More On Fearing Dumb Pipes

June 3rd, 2009
 

Vijay Gill wrote a nice article today looking at the common telco fear of becoming a dumb pipe.  He suggests that they are digging their own hole by outsourcing their networks and personnel, that they are de-emphasizing the very things they should be putting their effort into.  To put it another way, if you can't do the 'dumb pipe' properly and make decent money then how can you expect to be the best 'smart pipe'?  That only works if 'best' means [Read more →]

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Clearwire Opens In Vegas, Unofficially

June 2nd, 2009
 

Upstart WiMAX operator clwr is apparently now selling service to Las Vegas, although it won't officially launch the whole package just yet.  Word leaked out after coverage maps started showing up on clear.com, and the company confirmed the news yesterday.  Las Vegas is of course on the list for this year, and will apparently follow the Atlanta launch quickly. [Read more →]

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Metro Fiber and Lit Building List Update In Progress

June 2nd, 2009
 

I am in the process updating my metro fiber and lit building list, so today I am soliciting for any new or simply more recent data that anyone may have.  If a company is already on the list and keeps updated numbers in a public document, I will likely find it easily enough.  If not, feel free to send updated information along.   All structures that consume bandwidth count, from carrier hotels to general stores and even wireless towers.  While a few companies on the list have European assets which are included in their numbers, for the most part metro fiber and lit building information in Europe has been harder to come by.  I'm going to at least try [Read more →]

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Level 3 Aims Southward

June 1st, 2009
 

Level 3 Communications (NYSE:LVLT, news, filings) announced fiber and equipment upgrades today along the Texas-Mexico border, specifically in McAllen and Laredo.  This initiative will bring both additional capacity and a wider range of services to the region, and will allow Level 3 to better target cross-border traffic of all kinds.  Level 3's footprint in southern Texas is not part of its original build.  It comes from the WilTel and Broadwing footprints, but I have never known if the facilities were part of the original build of either of those two operators or if the fiber came as part of a capacity swap from someone else.  Perhaps a reader knows? [Read more →]

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Profile: Stratus Telecommunications, the Magic behind the Jack

June 1st, 2009
 

With all the hubbub surrounding MagicJack, it is easy to dismiss them as nothing more than a marketing machine.  But behind the infomercials lies a network - the CLEC network that often gets credit for the ability to offer such low pricing.  That network is built and largely operated by MagicJack's sister company, Stratus Telecommunications.  MagicJack and Stratus are both owned by Ymax but are managed independently, and while Stratus supplies the infrastructure for its sibling, those same products are also sold to network operators across the sector.  Stratus's offerings are based on [Read more →]

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Fiber Valuations Continue to Climb Back

May 31st, 2009
 

It does seem now that winter was the low point for market valuations of fiber based competitive telecoms in this cycle, because since then there has been a steady upward trend.  Part of that has come in the debt markets, where bond prices have in most cases moved closer to par.  For instance, back in December, Level 3 bought back a pile ($173M) of its 6% convertibles due 2010 at just 70 cents on the dollar, they now trade in the mid 90s.  But common stock has also done well across the sector despite the incessant drumbeat of negative news coverage.  Here is a graph with my latest EV/EBITDA calculations for a cross section of the industry: [Read more →]

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Shortage in Colocation Looms Nearer

May 29th, 2009
 

Data Center Knowledge had an excellent article yesterday about the looming shortage in colocation space, I recommend a read.   The frozen credit markets forced many projects to be canceled or delayed over the winter, and only a few have restarted.  The trouble areas seem to be Santa Clara and Northern Virginia, which have vast existing colo footprints but even greater demand.  Given the long lead time for new facilities, a shortage seems inevitable at this point. [Read more →]

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Zayo to Buy Fibernet Telecom Group

May 29th, 2009
 

Two months ago, Zayo raised $128M with the stated intention of spending it on M&A.  Today, they made good on that promise with the announcement that they will be buying ftgx.    The price will be $11.45/share, for a total purchase price of a bit over $90M including net debt of $5M.  It's not quite a done deal, Fibernet has a couple weeks to solicit a higher offer.  However, if the transaction goes through, Zayo will [Read more →]

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SGI Deploys An Ice Cube

May 28th, 2009
 

SGI has deployed one of its modular datacenters, branded the ICE Cube, at i/o Data Center's new Phoenix ONE facility.   i/o has been moving quickly on the huge 530,000 square foot facility, lining up connectivity from  AGL Networks and Qwest and raised flooring from Tate.   One of the last to raise money as the financial industry imploded, they are clearly hoping to capitalize on the slowdown in construction by getting their new space online.  It seems a bit early though for a functional ICE Cube though, I didn't think the facility would be on line yet.  But I guess since these things can be outside, all they need is [Read more →]

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Tinet Is Born

May 27th, 2009
 

With its acquisition by private equity now complete, Tinet now begins a new life on independent footing.  Rising out of the ashes of the Tiscali empire, their business plan starts out in the wholesale IP/MPLS market.  Of all the top backbones, only Tiscali is a pure play.  Cogent comes the closest to a parallel, but even then half their business is in enterprise metro access.  [Read more →]

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Terremark Reports, VMWare Buys a Stake

May 27th, 2009
 

Terremark (news, filings) [a subsidiary of Verizon (NYSE:VZ, news, filings)] reported its fiscal Q4 earnings today.  Revenues of $68.9M were lower than expected, but EBITDA of $22.1M and earnings per share of $0.06 were quite good.  Overall, a familiar story of slower growth due to the recession but with cost containment more than keeping pace.  For fiscal 2010 the company offered guidance that reflects the economic slowdown, projecting revenues of $290-300M (which would be 18% growth) and adjusted EBITDA of $80-85M.  In other words, still growing nicely, just not as quickly as last year. [Read more →]

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Internet Billboard Picks Level 3 for CDN

May 26th, 2009
 

Taking its CDN business into eastern Europe, Level 3 Communications (NYSE:LVLT, news, filings), announced a deal with Czech-based Internet Billboard.  Level 3 will provide caching, download, and traffic management througout the region, including the Czech Republic, Poland, Romania, Slovakia and Russia. The new capabilities will help Internet Billboard to centralize and streamline its ad delivery capabilities.  [Read more →]

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NTT Wins the Auction for Pacific Crossing

May 25th, 2009
 

In late March, news began to dribble out that the transpacific cable PC-1 was for sale, and the two bidders were apparently the Japanese telecom giant NTT Communications (NYSE:NTT, news, filings) and privately held Pacnet.  At the time, I put my money on NTT and if this were Vegas I would have won.  Today NTT announced that it has entered into a contract to buy the cable from its private equity owners.   Of course, it wasn't exactly a longshot bet.  NTT was by far the most logical place for the PC-1 to end up, in fact I'm surprised they didn't acquire it sooner. [Read more →]

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Amazon and the Dumb Pipe

May 25th, 2009
 

LightReading had a wonderful article late last week discussing what telecom carriers can learn from Amazon.  The topic is very relevant nowadays, as the industry struggles with net neutrality.  The owners of last mile fiber do not want to be dumb pipes, they want to make money off those bits by delivering services and don't appreciate when others do so in competition to them.  They need all that content and can never produce it themselves, yet trying to control its usage threatens to start a war for public opinion that they likely cannot win whether the economics back them up or not.  So what to do? [Read more →]

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Qwest Longhaul: At What Price Then?

May 22nd, 2009
 

Reuters reports that q isn't going to get near the asking price for its longhaul network assets.  I doubt anyone is terribly surprised.  However the reports also say that bids will be incoming anyway, meaning that the game is apparently still afoot.  So, let's forget the list price and consider this an auction, where the seller's reserve price is not known.  How much is Qwest's longhaul biz really worth? [Read more →]

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Fiber – Gross Margin Trends

May 21st, 2009
 

Last week I posted a graph of EBITDA margin trends for a cross section of longhaul and metro fiber providers.  In the comments, fellow blogger Dave Rusin of Telecom Straight Shooter mentioned that a Gross Margin chart might also be interesting.  Now, I had been thinking about it, but while I was thinking, another reader who recently became a fellow blogger, Brian Scully of Silver Oak Advisors had already put it together and he very kindly passed it along: [Read more →]

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Hibernia Raises Cash, Eyes Expansion?

May 21st, 2009
 

Hibernia Atlantic raised $12M in senior secured debt financing last week, with the money coming in from BIA Digital Partners.  Now, $12M is not a ton, but the key is that this money seems to be opportunistic.  It's not that Hibernia needs it, but that it has something it wants to do with it.  That the terms are favorable enough to make financing feasible right now may be a further sign that the credit markets continue to thaw at the edges.  [Read more →]

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Paetec, Sprint Make Peace

May 20th, 2009
 

According to an SEC filing by PAETEC (news, filings), the company has settled with Sprint Nextel (NYSE:S, news, filings) over the latter's patent infringement claims.  Patents again, ugh.  In this case, Sprint filed the lawsuit in January of 2008 along with similar claims against NuVox, Broadvox, and Big River.  This came just after making Vonage cry uncle and pay some $80M over the same 6 patents.  [Read more →]

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Quantum Cryptographic Networking?

May 20th, 2009
 

Metro fiber specialist abvt and security/defense consultant QinetiQ have announced that they will work together to advance network based quantum cryptography.  Quantum cryptography relies on a principle of quantum physics which says that if you measure something you change it.  In terms of use in communications, the dream of quantum cryptography is that you can't eavesdrop without being detected - via any method.  If you're not a physicist, it's obscure and counter-intuitive, and really cool (at least for me).  Add it to fiber networking, and what you have is the ability to build a link that is completely and totally secure. [Read more →]

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Qwest Longhaul and Cogent? Well…

May 19th, 2009
 

Ed Gubbins of Telephony Unfiltered detailed some interesting remarks by Cogent Communications (NASDAQ:CCOI, news, filings) CEO Dave Schaeffer about Qwest's longhaul network.  Basically, he said they looked at it but it is just too expensive.  My first reaction was along the lines of 'Huh?' because Cogent is just so much smaller that the very idea boggles the mind, even for Schaeffer who isn't exactly known for playing down his importance in the world.  Cogent's enterprise value is below $400M and they have $66M in cash, and Qwest's asking price is supposedly $2-3B.  I happen to think that price tag is too high, but not by that much.  Why would they even take the call?  But as it turns out, I actually think there just might be a way it *could* happen. [Read more →]

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Profile: NTT America – Part 2

May 19th, 2009
 

In part 1 of this article, I gave my own impressions of NTT America.  For a more direct perspective, Telecom Ramblings talked to Chris Davis, Director of Marketing for NTT America.

TR: NTT America has long offered the more established CDN services such as caching and website acceleration, do you have any plans to offer services such as streaming or large object delivery?

CD: We have one of the only fully integrated IP networks with a robust CDN layered on top, which allows for full control of the network, to deliver high quality streaming.

We’ve deployed a number of new [Read more →]

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Profile: NTT America – Part 1

May 19th, 2009
 

NTT America, a subsidiary of Japanese telecommunications giant NTT Communications (NYSE:NTT, news, filings), operates what has to be the quietest Tier-1 internet backbone in the US.  NTT leases wavelengths and such as the foundation for its IP/MPLS network, and sells capacity and services at layer 2 and 3.  Their story has never really gotten as much press, perhaps partly because they don't own fiber itself.  They are always out there pushing bits, but without the public drama of a Cogent, Level 3, or Sprint and without the raw size of an AT&T or Verizon - on this side of the Pacific anyway.  That's part of it too of course, being the smaller arm of a foreign giant can tend to leave you in the shadows and when one thinks of NTT one thinks of fiber in the Japanese market and the mobile arm NTT Docomo first.  But nevertheless they push a whole lot of [Read more →]

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Digital Realty Plans For Expansion

May 18th, 2009
 

In a signal that they expect a thaw in the credit markets, datacenter developer Digital Realty Trust (NYSE:DLR, news, filings) is buying more land.  The tract covers 34.2 acres and is adjacent to their other assets in Ashburn VA, and if fully developed it would add some 400K square feet in that market - roughly doubling their Ashburn footprint if I recall correctly.  Much of the space already being constructed in the region has already been spoken for, but brand new projects largely remain on hold with funding so [Read more →]

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