Telecom Ramblings

Over the weekend I read this piece by StreamZilla’s Stef van der Ziel taking Comcast’s side of last week’s public dispute with Level 3, and it got me thinking about just how it affects them.  The obvious temptation is for pure CDNs see Level 3 as a competitor who uses its ownership of a tier 1 backbone to lower its costs and thus gain the advantage of a lower cost structure.  And that Level 3 seeks to do this is not in question, owning the network is a key ingredient of their whole approach.  But I think that pure CDNs also have something to fear from a last mile provider bending transit networks over a barrel.  Why?  Because the rates that major CDNs pay to companies like Comcast for paid peering are intertwined with the fortunes of the IP transit marketplace. [Read more →]

Now that some of the dust has settled and all the pundits have had a chance to weigh in, it’s time for a poll.  However, instead of a straight vote for Level 3 or Comcast which would turn into a popularity contest, I thought it would be more interesting to look at the many actual points of dispute that have been raised either by the two companies or by various opinionators (myself included).  I’ve given you my take, what’s yours? [Read more →]

Apparently, December 1 was the target date for many of the fiber M&A’s of 2010 that had remained outstanding.  Along with the completion of the Lightower/Lexent and Windstream/Hosted-Solutions deals I mentioned already there were no less than three more.

Largest amongst them was of course the Windstream purchase of KDL/Norlight for $818M, which furthers its evolution into something more than a [Read more →]

Seeking the financial firepower to keep its buildout rolling, clwr announced today that it intends to raise more than $1.1B in cash through the sale of debt securities.  That they are raising cash will surprise absolutely no one, as they still need lots of it to continue their buildout and stand a chance many years down the line of achieving the scale necessary to fund themselves.  Is $1.1B enough?  Probably not in and of itself, but it would get the train back on the tracks for another year – assuming they are able to find [Read more →]

With the Comcast/Level3 dustup dominating the news this week, lots of other items worth attention haven’t gotten any.  

SDN communications, which supplies bandwidth to South Dakota and the surrounding region, has deployed the ATN metro gear of Infinera (NASDAQ:INFN, news, filings) as part of the $20M stimulus project it won.  SDN has had a longstanding relationship with Infinera, even showing up as a top 10 customer [Read more →]

NTT America (news) [a subsidiary of NTT Communications (NYSE:NTT, news, filings)] has tossed its own hat into the low latency ring with new offerings connecting the Chicago and New York hubs with Tokyo.  Powering the product is NTT’s purchase last year of the PC-1 cable system between the west coast and Japan, which is looking more strategic all the time.  From what I hear, PC-1 still has the shortest path despite more recent cables having been laid in the past few years (still true?). [Read more →]

British Telecom (NYSE:BT, news, filings) and AT&T (NYSE:T, news, filings) took their telepresence offerings to a new, important level yesterday.  The two telecommunications giants have announced the commercial availability of the industry’s first “inter-provider exchange-to-exchange telepresence meeting capability.”  That means that customers of BT’s telepresence offering can schedule with and connect to AT&T’s customers, and vice versa.  Such interconnectivity is, in my [Read more →]

What the heck is happening up in Burlington, Vermont?  Their municipal fiber effort, Burlington Telecom, is behind on its loan payments and is about to have its equipment repossessed by CitiCapital.  The city has already been scolded for sinking $17M of taxpayer money into the project without telling anyone, so there’s not likely to be more coming from that source.  So what does a municipal fiber project do when runs out of money and its equipment gets repossessed?  Install new equipment of course!  According to Mayor Kiss: [Read more →]

When there is opposition to something popular, one very human response is find a way to fight it without ever naming it directly.  Instead one chooses a proxy, something that sounds better.  It seems to me that this is the case right now in the Comcast/Level3 spat.  One of Comcast’s principal positions is that traffic from Level 3 is that the traffic ratio is rising, maybe approaching 5-1, and therefore they are abusing the peering system.  But when connecting to a last mile network on the internet of today and tomorrow, how can [Read more →]

Yesterday’s news may reflect a real shift in the internet weather.  A Tier-1 backbone provider has backed down to a last mile provider and agreed to pay for traffic, albeit under protest.  Not just any Tier-1 backbone, but Level 3 which regularly sits at or near the top of the Renesys rankings amongst others when it comes to total raw traffic and connectedness.  Level 3 is somewhat different in that it also operates a CDN and is expected to power half or so of Netflix’s streaming offering, but even still there is a chill to the wind blowing today amongst the independent fiber backbones. [Read more →]

I just have to say it.  I TOLD YOU SO!  A year ago, I wrote an article entitled “Could Network Neutrality Lead to Peering Wars?“.  And that’s exactly what Comcast is doing.  In a response to Level 3’s revelation that Comcast is adding a surcharge for video, Comcast says it’s not about video but about fair peering relationships and traffic ratios.  With the growth of online video, Comcast claims that Level 3’s traffic exchange with its network is unbalanced and hence it must charge more.  The threat therefore was to end the peering relationship. [Read more →]

Until now, network neutrality was largely a theoretical concept, a solution without a problem.  That era has ended.  In a statement from Level 3 Communications (NYSE:LVLT, news, filings) today, it has emerged that Comcast (NASDAQ:CMCSA, news, filings) is formally demanding payment for movies delivered over its network from an internet backbone and CDN provider in response to its own users’ clicks.  The target of this action isn’t really Level 3 of course, but rather Netflix (NASDAQ:NFLX, news, filings) and its brethren which have been making actual inroads recently by going over the top.  Whether they have made similar requests of Limelight Networks (NASDAQ:LLNW, news, filings), Akamai (NASDAQ:AKAM, news, filings), and others isn’t yet clear, however if they haven’t yet [Read more →]

Clearwire’s great WiMAX buildout continues, defying worries over the funding they need to go the distance.  Today they formally unveiled service in the two major metropolises of Los Angeles and Miami, as well as the three largest cities in Ohio – Cincinnati, Columbus, and Cleveland.  Under those five coverage umbrellas lie populations of 11M, 3.8M, 1.3M, 1.1M, and 1.4M people, respectively.  That raises their total population coverage by almost 18M.  For the curious, here are quick snapshots of the [Read more →]

While here in the US we were spending the weekend stuffing ourselves with turkey and shopping, down in Australia politicians were actually getting something done.  The so called Telstra Bill has now been passed by the Australian parliament, a hurdle which had loomed large.  The legislation provides the legal underpinning for the non-binding AUD$11B deal with Telstra, under which the NBN will take over Telstra’s historical role as the incumbent backbone.  So who gets what under this deal?  [Read more →]

With it being the Friday after Thanksgiving, the only news we’re going to get today out of the USA will be of the ‘I hope they don’t notice’ variety.  But the rest of the world goes on, and there have been several interesting items this week:

Juniper Networks (NASDAQ:JNPR, news, filings) added a rather non-standard type of client in Yunnan Copper.  Yep, that’s a gigantic Chinese mining company with a data center that needs an upgrade, which Juniper will be powering.  Just what kind of bits they need [Read more →]

Happy Thanksgiving everyone!  Before you go, here’s a quick rundown of this week’s pre-holiday networking news.  There was more of it than usual for this short week:

TW Telecom (NASDAQ:TWTC, news, filings) is joining the expansion parade down in Atlanta with a major buildout to the suburbs north and east of the city.  The new loops will offer potential connectivity to more than 600 commercial buildings in Johns Creek, Suwanee, Duluth, Norcross, the Emory University area, Decatur and Tucker, and bring the company’s total Atlanta metro route mileage to 550.  Atlanta is hot lately, as [Read more →]

Finishing up this week’s look at comparative financial metrics for competitive fiber operators, let’s look at relative valuations via a plot of EV/EBITDA through the end of the third quarter.  Of course, since the end of Q3 several things have happened such as Earthlink’s purchase of Deltacom, a flurry of movement due to the Level3/Netflix deal, and XO’s proposed rights offering and optimistic guidance.  This graph uses EBITDA for the trailing twelve months harvested from regulatory filings, it does not use projections or guidance – and thus the EV/EBITDA ratios tend to be higher than analysis that does attempt to look forward.  Ok, enough talk, here’s the plot: [Read more →]

Metro fiber specialist abvt is kicking off the holiday season with a surprise $5/share special dividend, to be paid out on the Saturday after Christmas.  The total amount of the one time dividend will be approximately $129M, which is just about two thirds of the $195M the company has on the balance sheet.  Replacing that cash on the balance sheet and the company’s current credit facility will be a new five year $250M senior secured revolving credit facility.  This would seem to imply that AboveNet is quite [Read more →]

We haven’t heard too much from dark fiber startup Allied Fiber (news, filings) of late.  Back in May the company unveiled its rather startling five phase plan to build longhaul dark fiber nationwide, with the first phase connecting New York, Chicago, and Washington DC.  In an update today, Allied Fiber announced additional financing from ABRY Partners and Falcon Investment Advisors that will allow it to complete phase 1, which will cost roughly $140M in all.  The expected completion date is now [Read more →]

Following up on yesterday’s post on EBITDA margin trends through Q3/2010, here is a quick look at both relative revenue growth and capital expenditures as a percentage of revenue.  As always, the latest automatically updated version can be find on my Competitive Telecom Trends page, but in this post we try to take a snapshot and use better formatting.  In this case, we include the partial data for Zayo on the capex chart, but not yet on the revenue growth chart, as Zayo’s publicly available numbers don’t go back far enough and if even if they did they would be so skewed by M&A as to be useless for comparison.  With no further ado, here is the revenue chart going back to Q1/2008: [Read more →]

According to reports over in the UK, News Corp’s bid for the part of BSkyB it doesn’t already own has run into a bit of an ecclesiastical snag.  That’s right, if you thought it was difficult jumping through all those regulatory hoops for the FCC, a few dozen state PUCs, the Justice Department, and occasionally Homeland Security, then consider this.  The Church of England is now publicly objecting to the purchase, on the grounds that it would give Rupert Murdoch and crew a ‘potentially dominant’ position in the UK media sector.  Nigel McCulloch, also known as the Bishop of Manchester, is apparently leading the charge, and it actually seems to have a few teeth. [Read more →]

Ever since Sidera Networks emerged from ABRY Partner’s acquisition of RCN, it seemed likely that further moves were in the offing.  Today, Sidera unveiled another piece of the plan, announcing that it has acquired Cross Connect Solutions.  Cross Connect Solutions offers carrier neutral colocation in Philadelphia via a 28,000 square foot facility at 401 North Broad Street, a site that is [Read more →]

I have updated the data underlying my competitive telecom trends resource to include all available Q3 data for US-based competitive service providers.  While the automatically generated charts are always there for you to peruse, I will take a closer look at each in turn with some better formatting as I did last quarter.  First let’s look at trends in EBITDA margin across the sector.  We no longer have new data from RCN Metro (now Sidera Networks and privately held) but we do have enough partial data from Zayo to add in.  Here’s the chart: [Read more →]