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AT&T Reorg Could Be the First Step Toward Layoffs

Source: gigaom.com

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.

Published on October 1st, 2008 under , , , , , , , , , , ,

Survey Says…Cable Sucks

Source: gigaom.com

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

Crowe: Online Video Will Keep Fiber’s Future Full

Source: gigaom.com

Given its proximity to the Broomfield, Colo., headquarters of Level 3, there’s always a good chance that the Silicon Flatirons telecom conference will get a visit from Jim Crowe, Level 3’s CEO. He made the short drive up Hwy. 36 on Monday afternoon for a well-reasoned talk about long-term trends in communications that had several key takeaways, among them:

  • Internet video use is here to stay, and will only increase going forward
  • Bundling services with devices is yesterday’s strategy
  • Legislators and regulators are right to be concerned about the potential for monopolistic practices by AT&T, Verizon and cable companies
  • Net Neutrality violations could be handled better by the FTC than the FCC

According to Crowe, between 60 and 70 percent of the IP backbone provider’s traffic is currently video, a trend that he thinks will only increase, perhaps even substantially should applications like Cisco’s Telepresence take off. “It’s kind of a full employment act” for backbone providers, he joked.

While it’s not too hard to say Internet video will be more popular, Crowe did take a somewhat divergent tack by forseeing a future in which communications services, devices and applications will separate into different markets, much like they already have in the PC arena. The popularity of the tightly bundled iPhone aside, Crowe said that standard interfaces and operating systems for wireless devices will eventually produce more innovation by the best of each market breed, putting bundled plans “on the wrong side of economics.”

On Net Neutrality — a topic practically invented at the Silicon Flatirons conference — Crowe said that when it comes to possible monopoly abuses by the big carriers, “you ought to be worried” since the Bell companies “have a long history of abusing” their facility-based advantages. And while cable companies might have “a far less colorful legal history, competition is not in their DNA,” Crowe said.

However, that doesn’t mean Crowe is in favor of pre-emptive legislation, which most Net Neutrality proponents prefer. Instead, Crowe (like many other speakers at the conference) said abuses could be better monitored by the Federal Trade Commission, under existing anti-trust laws.

“I just think after 10 or 15 years of getting everything they want, consumers will not tolerate” anyone blocking or limiting their access to applications and content, he said. If there are violations, then “anti-trust courts are only a few lawyers away, and may be a lot more efficient than regulatory bodies, who have to react to politics.”

Paul Kapustka, former managing editor for GigaOM, now has his own blog at Sidecut Reports.

Published on February 12th, 2008 under , , , , , , , , ,

Verizon’s VoIP Patent Game Continues

Source: gigaom.com

Verizon’s VoIP patents have become a lucrative source of income for the second-largest phone company in the U.S. After squeezing out $120 million from Vonage, the company has been filing patent infringement lawsuits against all comers — from tiny startups to cable giants like Cox. Today Verizon went after Charter Communications.

On the flip side, VoIP Inc., an Altamonte Springs, Fla.-based VoIP provider with a questionable business outlook, is almost out of gas. They owe Verizon about $8 million related to the settlement the two companies agreed to last year. As Fierce VoIP points out.

Unless Verizon believes in fairies, this money is as good as gone because the stock price is now at $0.008, creditors are already in the courts for big debts and VoIP Inc. is admitting it expects to have to write off its only real asset, its network business.

Convicted felon Steve Ivester was involved with VoIP Inc. during its early days when it was making a transition from tea company to Vonage competitor. Over the past 12 months, VoIP Inc.’s stock has tanked — from over $8 a share to less than a penny.

Published on February 11th, 2008 under , , , ,

Feb. 11, 2008; Cloudy Reception and Mobile Web

Published on February 11th, 2008 under , , , , , , , , , , , ,

Sprint Finds Cash in Patent Filings

Source: gigaom.com

Like finding a $20 bill in your coat pocket at the beginning of winter, Sprint has “found” a potential source of revenue in its patent portfolio. While it will certainly be harder than reaching into a coat pocket, the beleaguered wireless carrier probably sees patent litigation as easier than its corporate turnaround.

After squeezing $80 million out of Vonage last year, Sprint has apparently decided that its 115 “voice over packet” patents might be its next cash cow. The carrier says it will sue four smaller phone companies — NuVox Communications, Broadvox Holdings, Big River Telephone Co. and Paetec Communications — for violating six of its patents associated with delivering voice over a data network. It is seeking damages and an injunction. Interestingly, the carrier didn’t try to negotiate with the providers before dropping the L-bomb on them. All of the carriers said they were reviewing the lawsuit and couldn’t comment at this time.

Considering that these six patents have been tried in the courts thanks to Vonage, Sprint is in a much stronger position when it comes to getting a licensing deal, which makes the fact that Sprint chose to go with a lawsuit interesting. It’s likely that when presented with the patent violations and a reasonable license fee, the companies could reach some common ground. Another VoIP company, VoiceGlo, was sued in 2005 along with Vonage, and negotiated an undisclosed license with Sprint covering its use of the patents.

That means Sprint is either going for the injunction (to shut down its competitors), or it is taking them to court in an effort to weaken them (by way of scoring a larger financial settlement). Either way, Sprint is playing hardball — and it isn’t alone.

After successfully coaxing a $120 million settlement out of Vonage last year, Verizon Communications is also asserting its VoIP patents against a competitor. Earlier this month, Verizon sued cable operator Cox Communications for infringing eight patents. Two of those patents are the same ones Verizon successfully defended against Vonage. Vonage may have had to pay millions, but it looks like the power its loss gives the incumbents might keep independent VoIP players paying for years.

Yahoo’s Baby Steps to Phone 2.0

Source: gigaom.com

Champions of a more open Internet could take a small bit of cheer from Yahoo’s plans, unveiled today, to open up its mobile platform to third-party developers. But the lack of a service-provider partner to endorse the idea is one clear sign that chief Yahoo Jerry Yang and all the other exclamation-pointers have a long way to go before they can expect to have a major impact on the growing market of the mobile web.

To be sure, plans like Yahoo’s Go or Google’s Android, which aim to bring the power of the open Internet to your handheld device, seem a preferable future than locked-in services like Verizon’s VCast. But without a service-provider partner to watch its back, Yahoo (YHOO) seems unable to answer a big looming question for open-Internet apps accessed via a cellular phone: How fast will the app perform, and how much will it cost to download the data?


Here at CES this year, there’s evidence of a trend toward more single-purpose devices or agreements (like Sony’s Skype/PSP deal, which has BT as the phone power behind it) that are complete with the service necessary to deliver the goods.

On the video side, LG has an interesting plan to give existing broadcasters a mobile outlet, just another one of the competing methods arising to bring TV to places you never thought possible. But like Yahoo’s ideas, such plans don’t mean a whole lot unless the service providers play along.

Since we weren’t able to view the Yang speech live here at CES (long bus lines and the absence of transporter technology kept us from getting from the Sands to the LVCC in time), we weren’t able to question Yahoo folks afterwards about service-provider buy-in for Go 3.0. But there’s plenty of time ahead for answers.

Paul Kapustka, former managing editor for GigaOM, now has his own blog at Sidecut Reports.

Published on January 7th, 2008 under , , , , , , , , , , , , , , ,

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