Telecom Ramblings

Hello everyone! Attached are the updated Level 3 Communications (NYSE:LVLT, news, filings) models based on data for the recently filed 10k. What I’ve done is include the three main models I will use this year to track our performance. The first model is my perception of Q1 results. As you can see I’m thinking we are going to see a drop in top-line but continued strength in sga/cogs improvements. [Read more →]

Today Pacific telecom and undersea-cable operator Pacnet announced its new Media Delivery Service, becoming the latest carrier to enter the CDN business.  The new product is available globally from today, and seems to offer both http website acceleration and streaming capabilities (both Flash and Silverlight).  The company, as one might expect, sees its advantages stemming from its ownership of the network, as opposed to pure CDNs.  It’s something of an interesting proposition though, Pacnet basically crosses the Pacific, their nodes presumably are primarily on what some call the ring of fire and are hooked up by undersea cables, but wouldn’t have [Read more →]

The Technology Solutions portion of Rockefeller Group has teamed up with Hibernia Atlantic’s Global Financial Network (GFN) to offer its clients bandwidth services in many of the world’s biggest financial markets.  The GFN was just unveiled in December, and seems to be gaining some early traction despite the rather inauspicious timing.  This deal with Rockefeller Group follows an earlier one at IPC Network Services, and both are enablers rather than users – they hook up bandwidth for the real customers.  I sort of doubt that business is brisk [Read more →]

Last week, midwest regional and metro operator US Signal sneaked a press release past my nets, announcing their expansion plans northward in Wisconsin.  The company has long had dark fiber loops in Green Bay, Appleton, and Oshkosh, and they now plan to light 250 miles of regional fiber to hook up those markets and open new PoPs.  That will bring their total up to 4500 route miles, 700 of them metro loops.  Apparently, the metro fiber business remains pretty strong up in the rust belt, strong enough [Read more →]

In the next two weeks I am planning to update and enhance my metro fiber and lit buildings spreadsheet.  The purpose of the list has always been to illustrate who is out there and understand where they fit into the fiber ecosystem, and I hope that a few improvements will help with that goal.  First of all, I will add columns for average fiber count and ownership status (IRU, sheath, conduit).  Second, I intend to make the current version more generally available in a page off the top menu bar.  There are other things I’d like to do, but which seem out of reach for now.  For instance, it would be very helpful to know something about the types of buildings connected – some providers may have many small lit buildings, others may have fewer yet much larger [Read more →]

According to a report by Vertical Systems Group, demand for business Ethernet ports grew at a 43% rate during 2008.  That’s a really nice growth rate of course, and it seems to be holding up well despite the cutbacks in telecom spending brought on by the recession.  Of course, that is because it does the job better and more cheaply than legacy technologies.  Overall spending may decrease, but at the same time more focus is shifted to things that [Read more →]

For years, router specialist Juniper Networks (NASDAQ:JNPR, news, filings) has been using cartoons in its marketing campaigns, so much so that they became part of the landscape.  But no more, various reports say that the six year run is over; the cartoons are a casualty of the recent marketing shakeup.  All marketing campaigns come to an end and this one had a long run, but I have to say I will miss it.  Some people hated it, others loved it – but everyone noticed.   [Read more →]

Alternative service provider cbey reported Q4 and full year 2008 earnings today, with no big surprises.  Revenues of $93.9M and earnings of $0.02/share were basically inline with guidance and expectations.  Churn rose slightly to 1.4% from 1.3%, which seems about right given the economy. More importantly though, they did not waver in the slightest regarding 2009, maintaining projections of $420M-440M or 20-25% growth and $62-70M in EBITDA.  Not many companies in the sector are giving detailed guidance for 2009 and I [Read more →]

Internet provider Cogent Communications (NASDAQ:CCOI, news, filings) saw traffic growth of 24.9% from the third to the fourth quarter this year, according to their Q4 earnings release. Cogent’s lack of traffic growth earlier this year seemed to give us some advance warning that all was not right with the economy, but it seems that was a mirage. Actually, their traffic growth apparently relates mostly to its own sales dynamics. Traffic slowed as they faced pricing competition in the first half of the year, then surged when their own price cuts took hold. [Read more →]

Alternative telecommunications service provider PAETEC (news, filings) reported earnings this morning, and no the sky hasn’t fallen yet. Revenues of $400.2M were in the upper half of guidance, as was adjusted EBITDA of $60.3M. Net loss for the fourth quarter was $114.4M, but that included a deferred income tax adustment of $93.3M and a goodwill adjustment of $15M. Excluding these, net loss would have been [Read more →]

What will they think of next.  In the state of Washington, the legislature is considering a bill that would add a special tax on streaming media, i.e. video and audio.  Of course, there are already taxes on digital media downloads in some states, but streaming isn’t a download.  When you watch a streaming video, you don’t actually come away with it with a physical asset – just the experience.  Streaming is much more like radio or TV broadcasts, except that it is a developing industry still trying to figure out how to become profitable rather than an established one.

What is running through these people’s minds?  I can just imagine one side of a phone conversation with a constitutent… [Read more →]

Well, maybe ‘tales from the tradeshow’, but still. Imagine arriving at a tradeshow primed and ready to show off your wares using a mobile computing cluster the size of a big suitcase. You open the shipping crate, and you see this.  Yes, it’s supposed to be a square, [Read more →]

Consolidation has begun in the content delivery space, Korean based CDNetworks and US based Panther Express announced their merger today.  Contentinople and the Business of Online Video have further details on the event.  Both companies being private, the financial terms were not disclosed.  CDNetworks was much larger than Panther of course, being the #3 CDN on a revenue basis.  However, the pairing looks like a good one strategically.  CDNetworks gets what it has been seeking, a truly credible entry into the US and European markets.  And Panther gets what it has been seeking, [Read more →]

Better late than never?  British Telecom (NYSE:BT, news, filings) is apparently planning to enter the content delivery business, according to a report from Dan Rayburn.   But they aren’t going to buy their way in like Level 3 did, nor will they resell the services of other CDNs (Reliance Globalcom, Global Crossing, DT), nor will they straddle the fence with partnerships (Tata, Verizon).  Nope, BT is going to follow in the footsteps of AT&T (NYSE:T, news, filings) and build their own CDN offering from scratch. [Read more →]

Covad continues to transform itself into a national network operater, seeking to transcend its DSL and T-1 roots.  Today the company announced completion of a series of capacity upgrades and a nationwide MPLS deployment.  I have always watched Covad but never understood it well.  When the company sold out to private equity a year or so ago they mostly dropped off my radar screen.  Their new owners obviously needed to find a new direction for the company, and they are apparently ready to show off their new look. [Read more →]

Competitive telecommunications provider Cavalier Telephone unveiled its new, independently run Intellifiber Networks unit today, to be headed by industry veteran Clint Heiden.  The company debuts with more than 16,000 route miles of fiber, 400+ PoPs, and 700+ on-net buildings, mostly within an area bounded by Chicago, Boston, and Raleigh and concentrated in the mid-Atlantic states.  Cavtel has generally focused on the consumer segment and on enterprises in its main turf, the new move is intended to find a way to generate better value out of their fiber assets.  Of course, these are not new assets.
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An article from Phone+ Magazine over the weekend heralds a big change in the way Level 3 Communications (NYSE:LVLT, news, filings) sees itself.   The company is not only looking to increase sales via the indirect channels, it is looking to do so off-net.  For over a decade now, Level 3 has beat the drum about on-net services, driving higher margins by seeking sales that can be served mostly over their own facilities.  Now they are looking to embrace their inner CLEC, as it were, and compete for the mid-sized enterprise market via other [Read more →]

Reading the news these days is not unlike being hounded by the four horsemen of the apocalypse. Rather than being named Pestilence, War, Famine, and Death, this time they are named Depression, Nationalization, Foreclosure, and Bankruptcy. From the point of view of telecom and internet infrastructure, the whole thing is a bit surreal because for the sector there just hasn’t been much pain so far.  Sales may be wobbly in some corners and capex may be slowing, and a few companies with large existing problems may have succumbed, but with the telecom nuclear winter of 5-9 years ago still fresh in our minds this is like snow flurry so far.    This can’t continue forever, something has to give. [Read more →]

Hello everyone. I backed up the truck so to speak at .72 cents on Level 3 Communications (NYSE:LVLT, news, filings) equity on Friday so I thought I would take a minute to update a few spreadsheets and get my vision of the future out there for discussion.

First I did a quick and dirty ev/ebitdas calculation based on what I think is market price on the equity and debt which came out under 5. I’ve also included the calculation assuming face value of the debt, which came out under 7. I wanted an entry point under these numbers. Here’s that spreadsheet. I posted something close to this on the IV board however after going back through the 2009 numbers I’m a bit more [Read more →]

European alternative fiber operator Colt Group (LON:COLT, news) reported Q4 and full year 2008 earnings today.  Total revenue increased to €427.5M from €420.7M in the third quarter.  Overall in 2008 on a constant currency basis revenues increased 2.4%, the company has been driving data revenues while churning off voice revenues for several years now.  Data revenues in Q4 rose to 55% of the total.  It remains unclear just how long the company will run in place in terms of total revenue, but the economy surely won’t help. [Read more →]

Webhosting specialist Rackspace Hosting (NYSE:RAX, news, filings) announced solid Q4 and full year 2008 earnings today. Revenues of $143.1M were up 3% sequentially despite being affected by negative foreign exchange swings in the UK and Europe where about one fourth of their revenues derive. Overall, revenues for 2008 grew at a 46.9% clip, an enviable number by any measure let alone during a recession. Costs fell across the board, resulting in a profit of $0.06/share, well above estimates. [Read more →]

Sprint Nextel (NYSE:S, news, filings) reported earnings today and continued to excel – at redefining the word ‘gruesome’.  Fortunately, I think the street was expecting the new definition.  Revenues were $8.430B, down another 4.3% from $8.816B in Q3 and a bit more than the street expected.  For many quarters now the company has lost revenue rapidly, yet managed to generally maintain its cost of revenue – it’s just not a good combination.   The adjusted loss per share of $(0.01) was actually a bit better than the $(0.03) the street was expecting.  The company continued to generate positive cash flow at a reasonable clip, however, adding $536M during the quarter, and expects to [Read more →]

Metro fiber specialist Fiberlight offered an update yesterday on its progress building a new metro ring in northern Virginia.  The ring, which will connect the new NAP of the Capital region facilities that Terremark (news, filings) [a subsidiary of Verizon (NYSE:VZ, news, filings)] is building in Culpeper, is 50% done and on-target for completion in the spring as planned.  It’s nice to see that while the financial world may have ground to a halt and the pundits think the end is nigh on a daily basis, the world does keep on turning.  [Read more →]