DSL Prime News Briefs

DSL industry news from North America and around the world.

by Dave Burstein of DSL Prime and Future of TV [March 10, 2005]

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• From a Dutch ISP came a request for some observations on successful U.S. DSL companies. "I want to compare my local market observations with the best players in on the U.S. DSL market." Unfortunately, almost no one is making a go of competing with the Bells. Covad just reported a $20 million loss, and all the other remaining companies (Broadview, Network Telecom, etc.) are in pain. So the U.S. has no real models of success for you. Perhaps Bulldog in the U.K. or QSC and Hansenet in Germany might be more to the point. It really is that bad and I wish it weren't so. Yahoo BB and eAccess in Japan, plus FastWeb and the other emerging Europeans, prove there's no reason a dedicated regulator couldn't have developed competition, but holding back and praying for the market isn't enough.

Briefs

• Indian national carrier BSNL ordered another 75,000 ports of DSLAMs from UTStarcom.Occam has quietly built a stronger position in the U.S. small carrier market, resulting in a surprising $6.5 million in sales Q4. Zhone also is finding traction in that market, with quarterly results that drove the stock up 40 percent according to Forbes.

Press

• A tip of the hat to the online reporters doing a strong job identifying "sock puppets" and "coin-operated think tanks." Carol Wilson, back at Telephony, editorializes about the lobbying to stop muni broadband says, "Incumbents should be aggressively seeking means of working with municipal leaders to guarantee greater access to broadband resources for a wider swath of the U.S." Right on—the best way to stop government jumping into services is to do a darned good job yourself. (I've been quoting Telephony heavily lately, and I think that reflects an important change in the magazine. Despite enormous pressure because of reduced staff, the reporters, especially online, are responding with imaginative work. Someone in charge is doing things right.)
  
  
• Ken Belson at the New York Times is Jennie's neighbor, so I'm glad for another opportunity to write something friendly. One key test of a good journalist is the quality of his sources; we've all read too many articles that add little to an official release beyond obvious comments from predictable people. How many D.C. stories have you read with an "official," a bell spokesperson, and one of the same three consumer advocates, for example. Belson is doing much better, finding Bryan Moir, a true insider, for the Phone Mergers May Curb Price Wars story. Software Service Aims to Outfox Caller ID a while back had comments from Lee Tien of the Electronic Frontier Foundation, who's always thoughtful and articulate; Loretta Lynch of the California PUC, one of the most effective consumer advocates; Mark Rotenberg of the Electronic Privacy Information Center, a key expert; and Bob Atkinson, of Columbia University for some perspective ("it's spy versus spy"). Belson opened the article with color (how a bill collector might use the service, idea from a woman bounty hunter) and covered the legal and practical issues from solid sources. In a favorite Times touch, he had a revealing quote for last "Every technology has a dark side," Mr. Jepson said, "but our customer will have to use it legally." The Wall Street Journal has almost a dozen strong reporters on related beats, making it impossible for the smaller staff at the Times to match them story for story. But Belson is making the Times telecom reporting a must read as well.

Wall Street

• Level 3 jumped 17 percent in one day, but not because of my note that morning the AOL deal might drive up the price. Jim Crowe, who's keynoting VON, put the company up for sale clearly hoping to draw an AT&T or MCI type bid. The numbers make the deal hard, however. Level 3 is carrying high debt and little spare cash. MCI had enough cash to cover their debt, allowing Verizon to use MCI's own money for much of the takeover bid. It has to be a tough concession by Crowe, who's survived the crash and attracted support recently from Warren Buffet and Legg Mason. But he's continuing to lose hundreds of millions of dollars, while any honest analysis has to see SBC/AT&T and Verizon/MCI becoming even tougher to fight against.
  
  
• Similarly, Qwest's primary hope is that the states will allow them to milk the remnants of monopoly enough to reduce debt and build new businesses. They remain in a race against insolvency, which has been postponed by selling the Yellow Page assets for the cash to stay afloat. Tough call for regulators as Qwest, calmer but still desperate, seeks huge rate hikes despite declining costs of actual providing the service. Should local phone rates go up to pay off a failed gamble in national networks and overpaying in the boom times?
  
  
• Local telcos survived a scare about cuts in USF at the last FCC meeting, but the writing is on the wall in D.C. change is coming. Carriers with debt above $2,000/customer have to be considered enormously risky, which is why Citizens has the highest dividend rate on the stock exchange.
  
  
• CAN-TV Venezuela was downgraded by Merrill, because their earnings aren't enough to support the dividend. They face major political risk; with the U.S. government actively trying to overthrow Chavez, he's got no reason to let a Verizon dominated company raise rates and profits. Merrill was dubious about CAN-TV's response of raising capital spending 50 percent instead of paying out the maximum in cash. Another view is that CAN-TV, investing in the growth of Venezuela, is making the only play it can for respectability and survival. Milking the country for a dividend is not a recipe for political support.
  
  
• For job ads, visit the DSL Prime website.

Copyright 2005 Dave Burstein.
The DSL Prime Newsletter is reprinted with permission.

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