Telecom Ramblings

Last month, internet backbone provider Level 3 Communications (LVLT) announced a refinancing initiative in which the company would sell $400M of new 15% convertible notes and tender for its 2009 and 2010 debt, but the cash being raised was conditional on some 50% of the debt to be tendered.  The credit crisis forced the company and its backers to take action, and they did – but there was a wide range of possible outcomes, with one of the most commonly voice being that they would get nothing and go back to the drawing board.  Well, not quite.

They didn’t make it to that 50% by the deadline, so they just adjusted the offer. And you can see that the terms of the offer were very fungible, Level 3 and its backers probably intended from the very beginning [Read more →]

In a WSJ article Sunday,  it was revealed that Google (GOOG)  is seeking to place servers in ISP networks, to give itself a fast lane.  The blogosphere quickly attacked them for abandoning net neutrality of course, and Google quickly responded with an explanation that boils down to the fact that they are building their own CDN just like Akamai, Limelight, etc – more detail on DataCenterKnowledge Really, it’s no big surprise to anyone who has been following the sector,  everyone wants to build a CDN.  But it does tie into my other post this morning on the evolution of the internet to incorporate CDNs.  Put simply, just how many content providers can fit servers in every ISP’s closet next to Akamai’s before it becomes a really stupid solution? [Read more →]

I have been mulling over the recent moves by Velocix and the general trends in content delivery over the internet, and I can’t help but think that we are entering a transition period in how the internet is structured.   We already have network providers looking to enter the CDN business, and although each is taking a different track they are all talking about CDN services becoming an integral part of the internet rather than an over-the-top service.

In the current era, an ISP connected to the internet by a) peering with some networks, and b) buying transit from the rest.  End of story, all else is elaboration on the tradeoffs between peering and transit and the associated soap operas.  However, [Read more →]

In an article on Bloomberg, Pacific telecom and undersea-cable operator Pacnet made some noise. As noted on this blog, Pacnet has been increasingly aggressive lately and has been rumored to be on the M&A trail with a bid for AAPT. It turns out that the interest there was real, CEO Bill Barney admitted strong interest in buying the company, although he said no bid had been made.

Barney went further though, with this bit [Read more →]

In Level 3’s (LVLT) CDN patent infringement lawsuit against Limelight (LLNW), the judge yesterday released the Markman ruling.  Reader Eric S very kindly sent me a copy, so I just spent the last half hour reading legalese.  A Markman hearing is about defining the terms to be used to describe the scope of the patents in question.  The plaintiff, of course, tries to keep the scope wide, and the defendent tries [Read more →]

Today, Alcatel-Lucent (NYSE:ALU, news, filings) announced they would cut another 1000 jobs plus an additional 5000 contractors in an effort to save just under $1B in operating costs.  According to some this will be done through attrition rather than layoffs, but it’s somewhat hard to see in this economy.  Less jobs available, more people applying to them, everyone’s savings in the toilet, and the company already in the midst [Read more →]

Telecom equipment provider Ciena (CIEN) reported earnings today , and let’s just say things could be better.  We knew their fiscal Q4 would be ugly, back in September they guided toward revenue of $190-210M, down some 25% from Q3.  The actual number, $179.7M, was well below that range.  As one might expect with such a 29% sequential revenue decrease, earnings swung from income of $11.7M in the third quarter to a loss of $25.4M.  Guidance for fiscal Q1 of $170-185M was not particularly encouraging either.

But then we knew it was going to be [Read more →]

Apparently the capital markets aren’t completely locked up.  If you’re big enough and generate enough cashflow, you can still raise good money.  Today, Verizon Wireless received commitments for some $17B from a group of 8 banks.  It will use the money for the Alltel acquisition, mainly to refinance the debt I guess.   It wasn’t long ago that there wasn’t even short term paper available, so this crack in the door of the credit markets is a good sign.  Of course, they didn’t tell us the interest rate and the size of the deal may have sucked all the remaining oxygen [Read more →]

A report from the Commerce and Energy Committe of the US House of Representatives is none too fond of how FCC Chairman Kevin Martin has been running things.  Amongst other things, he is accused of manipulating and cherry-picking evidence, being heavy handed and non-transparent, allowing undue political influence, causing distrust and turmoil amongst his fellow commissioners,  and generally creating a ‘culture of fear’.    [Read more →]

To borrow and mangle a phrase, Tulsa built it and TW Telecom came.  According to an article in Tulsa World, the city took advantage of other construction in 2007 to install 4.5 miles of downtown conduit that reaches 85% of businesses in the area – something I wish happened more often.  Sensing an opportunity, competitive fiberoptic network operator TW Telecom (TWTC) has leased space in the conduit system and seems to have entered the Tulsa metro fiber market in force.   It’s not entirely a surprise, while the company hasn’t been very public about their intentions, they have been known to be hiring personnel in Tulsa.  What wasn’t clear was whether [Read more →]

Ciena (NASDAQ:CIEN, news, filings) announced today that they successfully demonstrated a 100Gbit/s connection at the SC08 show a week or two ago, informally joining a rapidly growing 100G club.  As expected, much was made of the single wavelength, and indeed this was a great achievement!  The industry as a whole is making great strides toward a commercializable 100G technology, although that goal remains pretty far off yet.  Right now it’s all at the ‘can we do it?’ stage rather than the ‘can we do it affordably in a production network?’ stage.  And the answer there is obviously ‘YES’!  Now all we need is some standards and we can talk products. [Read more →]

You could just see it coming, couldn’t you?  First there was Unity, designed to make Level 3 Communications (LVLT) more efficient in selling, provisioning, and servicing its customers – and hence requiring fewer people.  Second a worsening economy, with a credit crisis and debt maturities that make immediate cashflow more important than anything else.  Third, the layoff parade starts elsewhere in the sector – at AT&T and PAETEC so far and of course outside the sector as well.  And in the last but perhaps largest red flag, a new President and COO known for running lean operations joins the company, ready to [Read more →]

Considering the rather unstable employment market right now, it seemed like a logical time to add a jobs board to this website.  In the top menu, there is now a Jobs link, which leads to what I hope will be a useful feature for Telecom Ramblings readers.

If you are seeking a position, take a gander through the listings – they should be relevant to the sector and are searchable.  If you have a position (or more) you would like to list, you can do that also and not only will it appear on this site it will also go into a database that populates job listings on dozens of similarly focused sites around the internet.

If you have any suggestions for how to improve this feature, please let me know!

The web has been abuzz with the research study issued by Scott Cleland, claiming that Google (GOOG) uses 21 times the bandwidth it pays for.  It’s everywhere these days, but rarely do we get such a startlingly clear example of pseudo-research.  You see, this study had nothing to do with finding an answer, it had to do with finding justification for one.  Yet it’s such an obvious tactic, that I think it is more of a smokescreen than an attempt to convince.

I look at it this way.  I write this blog and I put it on the internet.  If I’m lucky, some people read it.  But if I’m really, really good, I might get popular, a true [Read more →]

In an SEC filing on Friday afternoon, Rochester based competitive telecom operator PAETEC (PAET) gave notice that it is downsizing by 5%, or ‘approximately 222 full-time employees’. As Christmas seasons go, this one is turning out pretty poorly so far in the telecom job market.

It actually isn’t clear to me that this move was induced by the economic downturn. Yes, I realize [Read more →]

Level 3 Communications (LVLT) today named Jeff Storey as its President and COO, finally replacing Kevin O’Hara who left in March. Followers of the sector will recall that Storey was the President of WilTel Communications while it was under the wings of Leucadia National Corporation. Level 3 needed some more operational muscle to help it break out of the rut it has been in for a year, it’s good to see them fill the COO position at last.

At WilTel, Storey won [Read more →]

Today I am introducing the Telecom Ramblings Event Calendar.  I follow lots of different events in the telecom and internet infrastructure sectors, enough that I often lose track of them, whether it be the who, when, or where.  I always wind up wading through many pages to get back to the link I need, or to find out just what time that conference call was supposed to start.  There’s just no central location for such information.  Lately I’ve begun tracking these events in Google Calendar, and it has helped.

Then it occurred to me though that such a calendar would work well for a group, and in fact might be useful to readers of this blog.  The idea is [Read more →]

So AT&T decided it could do without 12,000 employees, and is laying them off just in time for the Christmas shopping season.  What can one say?  I truly hope everyone affected lands on their feet as soon as possible.  I’ll bet they didn’t sell the company jet yet though, and those management bonuses will still come through somehow won’t they?  [Read more →]

It appears that the FCC may soon vote on a plan to auction off the AWS-3 spectrum with the condition that the winner must provide service to 95% of the country with 25% of the capacity available for free.  I just have one question.  Are these people insane?  Is there anywhere other than Washington DC that an idea like this would be considered viable?  Sometimes I think the politics of the word ‘free’ just suck the intelligence out of debate.  Nothing is free, all you can do is disguise who pays.

Why does the media keep harping on this idea as if we are days away from [Read more →]

Dan Rayburn has a long article on Akamai’s pricing travails in the video streaming market, I recommend a read.  Put simply, Akamai (AKAM) has long sold at a premium to the market.  But the market is segmenting, and the basic delivery of streamed bits is largely commoditized.  Dan says that Akamai is still quoting the higher prices for this product, but cutting it in half or more in negotiations.  This is not the whole CDN market, just raw streaming video delivery, but it is a challenge to Akamai’s leadership nonetheless.

Followers, or should I say survivors, of the IP transit wars over the last decade will recognize the pattern.  [Read more →]

The National Hockey League has chosen Level 3 to stream its content in high def (HD) on www.nhl.com. As deals go, this one isn’t a shocker.  Back in October, they had unveiled their subscription based “NHL GameCenter Live“, and Level 3’s existing relationship with the NHL via Vyvx made them the likely candidate. Indeed, the NHL seems to prefer a one-stop shop in this case.

In a way, the NHL is the perfect online streaming candidate.  When it comes to professional sports on TV in North America, hockey is nearly always the odd man out.  The NFL, NBA, MLB, and even tennis and golf take priority, and the NHL struggles for viewership scraps with [Read more →]

There is an article on Seeking Alpha today Three Stocks Selling Below Cash With Little Debt of which one is telecom equipment provider Ciena (NASDAQ:CIEN, news, filings).  The argument goes that Ciena’s pile of cash and marketable securities (over $1B) is substantially higher than its current marketcap, and since the company is profitable and has a P/E of 7, they’re cheap cheap cheap.

And they are, but of course, they aren’t the only ones.  If I had a nickel for every undervalued company in this sector, I could buy probably one of them. That said, it should be noted that Ciena’s P/E may be 7 now, but everyone who follows them at all knows that number will be rising [Read more →]

If you’re in the USA you probably think that title has a typo, but AAPT is the #3 telecom in Australia, and a subsidiary of Telecom New Zealand.  The company runs a network having some 89 PoPs in Australia and has capacity on various cables from there to the world.  According to various reports Pacnet has bid some $420M for it, although it remains unclear just how solid the basis is for those reports. [Read more →]