Dialup Internet Access Isn't Disappearing YetEarthLink is going back to the basics of concentrating on providing Internet access " including dialup accounts.Rolla Huff, the Internet Service provider's new chief executive officer, said Thursday that the firm would focus on dialup and digital subscriber line ISP business. He also said the company would consider acquisitions."We believe and most industry analysts agree that there will continue to be a meaningful percentage of households in the U.S. that will have dialup circuits in their homes for years to come," Huff said in a conference call to discuss EarthLink's earnings. "Dial access is not an organic growth business, and we no longer try to run it like it is. It's a mature business that if run correctly will generate meaningful cash flow for many years to come."He noted that some analysts expect dialup penetration in 2014 to range between 6-10 percent of U.S. households even though dialup is much slower than DSL, cable or other means of access."We believe that, not unlike the paging industry, there will be a meaningful segment of U.S. households that will have a dial-up Internet service connection for many years to come," Huff added.EarthLink shares climbed more than 50 cents, or 7 percent, Thursday to $7.18. The company reported that Huff's reorganization efforts in recent months had reduced employee headcount by more than 50 percent. Huff also is pulling EarthLink out of the municipal wireless fidelity (WiFi) network business. The company also is providing no additional funding for wireless provider Helio, which it had launched as a joint venture with SK Telecom.In the conference call, Huff said he learned soon after taking the CEO post last June that the WiFi business unit faced significant challenges."It quickly became evident that we would have a really difficult time changing the perception by some of the cities that we owed them a free network rather than the city stepping up to make the business model viable for both them and for our shareholders," he said, according to The Financial Times.For the most recent quarter, EarthLink said the WiFi business unit lost $32.1 million compared to a $7 million loss a year ago. EarthLink is looking to sell the WiFi business.For the fourth quarter, EarthLink reported revenues of $282 million and earnings of 19 cents a share, which topped analysts expectations by 4 cents.
EasyStreet explores going green Along with that growth comes a big power bill -- about $300k a year, Bader told me. That's only going to get bigger as EasyStreet expands its data center next year. "The data center is, in fact, becoming the dominant cost of IT," he said. EasyStreet isn't the only one with these troubles, of course. Google, which has installed a power-gobbling data center in The Dalles, announced last week that it will invest heavily in renewable energy. Intel and AMD are racing to create more efficient microprocessors, to cut power consumption. At EasyStreet, Bader says, exploration of green power began with employees who the company to cut power consumption and waste. EasyStreet bought TriMet passes for its workers, did away with bottled water and signed up for PGE's renewable power program, but only for half the company's total load -- going whole hog could have boosted EasyStreet's power bill by 20 percent, Bader told me. "The buck stops with me," he said. "It's got to make financial sense." That's what EasyStreet hopes to do with its new program. Last week, Bader and others from EasyStreet met with his old employer, Intel, to talk about ways of improving data center design. As Bader walked me through EasyStreet's existing data center, attached to its Beaverton headquarters, the magnitude of the issue was clear. Servers stacked tightly together throw off immense heat. EasyStreet won't make decisions about its new data center 'til late next month, Bader said, but ideas being explored include a design that doesn't rely on air conditioning -- partly by using Oregon's (usually) cool ambient air, and partly by managing air circulation inside the data center. Building a more energy-efficient data center will very likely cost EasyStreet more than if it used a standard design. Bader said he hopes an "anchor tenant," interested in lower power bills and the marketing promise of green power, will commit to use the facility and make it cost-effective. By expanding its data center, EasyStreet is already gambling on its future success. Bader said he has to manage that risk to ensure the added cost of going green doesn't get out of hand. "What I have to do is make sure this is not a bet-the-business proposition," he said.
NextPhase Wireless Announce 2008 WiMAX Rollout Plan NextPhase Wireless Inc (OTCBB: NPHS), a next-generation wireless connectivity solutions provider specializing in integrated Internet, voice and data communication, today announced that they will commence testing and deployment of certified WiMAX products in 1Q08. "Deploying WiMAX services in the U.S. has been a challenge to date, primarily because of limited spectrum availability, and non-existence of certified equipment designed for the bands that are available domestically. While the current WiMAX standards theoretically cover spectrum from 2GHz to 66 GHz, most manufacturers have focused their efforts on producing product for the international standard of 3.5 GHz, which is reserved for military use in the U.S.," said Robert Ford, President and CEO. "In June 2007, the FCC acknowledged this issue by opening up the 3.65 - 3.7 GHz band for Wireless Broadband Services in an attempt to 'encourage multiple entrants and stimulate the expansion of broadband service to rural and under served areas,' with applications for nationwide licenses being accepted from November 15, 2007. Since then, manufacturers of existing 3.5GHz WiMAX products have been working to have their products certified by the FCC, with Redline Communications being the first to announce a 3.65 GHz product to be approved for operation in the United States." "Now that certified WiMAX products are available, we are ready to take the next step in building a device-agnostic, WiMAX wireless broadband connectivity/content delivery platform serving all 48 contiguous U.S. states. Leveraging our existing WiMAX-ready infrastructure, we have applied to the FCC for a nationwide license, and will begin testing certified WiMAX equipment in 1Q08. Once testing is complete, we will be deploying WiMAX equipment in Southern California, and other key markets nationwide. As certified Mobile WiMAX products become available, we plan to test and deploy those, also," added Ford.
AOL's ad sales growth disappoints againAOL's online ad revenue grew at a much slower pace than the market average in the third quarter, a development likely to fuel skepticism over its ability to build a robust advertising business. In the third quarter, which ended Sept. 30, AOL grew its online ad revenue just 13 percent compared with the same quarter last year, parent company Time Warner said Wednesday. By comparison, Google's revenue, which is almost totally made up of online ad sales, grew 57 percent in its third quarter, also ended Sept. 30. It is the second straight quarter of disappointing online ad growth for AOL, which is in a transition from a business model based on Internet access subscription fees to one focused on online advertising. AOL's online ad revenue growth in the second quarter was 16 percent, well below the 26 percent growth of the U.S. online ad spending that quarter. Last month, AOL began the process of laying off about 2,000 employees, or approximately 20 percent of its staff, in order to shift budget dollars from the ISP (Internet service provider) business to the advertising team. AOL's weak advertising growth will also likely increase the pressure on CEO Randy Falco, who was hired a year ago and under whose watch the ad revenue has wilted. In a memo announcing the layoffs last month, Falco wrote: "So where is this taking AOL? Put simply, my vision for AOL is to build the largest and most sophisticated global advertising network while we grow the size and engagement of our worldwide audience." "We're now in a position to win as an advertising-supported business. We have a bright future as a company if we can execute on this vision," Falco wrote. The key word in Falco's memo: "if". Falco's appointment last November perplexed some industry watchers, because to bring him on board Time Warner fired Jonathan Miller, who engineered the AOL business transformation and had earned praise for its early results. In last year's third quarter, the last full one under Miller's lead, AOL's ad revenue grew 46 percent. For the 2006 fiscal year, AOL had ad revenue growth of 41 percent, faster than the 35 percent growth of the overall U.S. online ad market. Miller, AOL's CEO since August 2002, also had significantly more experience in the Internet market than Falco, a TV industry veteran who, prior to joining AOL, had been president and chief operating officer of the NBC Universal Television Group. Despite the struggles, AOL continues pushing ahead with its transition, announcing Wednesday that it has entered into an agreement to acquire Quigo, whose contextual advertising technology matches ads to Web page contents. Although financial terms weren't disclosed, a source told IDG News Service that the price is about US$340 million. Quigo, founded in 2000 and based in New York, is the fourth Internet advertising company AOL will buy this year. When the deal is finalized, Quigo, which has about 100 staffers, will join Platform A, AOL's new umbrella group for advertising programs and services. AOL's overall third-quarter revenue fell 38 percent to $1.2 billion, as AOL continues phasing out its ISP business, whose revenue fell 56 percent. As of Sept. 30, AOL had 10.1 million ISP subscribers, down by 5.1 million from last year's third quarter.
Time Warner to decide on AOL's future by end 2007 For AOL it is either a spin off or merger with another company. According to Reuters, Time Warner will decide the fate of the online company by the end of this year. "By the end of this year, we can make the call on AOL (on whether) we have found a business model or approach that can result in sustainable growth over time," Parsons said in the Webcast presentation. "We're in the right area." "It all comes down to the ability to transform AOL into a destination for the 12- to 35-year-old generation relative to surviving on their former dial-up or access subscriber base. If they can, they should keep it," said Pali Capital analyst Richard Greenfield.
AT&T Launches $10 DSL It Hopes No One Signs Up For AT&T has quietly begun offering DSL service for $10 per month for new customers. Offered as part of the concessions the telecom made to the Federal Communications Commission in order to gain approval for its merger with BellSouth, the speed is nothing to get excited about: 768Kbps down and 128Kbps up. AT&T is also doing little to publicize the new offering. In fact, I was only able to discover any reference to the low-price service by clicking on the Terms and Conditions link at he bottom of AT&T's residential high-speed Internet product page. A note on AT&T Yahoo! High-Speed Internet buried six paragraphs down says that the "basic speed ($10.00)" tier is available to new customers only, those who have not subscribed to AT&T or BellSouth DSL during the past 12 months, and the service requires a one-year contract. Customers must also order phone service to get the budget-priced DSL service; those looking for cheap, naked DSL should look elsewhere. Those living in BellSouth's former territory can get naked DSL for the next two-and-a-half years, however. Along with the budget high-speed Internet and naked DSL, AT&T also promised to maintain a "neutral network and neutral routing in its wireline broadband Internet access service" while also giving up its rights to the 2.5GHz spectrum. (WiMAX provider Clearwire recently completed the purchase of AT&T's unused 2.5GHz holdings.) In addition, AT&T must offer broadband to 100 percent of all residential living units in its territory, with 85 percent of that delivered by wire. As is the case with the naked DSL offering, AT&T is only required to offer the $10 per month tier for the next two-and-a-half years. After that, the company is free to make whatever changes it wants to the service. It's only $5 cheaper than AT&T's current lowest-priced service, but at $10 per month, the service could appeal to budget-minded consumers"especially those who are paying about that amount for dial-up service. More importantly for AT&T, it gives the company another platform from which to pitch its U-Verse broadband and IPTV service. After two-and-a-half years of 768Kbps service, U-Verse may look very attractive to lower-tier customers.
Telecom Industry Veterans Launch Zayo Bandwidth into Growing Fiber-based Network Services Market Industry veterans, strong financial backing, simplified business model and two successful acquisitions bode well for start-up and customers alike LOUISVILLE, Colo., Aug. 30, 2007 " Zayo Bandwidth, a regional provider of fiber-based network services, today announced its formal launch as a new company in the telecommunications industry. The announcement comes after the company completed two recent acquisitions: PPL Telcom, a 4,600 fiber-route-mile network based in Allentown, Penn. serving areas throughout the Northeast, and Memphis Networx, a 200 fiber-route-mile network serving the greater Memphis, Tenn. area. Both companies were acquired under Zayo Bandwidth's holding company name, Communications Infrastructure Investments (CII). In addition, Zayo Bandwidth has signed definitive agreements to acquire Indianapolis, Ind.-based Indiana Fiber Works (IFW) and Minneapolis, Minn.- based Onvoy, Inc. which are expected to be finalized in the third and fourth quarters of 2007, respectively. Combined, the four companies represent $125M of annual revenue and 8,400 route miles of fiber. Led by industry veterans Dan Caruso and John Scarano, both formerly with ICG Communications and Level 3 Communications, Zayo Bandwidth has secured access to $225 million from leading venture capital firms, including Columbia Capital, M/C Venture Partners, Oak Investment Partners, Battery Ventures and Centennial Ventures. Zayo Bandwidth was founded to acquire and support long-term development of fiber-based businesses. Through strategic acquisitions, the company will operate a set of regional fiber-based networks that will serve telecom operators (wireline, wireless, cable and Internet Service Providers), government and higher education institutions, and other businesses that require significant amounts of high-speed bandwidth. Bandwidth is becoming as important to businesses as phone service and electricity. "Video and other Internet applications are resulting in enterprises needing more and more bandwidth," said Dan Caruso, president and CEO of Zayo Bandwidth. "Zayo's mission is to be a highly reliable and responsive bandwidth provider in those geographies where we have fiber networks. We will collaborate with our customers to extend the reach of Zayo's fiber to meet their needs." Zayo Bandwidth enters the market as the demand for broadband services continues to grow. According to the Telecommunications Industry Association (TIA) report, 2007 Telecommunications Market Review and Forecast, demand for broadband has driven the highest telecom industry growth since 2000. The report states that overall U.S. telecom industry revenues grew 9.3 percent in 2006, while the worldwide market grew a robust 11.2 percent. The annual review cites demand for broadband and high-speed services as driving factors for this growth as carriers invest in new fiber, new IP technology and new wireless infrastructure to provide state-of-the-art voice, video and data services. "Enterprises of all types need more bandwidth," said Gillis Cashman, partner at M/C Venture Partners, an investor in Zayo. "We believe carriers and enterprises will appreciate Zayo's focused and passionate approach to supporting their fiber-based bandwidth needs." Through its two recent acquisitions, Zayo Bandwidth currently offers the following services: Private Line " Dedicated, high speed private line from DS-1 to OC-192. Point to point, dedicated ring and hub and tail configurations Ethernet - Point to Point and Multi-Point Ethernet from 10Mbs-1Gb Internet Access " Dedicated Internet connectivity at T1 speeds and above Wavelength Services " 2.5G and 10G Wavelengths Colocation - Carrier-grade colocation space for backup and data applications
Remember dial-up Internet access? Nearly 35 percent of Internet-connected U.S. households still rely on dial-up Internet access providers. This segment may be stuck in the Internet slow lane, but according to a study by J.D. Power and Associates dial-up Internet users are happier with their service compared to their broadband brethren. The just released study J.D. Powers found that 51 percent dial-up subscribers are loyal to their ISP, compared to 42 percent of high-speed customers. Satisfaction, in fact, has been improving for dial-up customers increasing 13 points (using J.D. Powers rating methodology) from 2006 to 2007. Meanwhile satisfaction with broadband ISP has declined by 13 points since 2006. "We are surprised at the trend, more than we are at the percentage changes," says Steve Kirkeby, executive director for telecom and technology for J.D. Powers. Kirkeby points out that satisfaction directly relates to price. Broadband customers who pay more expect more and vice versa. Top gripes for broadband customers are outages and network performance, connection problems, and quality of tech support received when it is sought.
House bill would make ISPs keep user dataThe Washington Post reports that Rep. Lamar Smith introduced a measure in the House of Representatives last week that would require all internet service providers to keep records on their customers. This measure would be part of the larger SAFETY Act, which would give the attorney general broad powers to write rules on what information companies have to record and retain. This initiative is aimed at protecting children from online predators. However, online advocates say the privacy and civil-liberties issues raised are huge. In addition, the industry is very concerned about the costs of compliance. At minimum, this provision would require that ISPs would have to keep the subscriber's name and address, which can be linked to an internet protocol address. Smith said that in order to gain access to this information, law enforcement officials would have to subpoena it. In addition, they would not be able to use the tool to track law-abiding citizens on the internet
Report: 55% of US Households Will Have Broadband by Year's EndBy the end of 2007, 55% of all U.S. households will have high-speed Internet access, according to projections in a report from market research firm Parks Associates.Subscriptions rose 20% in 2006 to exceed 50 million households, and are expected to surpass 60 million by year's end. "The foundations of digital lifestyle applications and products are built on access services, including broadband Internet and television," said Kurt Scherf, vice president and principal analyst with Parks Associates. The report finds that service providers in recent years have been more closely aligning themselves with makers of devices including set-top boxes, PCs, home networks and game consoles. "With the penetration of high-speed Internet exceeding 50% in 2007, we're also witnessing shifts in the way companies are positioning their communications, entertainment, and information services as home technology solutions," added Scherf.
As the Voice over Internet Protocol (VoIP) market moves to maturity from its early-adopter phase, mass-market consumers need to be convinced of the service benefits of VoIP. New and enhanced services that are likely to leverage the public's strong interest in broadband and PC usage are replacing traditional circuit-switched telephony. At the same time, these services need to be user friendly in order to attract non-technical users. New analysis from Frost & Sullivan (www.frost.com/communicationsservices), North American Residential VoIP Services Markets reveals that revenues in this industry totaled $1.22 billion in 2005 and estimate to reach $13.2 billion in 2012. If you are interested in a virtual brochure, which provides manufacturers, end users and other industry participants an overview of the latest analysis of the North American residential VoIP services markets, then send an email to Ravinder Kaur, Corporate Communications, at ravinder.kaur@frost.com with your full name, company name, title, telephone number, city, state, country and email. Upon receipt of the above information, an overview will be sent to you by e-mail. "The residential VoIP market is moving to mass-market consumers who are not interested in technology and novelty; they are looking at VoIP-based services based on convenience, control, and cost," explains Frost & Sullivan Senior Analyst Lynda Starr. "These consumers want the convenience of a bundle of integrated services, control over their communication as in the ability to select when, how, and by whom one can be contacted; and value for one's money rather than just low price." Service providers are responding with bundles of services that leverage their core competencies with enhanced services. This includes the entry of Internet service providers (ISPs) with softphones that leverage their customer bases and existing features. Softphones have two primary user segments, namely, those who use an analog terminal adapter (ATA)-based VoIP-based calling service from their fixed location and will use the softphone when traveling, loaded onto a laptop, personal digital assistant (PDA), or wireless fidelity (Wi-Fi). The second group is younger and more mass market and in a move to cater to them, service providers have extended its instant messaging to include voice. It is necessary for VoIP providers to overcome the hesitation of consumers outside this demographic regarding using a PC-based service for offering applications that are not available over a telephone. These features include presence, click to talk and multimedia sessions. In general, consumers tend to express satisfaction with landline telephony service and limited calling in VoIP as reasons for their lack of interest. The mass market may even be suspicious of lower priced services and may consider them as lacking in quality. It is the role of the service provider to overcome these challenges with a demonstration of the service to show ease of use and call quality. "VoIP-based calling is becoming user-friendly and is moving toward a convergence of services in conjunction with the television and PC and also with mobile applications," explains Starr. "The applications and the many uses of VoIP-based services, rather than the technology itself, will drive their adoption and in order to attract the mass-market consumer to them, they must be easy to use and the service providers are making the effort to achieve that goal." As the VoIP market moves to the mainstream, there need to be ways to attract non-tech savvy consumers. These consumers may be reluctant to use VoIP, which they perceive as PC-based and complicated. Many solutions capitalize on VoIP technology thereby affording ease of use. The goal is to improve upon current services and to evolve them into new, enhanced off
EarthLink Introduces Next Generation of Proactive Customer ServiceLivePerson Platform Offers Online Chat to Visitors in Need, Increasing Customer Satisfaction and Generating a 200 Percent Return
EarthLink to offer TiVo boxes with DSLEarthLink and TiVo are joining forces to sell a package featuring EarthLink's high-speed Internet and TiVo's digital video recorders.
Sutus Inc. Secures $5 million in Series A Funding
EarthLink, Time Warner challenge FCC telecom-access ruleEarthLink Inc., Time Warner Telecom Inc. and a host of small Internet service providers went to court Friday to challenge regulatory action that they say puts wireline phone companies in control of high-speed broadband access to the Web.