BroadSoft, a Gaithersburg, Md.,-based VoIP application platform maker, has cut about a dozen positions, according to a source familiar with the company. The cuts are said to have taken place in its sales, product management and engineering divisions, in both the Americas and the EMEA region. BroadSoft had about 300 employees, so a dozen cuts represents a fairly small percentage. What’s significant is the reasons behind them — sales have started to slow, not just for BroadSoft but for other vendors as well.

Updated: Leslie Ferry, Vice President of Marketing at BroadSoft did confirm that the company had some cuts though she didn’t reveal the exact numbers. She indicated that the company was on track to grow both revenues and margins going forward. Meanwhile, other reports have come in saying that the cuts might be deeper than reported earlier. 

Nearly 10 years old, privately held BroadSoft counts some of world’s largest telecom operators among its customers. The company is estimated to have logged around $60 million in revenues last year and was said to have broken even. It recently acquired the M6 application server business from GENBAND, expressing high hopes for the future. It seems the economy has stopped BroadSoft in its tracks. Notably, Cisco Systems just last week said it planned to shut down its broadband telephony business in Texas, a sign that the demand for VoIP-related hardware might be maturing, too.

AT&T reported a slight boost in profits this morning, and the carrier has quite a bit to boast about, especially on the wireless side. iPhone activations reached 2.4 million during the third quarter, and 40 percent of those iPhones were sold to new subscribers who activated on the AT&T network. And despite what analysts say, AT&T also seems on track to reach 1 million U-verse subscribers by the end of the year, gaining 232,000 subscribers this quarter for a total of 781,000 signed up at the end of September.

Total revenue for the carrier was $31.34 billion, up from $30.13 billion the same period last year. That led to profits of $3.23 billion for the quarter, up from $3.06 billion from the third quarter of 2007. AT&T should retain its wireless lead with 74.9 million subscribers after gaining 2 million during the quarter. We’ll have to see how many Verizon added to the 68.7 million it had at the close of June, when it reports earnings on Oct. 27.

For the first time, AT&T also broke out the total number of wireless and wireline broadband subscriptions, signaling the growing importance of wireless broadband data. Total broadband-capable connections increased by 2.9 million in the third quarter to reach 20.7 million. Since the iPhone data plans count as a broadband subscription, many of those adds look to be iPhone related. Wireless data revenue was up by 50 percent from the third quarter of last year at $2.7 billion and accounted for 24 percent of total wireless services revenue. Postpaid annual revenue per user (ARPU) on the wireless side was $58.99.

AT&T earlier this month reorganized its business into consumer and business related segments as opposed to wireline and wireless, but still reported wireless and wireline sales separately for the quarter. The carrier is watching its landlines and DSL lines erode further, but U-verse subscriptions are taking up some of the slack on the wireline side. IP traffic is continuing to increase as part of the wireline business, with 44 percent of AT&T’s sales coming from IP services such as broadband, rather than analog phones. AT&T should welcome the digital — and data driven — future.

Microsoft today unveiled its next-generation Communications Server product that will allow users to replace their existing phone systems with Microsoft’s software. It’s about time Redmond pushed its VoIP offering further. The product, which goes on sale in February 2009, replaces a PBX system with Microsoft’s VoIP software on a server, allowing employees to make calls to any phone number, to make calls from within Microsoft documents and adding audio conferencing.

The VoIP functionality and integration with Microsoft’s SharePoint product is Microsoft’s answer to the challenge Cisco is offering in the unified communications space. It has some nice features, especially the ability to use presence awareness, VoIP and IM on select mobile phones.

It’s funny how the more things change, the more things stay the same: I recall back in 1999 writing about unified communications, which at that time meant a one-stop online shop for emails, voicemails and faxes, with nothing real time about it. Today, we have the ability to connect with people in real-time via IM or VoIP while simultaneously sharing online documents, butwe’re still looking for that one-stop repository for all of our communications.

Microsoft aims to make its programs that one stop, by tying this next generation Communications Server to its SharePoint software. It allows users to see presence and call while within Microsoft programs, meaning employees don’t have to go to a separate presence application to talk or IM about a spreadsheet or Word document. That makes Office the one-stop shop for all communications, including those in real-time.

Cisco is taking a different tack, judging from its recent acquisitions and its CEO’s comments about the opportunity. It plans to create a separate layer of communications services such as IM and VoIP that will sit in the network and work across a variety of applications. If it can be a well-integrated, neutral vendor, it could blow Microsoft out of the water.

Updated: Cisco on Friday said in a filing that it planned to close its Broadband Telephony Services unit in the Richardson, Texas, office and will lay off 129 employees between Oct. 8 and Dec. 12. The networking giant filed this information with the Texas Workforce Commission on Oct. 10. In its letter to the commission, the company wrote, “A decision has been made by Cisco Systems Inc. to cease operations in its Broadband Telephony Services operating unit within its facility located at 2200 East President Bush Highway, Richardson, Texas 75082-3550.”

Richardson, near Dallas, is where Cisco opened a new data center in June 2008 as part of the company’s data center consolidation plans, and is also home to several other Cisco business units. For perspective, Cisco employed 66,129 people as of July 28, according to its filings with the SEC, so this is a small number of employees. I’ve asked Cisco for more details on the notice as I’m not sure if this is indicative of weak broadband telephony sales, the macroeconomic climate or simply a consolidation effort. I’ll update with more information once Cisco gets back to me. Updated below

Cisco issued a statement that read:

Cisco continuously evaluates its businesses to align human and capital resources to address key growth opportunities and improve efficiency. As part of our ongoing business processes, Cisco continually prioritizes its resource allocations to properly align those resources with revenue generation, profit growth, and market share opportunities, positioning itself for long-term sustainable growth.

That’s typical corporate speak for something that’s not making much money anymore, but I didn’t get information from Cisco on what the Telephony Broadband Services unit is . They’ve bought a lot of companies in Dallas over the years and my guess is these layoffs were related to one of those buys. Any help readers?

AT&T plans to sell its triple-play U-verse services through more than 600 Circuit City and  Wal-Mart retail stores beginning this month. There are a few things about this plan that just don’t make sense. First, the choice of stores, namely the floundering Circuit City, is perplexing. Why not a more successful electronics retailer such as Best Buy, which already is stocking the iPhone and working to sell other services contracts?

The other odd thing about this announcement is the idea that consumers will go to a retail location to learn about their broadband, voice and video services rather than through a traditional television, mailing or online ad campaign. Essentially this is another, potentially more interactive form of advertising, which could be a good thing given the current cable attack ads around HD channel delivery and what qualifies as a fiber network. However, the strategy looks expensive, and it seems to indicate that AT&T is having a hard time signing up the 1 million U-verse subscribers it says it will have by the end of the year.

An almost decade-long effort to bring an unknown wireless broadband technology to the U.S. is set to bear fruit next month in Florida after XG Technology Inc. scored a $375 million infrastructure deal backed by a secretive Swiss billionaire. Earlier this week the Financial Times said Sarasota, Fla.-based XG scored a $375 million deal from an investment firm owned by Johan Bohman to start deploying XG’s low-power wireless base stations. So far I’m taking this story with a heaping grain of salt, especially since other reports call this guy a reclusive Swedish billionaire, and there are allegations of fraud regarding a member of the company’s management team, plus uncertainty about the technology.

XG, which is listed on the AIM market in London, is pushing a low-power, long-range wireless technology called wMAX that they’re pitching as a competitor to cellular and WiMAX networks. They already have handsets in the works, and FCC approval. According to the company, its signal range at 900MHz is 7.55 miles, compared with 2.3 miles for GSM, 2.46 miles for WiMAX and 2.53 miles for UMTS (3G), all using equal average power.

The goal is to roll out a VoIP service in South Florida this year and launch data and modem services in 2009, according to the Financial Times.  I’ve called the company to learn more, but have not heard back. If it can deliver a low-power, mobile broadband service that would be a cheaper alternative to cellular and possibly to other wireless broadband efforts, that’s pretty sweet, but it seems a little too good to be true.

Today, Qwest Communications launches an Internet portal that allows users to access and see what’s happening on their home phones. Dubbed qHome, the service allows users to see who’s calling their home phone, listen to voicemail, forward messages, manage their contacts and place a phone call, all from the Internet. Users of Windows Live Messenger can also tweak their settings to get an Instant Message when someone calls their home phone.

For those of you who still have land lines, this is kind of a nifty feature that gives a little more control and access to a home phone without having to dial in for messages. Unfortunately, the service only works right now in Colorado and will be rolled out to the rest of Qwest’s customers later this year. More limits include the need for a customer to have both a Qwest land line with Caller ID and VoiceMail and DSL package as well as Windows Live, q.com, msn.com or hotmail account. This isn’t going to convince people to sign up for a land line, but it might keep those who are considering a rival cable or VoIP service happy with Qwest.

If you’ve ever seen a Mafia movie, you know that playing nice with the mob is like having the tiger by the tail. It is no different for companies who do business in China, whether on their own or through partnerships. The latest one to experience the downside of this is eBay’s Skype, which has been taking some flack for privacy breaches in the region. 

Citizen Lab, an Internet research group at the University of Toronto, released a report that shows text messages of Chinese Skype users were monitored and their messages blocked if they included political words such as the Chinese Communist Party, the Falun Gong, Tibet, and the great milk scandal.  As a quick background, Skype and TOM teamed up in 2004 and in 2005 released a special software version, TOM-Skype. Since then Chinese users — some 69 million of them — have become a major part, roughly 20 percent, of Skype’s total install base of 338 million.

The report got so much attention that last evening Skype decided to respond. In a blog post, Josh Silverman (Check out my interview with Josh) tries to defend Skype and downplay its role in the China fracas. Here is my translation of the sanitized message he wrote:

•  This is a TOM Online problem, since they distribute Skype in China.
• TOM has to play ball and do what the Chinese government asks its to do. (aka regulations that include monitoring and blocking instant messages that the government doesn’t like.).
• Grow up, censorship is part of life in China.
•  Hey, don’t blame us. “In April 2006, Skype publicly disclosed that TOM operated a text filter that blocked certain words in chat messages.”
• This is a China-only problem. On the rest of the Skype network, none of this security breaches and blocking happens — or at least that we know of.

Our challenge is to bring this valuable service to people all over, including China, while being transparent to our users and staying within the boundaries of the local laws. We are committed to meet this challenge.

• China is so big and important to our installed base that’d we rather not tick off folks there.

As I said, this is what happens when you’re married to the mob. Seriously guys, these compromises are routine and will likely be commonplace. For for-profit entities (despite their slogans), China is a big, growth market and the promise of millions in future profits keeps them from making the right decisions for their shareholders. Sad, but true!

Related link: The Security Breach Report.

AT&T’s move to reorganize itself into four business units is likely a precursor to layoffs, according to sources within the company who asked not to be named. The reorg comes as AT&T tries to adjust to the realities of the credit crunch, a diminishing access line and DSL business, and increased headcount caused by two large mergers in the last three years.

News of the reorg, which will see the creation of consumer, business, infrastructure and diversified products business units, trickled out yesterday. John Stankey, the former president of AT&T’s telecom operations, will head the infrastructure division; Ray Wilkins will remain CEO of the diversified businesses unit; and Ronald Spears will head the business unit. Ralph de la Vega, currently the CEO of AT&T’s wireless business, will head up the consumer business, which will contain wireless, broadband and video services. AT&T subsequently confirmed the moves, saying it wants to make consumer products work better across its portfolio of devices.

The reorganization will better align the company as it competes against the cable carriers. Just yesterday we noted how the phone companies have a hard time attracting customers to their triple-play bundles because of speed issues on DSL lines. Once those broadband connections are upgraded, the ability to combine data, voice, video and wireless for a quadruple play could put the carriers ahead of cable. But in order for that to work, the old division between wireline services, such as U-verse, and wireless needed to come down.

However, as the company streamlines, it’s also likely to find redundancies. Managers inside AT&T expect that they’ll soon get targets for headcount reductions ranging anywhere from 5 percent all the way to 20 percent in some areas of the company (I bet DSL and wireline will be hardest hit). When asked about layoffs via email, AT&T spokesman Marc Bien said, “Regarding headcount, at this time, we have no specific plans for workforce changes related to this new organizational structure.”

Employees believe it’s only a matter of time. News of rising costs related to AT&T struggling to sell its short-term debt, and the recognition that costs still need to be trimmed in the wake of its acquisition by SBC Communications (which then took the AT&T brand) in 2005 and BellSouth in 2006, have many concerned. Earlier this year the carrier announced a workforce reduction of 1.5 percent (about 4,650 workers) in its local phone business, but it still employed 307,550 people as of June 30. I expect that number will drop again soon.

Cable providers rate poorly on both customer service and pricing, but thanks to their speedy broadband service, they have so far managed to score more customers than the phone companies, according to a survey out today from research firm CFI Group. The survey, which quizzed 1,318 households online at the end of June, measured consumer satisfaction with telecommunications providers.

The research showed that while cable providers were getting more customers for the time being, telecommunications firms have a chance to win subscribers back as they roll out faster broadband services, IPTV and even wireless bundles. The research also underlined the demise of landlines (1.6 million gone for AT&T and Verizon in the last year), and customer dissatisfaction with slower DSL offerings from telecommunications carriers (nearly 70 percent of net broadband additions went to cable in the second quarter of 2008).

The phone guys even lose out on bundled services. Of the 60 percent of users surveyed who had a bundled service plan (usually a combination of voice, video and data), only 31 percent purchased their bundles from a telecommunications firm. The remaining 69 percent bought their bundles from a cable provider, but that doesn’t mean they like it; twice as many consumers would actually prefer to bundle communications services with a phone company as with a cable company.

This could be a case of the grass being greener, but I do think IP services built on faster fiber-to-the-home networks like Verizon’s FiOS service, could beat cable. I’m less convinced that AT&T’s fiber-to-the-node strategy will be as compelling, since the speeds are more comparable to today’s cable speeds.

source: CFI Group

According to research firm TeleGeography, at year-end 2007 there were 25.3 million consumer VoIP lines were in service in Western Europe, up 69% from 15 million in 2006. There were 6.5 million VoIP subscribers in 2005. That number is going to top 37 million by end of 2008, nearly 29% of the total fixed lines in Western Europe.

Why this rapid growth? Better broadband speeds, carriers fully embracing triple play services and most importantly intense competition are the main reasons why Western Europe is seeing a VoIP explosion. In Europe many operators are charging as little as €30 (U.S. $43) including unlimited dialing. France Telecom is the biggest VoIP provider in Western Europe. The incumbents are five of the 10 largest European VoIP service providers. Surprised!

Last week, when the FCC published an order aimed at halting the collection of and reporting on the quality of telephone service on a nationwide basis, we were pretty disappointed, as it came off like the agency was just throwing in the towel on real regulation and reform. Since one of the reasons behind the FCC decision is that the data is available at state utility commissions, I surfed and called around to the commissions at the five most populous states to see how difficult it is to compile and compare quality of service data.

My conclusion? It’s no picnic. Beginning with my home state of Texas, it took a phone call to get a basic report faxed over (they can’t email it). The report offers the total complaints registered against telecommunications companies vs. those lodged against electrical companies and lists the top offenders in each category. More details require a Freedom of Information Act request and a wait of up to 10 business days. California required a phone call and some back and forth to get some information, which includes data on the number of repairs and the amount of time a customer waits for refunds. A week later, I’m still waiting to hear back from the commission in New York.

Illinois publishes its quarterly quality reports on its web site, and tracks information ranging from length of time services were out and whether credits were issued for no service to the amount of time it took to get an operator on the line. Florida also published the reports on its web site, but the most recent one for AT&T (the company I was trying to track) is from 2007. Florida tracks a lot of stuff (their reports are about 24 pages compared to one in other states) from the timeliness of repairs and to how long it takes to get a number listed in directory assistance.

So compiling and comparing these reports to get a measure of how network quality and customer service complaints are settled is not all that easy and may not even be doable, since the information might be old and may not match across all states. At the least, it would at least take multiple FOIA requests and weeks rather than days. My research covered five states where about 36 percent of the population lives, but an apples-to-apples comparison on a nationwide basis seems to be impossible.

Another FCC objection to collecting this data is that it only covers access lines, the wireline telephone service rapidly going out of style in many households. I agree with the FCC that this data is bordering on obsolete, but instead of ditching it, the federal government should really expand the regulatory oversight of other voice services, from wireless to cable VoIP.

The difference between regulation of various broadband delivered services from video to voice should be eliminated, and it should be done at the federal level. Cable companies and telecommunications firms should not be held to different standards when it comes to reporting quality data, getting local franchise agreements for deploying television services or even requirements to serve rural areas. There will be plenty of fights over which questions to ask given how different the cable and telco networks are, but at the end of the day both types of companies are offering video, voice and data over broadband. They should play by the same rules.