Verizon

Verizon CEO comes out swinging against net neutrality

I gotta say, any trade show that opens the ceremonies with some trash talkin’ has my attention.

After giving up a little hip-hip-hooray for Verizon’s long-awaited 4G network (ready for 60 devices thus far and expected to be in 25-30 markets next year) at the opening keynote of SuperCOMM 2009 on Wednesday in Chicago, CEO Ivan Seidenberg shelved his warm and fuzzy feelings there.

The Federal Communications Commission was on the cusp of releasing its proposed net neutrality regulations — a hard sell for the SuperCOMM crowd, to say the least.  Seidenberg pretty much stopped short of calling the net neutrality proponents (and their sympathizers on the FCC) lefty wingbat commies.

“If this burdensome regime of net regulation is imposed on all parts of the Internet industry, it will inject an extraordinary amount of bureaucratic oversight into the economy’s main growth engine for the future,” he said.

Seidenberg said his main beef with net neutrality proponents was their suggestion “that network providers like Verizon and applications providers like Google, Amazon and others occupy fundamentally different parts of the Internet ecosystem — a binary world of ‘dumb pipes’ on the one hand and ’smart applications’ on the other.”

Verizon Wireless and Google — who has been at the front of Team Net Neutrality — are partnering to release a smartphone that runs on Google’s Android system.

“This is a mistake, pure and simple: an analog idea in a digital universe,” he said. “We can’t create smart economy by dumbing down our critical infrastructure.”

Apple’s record-setting quarter and what it means for telecom

Telecom is a hard-knock life sometimes, like this week when Apple announced its most profitable quarter EVER. No small part of that smashing success is the 7.4 million iPhones sold in the quarter. Of course, in the U.S., AT&T benefits from those new iPhone users since they use AT&T’s 3G wireless network.

And then there’s Google. Last week the Android-backing company also crowed about increasing its net profit for the third quarter, declaring the recession almost over.

Meanwhile back at the network, while things are looking up, those in traditional telecom circles are talking about how to stem plummeting cost per bit and wondering if they can make a buck deploying 4G LTE networks.

So what does all of this iPhone success mean for wireless operators? For starters, Verizon hasn’t negotiated to also sell the iPhone, apparently, because its new ads are promoting the “Droid,” an Android 2.0 phone that may be supplied by Motorola (one of the Android mobile operating system’s original backers). And so we may be in for a new season of handset wars, which can be dangerous business, according to our telecom guru Tom Nolle. The weakness with the iPhone is the stress it’s putting on AT&T’s 3G network, Nolle reminded us. When Verizon moves to 4G LTE and introduces the Droid, both Apple and AT&T could face more heat.

C-Level convergence: It’s getting lonelier at the top

We’ve talked and talked about it, and the convergence continues. High C-level positions are biting the dust or being combined with other high C-level positions. Next-gen industry change is finally moving up from the lower levels, the place where employees are used to reorg after reorg. We wonder if “rightsizing” feels any better at the top than it does at the bottom?

Verizon Communications is just one of many providers tweaking at the top. Verizon Chairman and CEO Ivan Seidenberg this week said Verizon is eliminating its chief operating officer (COO) position as part of a broader restructuring effort (and it has had many). Recently, BT got rid of its CTO position, and Global Crossing combined its CTO/CIO position into one powerful slot.

The bigger news is that Verizon’s consumer and business landline operations will now be in one big landline pot. Why now? Verizon said it wants to speed up the process of bringing products to market. Maybe. But it takes a lot of time to move a ship that big.

The lines between consumer and business divisions used to be hard and fast. Verizon Business was a combination platter of MCI’s and Verizon’s business customers, which in the old days a couple of years ago, would never be seen in public with the thin-margin consumer business. But landline services have been hit hard by the economy and wireless migration, and now they’re just plain old “landline.”

Telecom Timeout: The App Store Agenda

In this video, I speak with Lewis Ward, IDC research manager, and Arvin Chander, with Qualcomm, about the future of mobile app stores and what they mean for carriers. Is the Apple iTunes model destined for the future, giving carriers only a slim cut of revenue? Or is there are brighter future for wireless carriers? Watch the video to hear why Ward predicts carriers will eventually only get a 10% cut of this growing market.

Breaking: Ericsson bids $730mm for Nortel’s CDMA, LTE assets

Ericsson has finally entered the Nortel fray, announcing their starting bid at $730 million for bankrupt vendor’s LTE and CDMA asset a day before the official auction is held. It will now be (at least) a three-horse race between Nokia Siemens Networks (NSN), private equity firm MatlinPatterson and Ericsson. While MatlinPatterson will likely bow out early, both equipment vendors have a lot to gain, particularly as they try to position themselves to win Verizon’s lucrative LTE business.

“There’s synergies, there’s scale, and both of them are part of the Verizon network to move to LTE,” said Akshay Sharma, research director at Gartner. He said both companies would benefit from being able to offer Verizon a smoother upgrade path to LTE, which could win some business from Alcatel-Lucent which already has as a strong advantage when it comes to LTE deployments.

According to the Wall Street Journal, Ericsson could be quite serious about capturing that advantage. “We are pursuing the deal because it seems to be an interesting opportunity and we are always looking for ways to create value for Ericsson,” the paper quoted a Ericsson statement, adding “we will pursue this opportunity to the point it makes sense.”

Further Reading:

• Nortel wireless fire sale delivers North American footprint to NSN
More LTE vendors join the 4G party (but no cake for Nortel!)
• Will Verizon’s LTE rollout stumble over a little DoJ review?

Verizon marketing dumping DSL down the memory hole?

Maybe it’s Verizon’s landline unions that should watch out: Shortly after writing this morning’s post on Verizon’s DSL vs. wireless debate, I caught up with DSLReports’ note that Verizon is deleting DSL mentions in marketing material. For the record, I think this is only about as ominous as when the cable companies renamed VoIP “Digital Voice” to escape the bad name (scratchy sound, dropped calls, lack of 911) it had received. OK, maybe the erasures are a bit Orwellian, but isn’t Big Brother just a part of big business?

The updated language does underline an important point, however: People don’t really care how they are connected so long as they are connected, and in a way that they feel is fast and consistent and fairly priced. In some markets, this might mean DSL; In others (large, population-rich urban environments), Verizon’s FiOS will be the standard; Others will be happy with microwave connectivity.

But if Verizon’s going to use this as excuse to charge FiOS-like rates for its broadband DSL package, they’re going to be doing themselves a serious disservice, ultimately hurting the FiOS brand more than anything as consumers vent to each other via word of mouth, online comments, and Twitter. That’s an advantage I’m sure the cable companies would love to seize, particularly as Comcast lashes out with a sharp responses to the cable creeper ads Verizon’s been running. See both below, and feel free to share your thoughts.

When Verizon’s copper and wireless collide

I hate to break out the old saw about the unstoppable force versus the immovable object, but it just seems too appropriate here. Verizon’s (landline) unions are pitching a fit at Verizon Wireless’ latest campaign in Massachusetts, which is urging customers to “cut the cord” by switching to an all-wireless plan, as the Boston Herald reports:

“The whole trend (for Verizon) is to dump anything to do with plain old phones,” said Paul Bouchard, a district representative for the Communications Workers of America.

Don Trementozzi, president of the Communications Workers of America Local 1400, disputed Verizon Wireless’ assertion that intended to target only non-Verizon customers.

“Even I got one of the fliers at home,” said Trementozzi, whose union represents about 1,000 Massachusetts Verizon workers. “The ad campaign is real crazy. It’s a big mistake.”

Verizon Wireless, which is 50% owned by Verizon with the other half being owned by Vodaphone, said mailers sent to cross-over customers (who have both Verizon Wireless and Verizon landline services) were accidental and limited, but the unions see something a bit more sinister: They note that Verizon is selling off their landline business in well over a dozen states, and that Verizon Wireless has many fewer unionized employees.

Don’t expect this battle to go away anytime soon, particularly as other players like Comcast and Time Warner get into the wireless game through Clearwire.

Will Verizon’s LTE rollout stumble over a little DoJ review?

Tom Nolle certainly thinks LTE could face delays as a result of the Department of Justice review, but he also decries the media for “sensationalizing” the story of the investigation. To allow a little more nuance (and maybe just to be fair to Tom), he did state his concerns were regarding a serious inquiry, and this latest kerfluffle seems anything but, as antitrust lawyer Matthew S. Wild explained:

Despite the increased regulatory scrutiny, this is just the earliest stage of the DOJ’s investigation, and Wild said it will probably come to nothing. In many ways, investigations into text pricing or device exclusivity are par for the course for big business.

“These deals only begin to pose a problem if they foreclose a substantial amount of competition,” he said. “Unless there is a deal between AT&T and Verizon, for example, or Nokia and Apple — horizontal competitors — it’s not much of a concern.”

The investigation is in such early stages that AT&T reportedly didn’t even know it was being investigated. Wild said for public companies, such an investigation would count as a “material fact” about corporate well-being, and AT&T (and any other telecoms involved) would have to disclose the information.

So what’s your take? Tempest in a teapot or a sign of big government gunning for big telcom players?

As the Palm Pre goes, so goes Sprint?

How closely tied are Sprint’s fortunes to the success of the Palm Pre? Look around and it would seem the two are indistinguishable. The device has been appearing (unnamed but unmistakable) at the end of all Sprint’s Now Network commercials, in a full page ad Sprint bought in the Wall Street Journal, and in almost all blog chatter about Sprint’s future. SeekingAlpha.com has a post entitled Why Sprint Needs the Palm Pre to Succeed which outlines the case succinctly:

During the quarter, Sprint lost another 1.3 million subscribers with the vast majority being the highly sought after “postpaid” variety. This brings the total number of subscribers down to 49.3 million an 8.4% decline over fiscal 2007’s year end. With Sprint’s main competitor’s AT&T (T) and Verizon (VZ) gaining subscribers through the downturn, the gap between the “have’s” and the “have not’s” continues to expand. The wireline (mostly internet) business was not much better as revenues in that area dropped 6%.

It is clear that Sprint needs something to make customers stick around, and they believe that they have that silver bullet with their exclusive deal with Palm (PALM) to provide the new Pre handset. Continued »

Wi-Fi: You can take it with you

Being neither 3G nor 4G, Wi-Fi, with its “no G” status, is much in the news these days, which goes to show that beyond the next-gen hype, there’s life (and competition) in Wi-Fi yet.

First let’s look at Qwest, which is offering its high-speed Internet customers a good deal — free Qwest Wi-Fi access at 17,000 hot spots nationwide. Qwest Wi-Fi is actually rebranded AT&T Wi-Fi, so there’s no doubt a wholesale deal in place. Some years ago, this deal would have been unthinkably anti-competitive, but both of the former Baby Bells operate in completely separate wireline territories, and Qwest doesn’t own any wireless assets. So why not?

Continued »