seeking Alpha, Ciena issued a press release on Friday that put the company’s bid for Nortel’s assets at about $550 million ($400M in cash and about $150M in stock — 10M shares). The company won’t comment on that, and the release itself is no longer visible. Ciena’s announcement yesterday didn’t mention specific prices. more

Windstream eyeing Fairpoint?

Windstream (NYSE:WIN) may be buying up debt held by Fairpoint Communications (NYSE:FRP) as the latter faces the possibility of bankruptcy, according to the New York Post. more

Comcast CEO named among five most ‘overpaid’

Brian RobertsComcast’s (NASDAQ:CMCSA) Brian Roberts has been named one of the top five most overpaid CEOs by the Corporate Library, a corporate governance research and analysis firm.

Roberts’ total 2008 compensation of more

Some broadband projects self-fund without stimulus

As broadband stimulus applicants vie for federal funding, plenty of government entities across the country are moving ahead with public/private partnerships that extend broadband without the need for grant money from Uncle Sam. more

Networks alone not enough for carriers to compete in CDN

Though telecom carriers in the content delivery networking (CDN) space are quick to point to their networks as differentiators, they will have to climb the service stack – developing more sophisticated service features – to compete.

That was some of the advice from Dan Rayburn, principal analyst with Frost & Sullivan, in a recent Telephony Webcast that you can replay here. more

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