Content taken down a peg

July 8th, 2008
 

Ryan Lawler over at Contentinople reports that there are in fact skeptics over the common sentiment that content is king.  According to a Lehman analyst, the ability to monetize digital media assets is likely to be counterbalanced by a an accelerated decline in traditional media.  [Read more →]

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Level 3 and the Buffett Factor

July 7th, 2008
 

My last post suggested that big money might revisit the telecom space.  This time let’s look at the relationship between Warren Buffett and Level 3. Tomorrow is the 6 year anniversary of Buffett’s cash infusion, where alongside Longleaf and Legg Mason he invested $100M in convertible bonds.  At the time, all the other nextgen backbones were falling like dominoes, Global Crossing and Wiltel were already in BK court, Genuity was sinking fast, Broadwing and Cable & Wireless were frantically planning amputation.  [Read more →]

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Telecom and the Return of the Big Hitters

July 7th, 2008
 

As telecom valuations linger at multi-year lows, the chances that big money value investors may make another foray into the telecom space are increasing.The last time it happened was in 2002-2004, when Buffett threw a lifeline to Level 3, Leucadia scooped up WilTel, Carl Icahn took over XO, Singapore along with Carlos Slim and Richard Rainwater took over Global Crossing, and even Wilbur Ross [Read more →]

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Ike's business VoIP survey

July 5th, 2008
 

Ike Elliott has posted the results of his first business VoIP survey, and it is definitely worth a read.  He has two followups, one analyzing the retail/wholesale angle and one analyzing the different approaches to quality of service.  For investors however, only a few of these companies are public - 8x8, Inc (NASDAQ:EGHT, news, filings) and cbey. [Read more →]

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AT&T's CallVantage finally disappearing?

July 5th, 2008
 

Tom Keating reports that AT&T (NYSE:T, news, filings) is planning to end its foray into the standalone VoIP world, CallVantage.  I remember back when CallVantage started, it looked as if it would be a major competitor - back then AT&T was not an RBOC it was an IXC, a term we don't use much anymore now that the biggest IXCs are relatively minor parts of RBOCs.  CallVantage was (and is) a very solid product, I went with Packet8 on price because it fit my needs, but I thought about using CallVantage.  [Read more →]

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The Bear attacks on video growth

July 3rd, 2008
 

So yesterday Dan Caruso took issue with my post on measuring online video growth , but then we had to wait a whole day before he said why.  Yes Mr. Powell, I'd like you to meet Mr. Hanger, Cliff Hanger.  Now given Dan's earlier positions that bandwidth growth is in fact very healthy, I thought at first he was going to dispute the word 'if', but it turns out he was looking squarely at the word 'triple'.  Here is what I said: [Read more →]

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Level 3 and Global Crossing – the hurdles

July 3rd, 2008
 

Previously, I laid out the case for Level 3 purchasing Global Crossing from a strategic standpoint, which I think is quite compelling.  However, it takes more than a good fit to make a merger possible, let alone likely.  So let's look at the hurdles such a deal faces. [Read more →]

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Why Level 3 ought to buy Global Crossing

July 2nd, 2008
 

I have written a few times now that Level 3 would be a natural suitor for Global Crossing once Level 3 works past its current integration issues.  But I have never really explained why, so I thought I would lay out the argument in a blog post.  I'll give details in a moment, but  it all comes down to this:  GLBC is strongest [Read more →]

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Carriers and replacement value

July 2nd, 2008
 

Carriers love to throw variants of this term around.  Cogent contends that its acquired networks cost some $11B to build.  Broadwing used to boast how it took $12B to build their network.  Level 3 says its networks represent some $25B in invested capital, and that it would take even more than that to replace their network today.  Others do the same, taking pride in what they picked up at garage sales.  But it is all smoke.

[Read more →]

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Measuring online video growth

July 1st, 2008
 

There is a very interesting discussion over at the Nyquist Capital blog about the growth rate of online video (read the comments!).  Essentially, one measure of the video market shows a decrease of 9% in the last year, which seems to contradict claims by Cisco, AT&T and others that video is going to grow so fast that the internet will be under severe stress.  In a response on his blog, Ike Elliott cites [Read more →]

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C&W raises its bid for THUS

July 1st, 2008
 

Last week it emerged that several companies were considering bidding for THUS.  Now C&W has raised their bid by almost 10% to $656M. Since there was no competing bid actually on the table, we have to see this move by C&W as preemptive.   They are serving notice that they aren't kidding around, [Read more →]

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TheJuice updates his LVLT model

July 1st, 2008
 

As Rob has updated his model here is my revision as well.  I have made a few changes to the format in an effort to clarify the 'other' line item that contained working cap changes and other one-time adjustments on the previous spreadsheet.  Essentially I have used data from the cash flow statement to tie adjusted ebitdas back to the actual changes in cash.  Without further ado: [Read more →]

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My revised LVLT financial model

June 29th, 2008
 

Back in early may, I posted my Level 3 spreadsheet.  It is a detailed model that allows study of trends within Level 3's business groups and the effects on margins, ebitda, and cashflow.  Well, Q2 ends on Monday, which means that it is prediction time prior to the earnings call in 3-4 weeks.  And in preparation for that event, I am posting the latest version of my model. [Read more →]

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Cutting back at XO?

June 29th, 2008
 

Last week, Infinera cut its forecasts for the second half, blaming delayed buildouts by North American carriers.  At the time, I suggested that it was likely cutbacks in spending by Level 3 and XO.  This was an obvious statement of course, given that these two are perhaps the largest of Infinera's North American customers.  However, subsequent events have pointed the finger primarily at XO.  First, [Read more →]

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MagicJack and TANSTAAFL

June 27th, 2008
 

A commenter asked me about the product Magic Jack, so I did a little looking.  Essentially it is a USB dongle, you plug one end into your computer, and then plug a phone into the other and bingo it works.  You get your own phone number - no local number portability just yet, but they say it is coming.  So what is novel about this solution?  [Read more →]

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Cogent makes the big leagues

June 27th, 2008
 

The IP world now has another Tier-1 network.  Renesys reports that Cogent (CCOI) and AOL have finally kissed and made up, 6 years after they fought a peering war that Cogent lost - perhaps the last one they did lose outright.  Since then, Cogent had been buying transit from NTT/Verio to get to AOL.  But not anymore, the hatchet has been buried and the peace pipe has been smoked. [Read more →]

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T-Mobile's VoIP play and Implications

June 26th, 2008
 

T-Mobile rolled out a VoIP play yesterday, and the world yawned. They'll be competing against cable voip and vonage, but from a wireless bundle angle - in order to get the very inexpensive $10/month voip package you have to be a wireless customer, plus you have to buy their router. But VoIP is dead if you're not a cable company right? Well maybe yes, maybe no, but I don't think VoIP is the end-all of this deal.  It goes to T-Mobile's USA strategy and the rollout of their 4G network next year, and this VoIP play is a risk-free sideline. [Read more →]

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The road to 100G and beyond – my thoughts

June 26th, 2008
 

In the past few posts, I've tried to offer a very simplified explanation for the two main paths to 100G and beyond along with the advantages and disadvantages of each.  In the optical industry, there is a bias toward the pure 100G wavelength solution.  One can see it in discussions of 4x10G products, with some saying that isn't *real* 40G - and similar are made when 100G via bandwidth aggregation is discussed.  [Read more →]

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The road to 100G and beyond – bandwidth aggregation

June 25th, 2008
 

Last time we looked at pure 100G wavelengths, now let's look at bandwidth aggregation.  In order to reach 100G why not take ten 10G connections, bundle them together, and put it in a nice package so that nobody can tell.  If it takes 100G as input and gives 100G as output without losing anything and does it cheaply, isn't that good enough?  [Read more →]

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The road to 100G and beyond – pure 100G wavelengths

June 25th, 2008
 

Following up on my previous post, let's take a look at the pure 100G wavelength option.  Right now they can do pure 40G waves and they think they can use what they learned getting to 40G to get to 100G on a single wavelength.  From a network design point of view, this is quite desirable because everything new is inside the black box, all you have to do is buy the new black boxes.  [Read more →]

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The road to 100G and beyond

June 24th, 2008
 

In a response to my exaflood post a regular commenter, Frank Coluccio, brought up a subject that I had skirted over but which deserves discussion.  Specifically, he mentioned  that the way in which we reach for 100G+ matters a great deal, and is currently in dispute.  This is a difficult subject to talk about without descending into the netherworld of technical acronyms never to return, but I'm going to try anyway. [Read more →]

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Wimax femtocells at Comcast

June 24th, 2008
 

Well, now it is starting to make sense.  When they participated in the Clearwire deal, it seems that Comcast extracted some spectrum for Wimax femtocells.  Femtocells are like little wireless cells in your home instead of on the tower nearby, and they only cover your house.  Sound like anything you might use now?  Yes, to me such a device would seem to replace the wireless router many people now use for home networking.  Technical differences don't matter here, Comcast can do what they did with VoIP - bundle it and call it digital phone so nobody is scared off.  [Read more →]

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A fight develops over THUS

June 23rd, 2008
 

Earlier this month, C&W made a hostile bid for THUS valuing the company at just under $600M including net debt, and while THUS rejected it C&W are forging ahead anyway.  For those unaware, THUS is a UK network provider that does about $1B in annual revenues and has about 100M in ebitda while still burning some cash but not as much as it used to.  Give or take a bit of course.  Today reports emerged [Read more →]

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