Wednesday, October 29, 2008

One Minute Video: What is a WDM PON?

One Minute Video presented by Dr. Paul Morkel -- What is E-NNI?

Jargon Buster

France Telecom Sees Revenue Growth Exceeding GDP in Key Markets

France Telecom Group revenue of EUR 39.9 billion for the first nine months of 2008, up 3.4% YoY on a comparable basis. Third-quarter 2008 revenue grew 2.3% on a comparable basis. The company said its performance comes in the context of the difficult general economic environment. Other than Spain and some emerging markets, the Group saw no impact on its operations from the slowdown in the economy. It's aim is to continue outpacing GDP in its key markets.

Some highlights:

Personal Communication Services

  • Revenue from Personal Communication Services (PCS) totalled 21.985 billion euros in the first nine months of 2008, a 1.5% increase on an historical basis. This includes the unfavourable impact of exchange rates (-504 million euros) and the effect of changes in the scope of consolidation (-480 million euros with the sale of Orange's mobile operations in the Netherlands and the acquisitions of Voxmobile in Luxembourg and of Ten in France).

  • On a comparable basis, growth for the first nine months was 6.4%. Excluding the impact of the rate decreases for call terminations and roaming (estimated at -663 million euros), growth continued to be very strong on a comparable basis, at 9.9%, following 10.8% growth in the first half.

  • Third quarter 2008 revenue (7.604 billion euros) was up 0.8% on an historical basis and up 5.1% on a comparable basis. Excluding the impact of the rate decrease for call terminations and roaming (estimated at -208 million euros) quarterly revenue grew by 8.2%. This is driven both by mature Western European countries (particularly France, the United Kingdom and Belgium) and by emerging markets (particularly the Middle East and Romania).

  • There were 117.6 million customers at 30 September 2008, excluding MVNOs, an increase of 12.0% year on year on a comparable basis (+12.6 million new customers, of which 3.2 million were acquired in the third quarter of 2008).

  • The number of mobile broadband customers was up sharply at 23.2 million at 30 September 2008 compared with 12.8 million at 30 September 2007, an 81% increase year on year.

  • The MVNO customer base in Europe rose to 2.5 million at 30 September 2008 (of which 1.7 million were
    in France), compared with 1.5 million a year earlier on a comparable basis (of which 1.2 million were in

Home Communication Services

  • Revenue for the third quarter 2008 was up 0.7% on an historical basis (5.711 billion euros). On a
    comparable basis, the quarter was down 1.2%.

  • Revenue from ADSL broadband services6, up 23%, very largely offset the downward trend in traditional
    telephone services and represented 24.1% of total Home Communication Services revenue over the first
    nine months of 2008, compared with 19.6% for the same period in 2007.

  • The number of residential ADSL broadband subscribers in Europe rose to 12.4 million at 30 September 2008,
    representing annual growth of 11.1% on a comparable basis (1.2 million new ADSL subscribers). ADSL
    Multiservices grew strongly

  • Tthe number of Liveboxes rose 35% in one year, with 7.5 million units sold in Europe at 30 September 2008,
    up from 5.5 million at 30 September 2007 on a comparable basis.

  • There were 6.0 million Voice over IP customers at 30 September 2008, up from 4.1 million at 30 September
    2007, growth of 49% in one year on a comparable basis.

  • ADSL digital TV services (IPTV) had a total of 1.746 million subscribers in Europe at 30 September 2008,
    compared with 1.017 million at 30 September 2007, a 72% increase in one year.

Enterprise Communication Services

  • Revenue for Enterprise Communication Services (ECS) totalled 5.740 billion euros for the first nine months of 2008, a 0.5% increase on an historical basis, including the unfavourable impact of exchange rates (-126 million euros) and the positive impact of changes in the scope of consolidation (+21 million euros), in particular with the integration of the "Enterprise" and "Managed Services" divisions of GTL India that was acquired in July 2007.

  • Fixed telephony and traditional data services continued their downward trend, with a 5.4% decline for the first nine months of 2008 on a comparable basis (after a decline of 5.3% in the first half). This was less than the decline recorded in 2007 over the same period (-9.5% on a comparable basis), reflecting fewer migrations from data networks to IP networks after the steady depletion of previous years.

  • Advanced Business Network Services rose 8.0% over the first nine months of 2008 on a comparable basis, after rising 7.9% in the first half. This rate of growth is higher than that of the first nine months of 2007 (+6.5% on a comparable basis), reflecting the continuing growth of IP network services. The number of IPVPN subscribers worldwide rose 9.8% year on year to 314,000 at 30 September 2008. Similarly, the Business Everywhere mobility offer was up 20.8% in France, with 664,000 users at 30 September 2008.

  • Revenues for Extended Business Services continued their sharp climb. On a comparable basis, revenue grew 16.1% over the first nine months of 2008, after rising 16.0% in the first half. The Group's growth outperformed the market, driven by the growth of service platforms and consulting as well as project management operations linked to the management of business data networks.

  • Other Business Services recorded a slowdown in revenue growth (+4.9% over the first nine months of 2008 compared with +10.9% in the first half), reflecting slower equipment sales. At the same time, broadcast services of the subsidiary Globecast continued to grow steadily.

Commenting on the third quarter results, Didier Lombard, France Telecom Chairman and Chief Executive Officer, stated: "With third-quarter revenue growth of 2.3%, the Group has for the fourth consecutive quarter maintained a level of activity that outperformed the estimated average GDP across the Group's worldwide footprint."

Qwest to Report Greenhouse Gas Emissions

Qwest Communications has joined The Climate Registry as a founding member, and in so doing has committed to calculate, independently verify and publicly report its greenhouse gas (GHG) emissions across North America.

The Climate Registry is a nonprofit organization that seeks to provides data on greenhouse gas emissions. The Climate Registry establishes consistent, transparent standards throughout North America for businesses and governments to calculate, verify and publicly report their carbon footprints in a single, unified registry. The protocol is based on the internationally recognized GHG measurement standards of the World Resources Institute and World Business Council on Sustainability.

Qwest noted that it already discloses its direct and indirect carbon emissions through its Carbon Disclosure Project.http://www.qwest.com

Alcatel-Lucent Reports Q3 Revenue of EUR 4.065 Billion, Down 6.6% YoY

Alcatel-Lucent's revenues for Q3 2008 declined 6.6% year-over-year and decreased 0.9% sequentially to Euro 4.065 billion. At constant exchange rate, revenues declined 2.2% year-over-year and 2.9% sequentially.

At constant exchange rate and on a year-over-year basis, Carrier revenues declined 9.4%, Enterprise revenues grew 6.3% and Services revenues grew 16.6%.

The adjusted gross margin was 32.5% of revenues, or 33.0% excluding a currency hedging loss of Euro 23 million. Adjusted operating expenses declined 9.6% year-over-year and 4.5% sequentially, leading to an adjusted operating income of Euro 40 million or 1.0% of revenues. Adjusted net income was Euro 41 million or Euro 0.02 per diluted share, including a one-time income of Euro 63 million pre tax and of Euro 38 million after tax resulting from the amendment of the post retirement healthcare plan.

Ben Verwaayen, CEO commented: "First, let me state that we are in good shape from a cash standpoint. We achieved a positive cash flow from operating activities this quarter through the reduction of our operating working capital requirements. The funded status of our pensions and other post retirement benefits remains materially positive with a prudent asset allocation. With gross cash on hand and marketable securities of Euro 4.46 billion and less than Euro 1 billion worth of bond debt maturing in the next 12 months, we are adequately funded.

"Second, we met our revenue guidance in a more challenging macroeconomic environment. In addition to the ongoing CDMA decline, we saw a reduction in spending by certain customers in developed markets, especially in fixed access and terrestrial optics. This was partly offset, however, by the strong performance of certain carrier activities, including W-CDMA, NGN and submarine networks. In addition, we continued to grow our Enterprise business at a healthy rate and saw accelerated growth in Services. "

Some highlights:

Carrier Operating Segment

  • Carrier operating segment were Euro 2,734 million compared to Euro 3,142 million in the year-ago quarter, a 13.0% decrease at current exchange rate and a 9.4% decrease at constant rate.

  • Fixed access revenue decreased at a strong double-digit rate. The ongoing decline in new subscribers to copper-based broadband access, coupled with a rapidly deteriorating economic environment led certain customers in North America and Europe to reduce their capital expenditure plans for fixed access, thus impacting both DSL and Digital Loop Carrier (DLC) activities.

  • Alcatel-Lucent shipped 6.1 million DSL ports in the quarter, down 23% from the year-ago quarter and 21% sequentially.

  • Revenue from FTTH solutions more than doubled this quarter, taking the year-to-date growth to more than 60%. Alcatel-Lucent further reinforced its leadership position in next generation broadband access both in FTTN, where it was selected by KPN as its exclusive supplier and in FTTH where it announced several contract wins, including EPB in US, Telecom Malaysia and Neuf Cegetel in France as part of a social housing project in Paris.

  • In data networking, revenue from IP/MPLS service routers enjoyed solid growth both year over year and sequentially, shipping to more than 20 new customers, taking the total to more than 250 customers to date. Alcatel-Lucent announced new wins with Eircom (Ireland), Bezeq (Israel), EPB Telecom (USA) and Telecom Malaysia. The company's solution for mobile backhauling (7705 Service Aggregation Router), is also gaining traction with more than 20 customers and 20 additional trials. The ATM switching business continued on its structural decline path.

  • Optical networking grew slightly this quarter, a contrast with the double-digit growth rate reported in the first half, reflecting a slowdown in the terrestrial optical networking market. Submarine networks and microwave transmission activities grew at a strong double-digit rate.

  • In mobile networks, GSM revenue declined this quarter, due to the temporary freeze on networks expansion in China during the Olympics. W-CDMA revenue doubled this quarter, as it continued to benefit from a strong ramp-up in revenues in France, the US and Korea. Alcatel-Lucent won several new W-CDMA customers in the third quarter including Vodacom in South Africa and BSNL/ITI in India. Year to date, the company has been selected by 11 new W-CDMA customers, taking the total to more than 50. CDMA revenues declined materially year-over-year but recovered sequentially, as the company began shipments to a Chinese customer.

  • LTE: in the past months, the roadmaps as well as the technical and business requirements of key operators around the world have significantly evolved. Recognizing the diversity of the market, Alcatel-Lucent and NEC are further optimizing the scope and format of their technical collaboration in the LTE radio access space. The two companies are currently considering the opportunity to focus their technical cooperation on selected parts of the LTE radio access platform, in the form of specific joint development agreements as appropriate. Alcatel-Lucent is fully committed to providing its customers with a superior end-to-end LTE solution. The company has already accelerated its global LTE development program in the past two quarters, and will continue to do so to meet the roadmap and requirements of its key customers around the globe.

  • The company's core switching activities declined moderately year over year, as the decline in legacy TDM voice was almost entirely offset by the strong, double-digit growth in NGN.

  • Applications had a softer quarter due to a slowdown in legacy Messaging and IN (Intelligent Networks) activities. Revenue from Subscriber Data Management and Multimedia applications continued to enjoy strong double-digit growth driven by Asia and the Americas.

Enterprise Operating Segment

  • For the third quarter 2008, revenues for the Enterprise operating segment were Euro 388 million compared to Euro 380 million in the year-ago quarter, an increase of 2.2% at current exchange rate and of 6.3% at constant rate. Adjusted operating income was Euro 29 million, or 7.5% of revenues, flat from last year.

  • Enterprise Solutions grew in the mid single-digit range. This was driven by Data networking which enjoyed its seventh consecutive quarter of double-digit growth as well as the sustained momentum in sales of voice solutions to large enterprises, more than offsetting the slowdown in demand from small and medium businesses.

  • Genesys, the contact centre software activity, grew at a high single-digit rate this quarter versus a double-digit rate in the first half, due to a slowdown in professional services.

  • From a geographic standpoint, the segment saw double-digit growth in both North America and Latin America and low-single digit growth in both Europe and Asia.

  • The adjusted operating margin of the Enterprise segment was stable both year-over-year and sequentially, at a rather high level.

Services Operating Segment

  • For the third quarter 2008, revenues for the Services operating segment were Euro 870 million compared to Euro 776 million in the year-ago quarter, an increase of 12.1% at current exchange rate and of 16.6% at constant rate.

  • Network operations enjoyed accelerated growth this quarter, both in revenues and orders due to the ramp-up of some of the large contract wins announced since the start of the year.

  • Network integration grew in the high teens this quarter, a somewhat slower growth than in the first half, due to the slowdown in the part of the business which is attached to the sale of carrier products. Alcatel-Lucent nevertheless continued to enjoy very strong growth in complex network design, network optimization and network transformation projects.

  • Growth in Professional services - which include the integration of software applications either from Alcatel-Lucent or third parties - accelerated to the high teens this quarter compared to the high single-digit growth achieved in the first half, driven by IPTV and OSS integration.

Chunghwa Telecom Reports Q3 Revenue Decline or 1.5%

Chunghwa Telecom, the incumbent operator in Taiwan, reported a 3% revenue growth for the first nine months of 2008, but a revenue decline of 1.5% in Q3 2008. Chunghwa's total revenue for the first nine months of 2008 reached NT$151.9 billion, of which 28.4% was from fixed-line services, 35.9% was from mobile services, 24.5% was from Internet and data services and the remainder 11.2% was from other revenues, including handset sales from SENAO and Chunghwa.

Internet and data revenue of NT$37.3 billion in the first nine months of 2008 was 1.3% higher than the comparable period in 2007. This was driven by the continued growth in the total broadband subscriber base, FTTB and ADSL speed upgrades, and partly offset by an ADSL tariff adjustment that took effect on April 1, 2008.

Mobile revenue decreased by 2.0% in the first nine months of 2008 to NT$54.6 billion. This was primarily due to the positive effects of the 2.5% increase in subscriber numbers and the 26.8% increase in value added service revenue year-over-year, but was offset by the traffic decline and the price cuts by the National Communication Commission ("NCC").

Total fixed-line revenue declined 3.7% to NT$43.1 billion as compared to the prior year period. International Long Distance revenue decreased 4.2%, mainly due to increased competition from calling card and the decrease in settlement income resulting from the fluctuation of FX rate. Local and domestic long distance revenues decreased by 2.9% and 6.5% year-over-year, respectively, for the first nine months of 2008, mainly due to mobile and VOIP substitution.

For the third quarter 2008, Internet revenue was 0.3% lower while data revenue increased by 2.5% year-over-year. Mobile revenue decreased by 3.4%, mainly due to the price cuts imposed by the NCC and promotional packages provided by Chunghwa. Fixed line revenue as a whole decreased by 5.1% as compared to the same period last year.

As to the global economic downturn, Dr. Shyue-ching Lu, Chairman and CEO of Chunghwa Telecom, made the following comment: "The current financial crisis has impacted the global economy, especially in the US. Based on our current outlook, given that telecommunication is a utility-like service and our dominant leadership in Taiwan, the impact on us will be relatively small. As a result, currently, we are still confident that we should be able to achieve our annual guidance which we set out earlier in 2008."

STMicroelectronics and Arkados to Develop 200 Mbps HomePlug AV Chip

Arkados and STMicroelectronics reached an agreement to develop and manufacture a 200 Mbps HomePlug AV wideband powerline modem System-on-Chip (SoC). The chip, which is planned for availability mid-next year, is being designed to power applications ranging from simple Ethernet-to-powerline bridges to full-featured products as wide ranging as HDTV distribution, digital set-top boxes, IPTV, whole-house audio, networked digital picture frames, surveillance systems, and also industrial and commercial applications, especially targeting the Smart Grid and Green Energy segments.

The companies said their HomePlug AV-based SoC will boast an integrated AFE (analog front end), a wide variety of built-in interfaces, and a powerful ARM processor. The SoC will offer processing in cutting-edge 65nm geometry, providing savings in both cost and power consumption, while also offering full interoperability with the existing base of nearly 20 million HomePlug 1.0 chips, a feature currently not available in competing HomePlug AV devices.

The next-generation chip will include support for the Inter PHY Communication Protocol (IPP), currently being defined by the IEEE P1901 Working Group; the chip could also be the first to market compatible with the expected IEEE 1901 industry standard for high-speed powerline communications.

Motorola Sees Separation its Businesses beyond 2009

Motorola reported Q3 2008 sales of $7.5 billion and a GAAP net loss from continuing operations of $397 million, or a loss of $0.18 per share (including special charges of $0.23 per share).

Greg Brown, Motorola's co-chief executive officer and CEO of Broadband Mobility Solutions, said, "The company had positive operating cash flow of $180 million and ended the quarter with a total cash* position of $7.6 billion. Our balance sheet and liquidity position give us agility and flexibility in today's weakened global economy and turbulent financial markets. In addition, we benefit from a global customer base and a broad portfolio of products and solutions that meet the needs of our customers."

Sanjay Jha, Motorola's co-chief executive officer and CEO of Mobile Devices, said, "While our strategic intent to separate the company remains intact, we are no longer targeting the third quarter of 2009, primarily due to the macro-economic environment, stresses in the financial markets and the changes underway in Mobile Devices. We have made progress on various elements of the separation plan and will continue to prepare for a potential transaction at the appropriate timeframe that serves the best interests of the company and its shareholders."

Some highlights for the quarter:

Mobile Devices

  • Mobile Devices segment sales were $3.1 billion, down 31 percent compared to the year-ago quarter. The segment reported an operating loss of $840 million, compared to an operating loss of $248 million in the year-ago quarter.

  • Shipped 25.4 million handsets and began shipping 16 new products to key markets, including three new 3G devices

Home and Networks Mobility

  • Home and Networks Mobility segment sales were $2.4 billion, down 1 percent compared to the year-ago quarter. Operating earnings increased to $263 million, which represents an increase of 65 percent compared to operating earnings of $159 million in the year-ago quarter.

  • Expanded operating margin year-over-year from 7 percent of sales to 11 percent of sales

  • Shipped 4.1 million digital entertainment devices, compared to 2.7 million in the year-ago quarter, due to continued strong demand for HD, HD/DVR and IPTV devices

  • Signed multiple contracts worth $431 million with China Mobile Communications Corporation for its GSM network upgrades and expansion

  • Announced the multimedia set-top platform and its first implementation with KDDI, an operator in Japan

  • Won IPTV contract with Deutsche Telekom in Germany

Enterprise Mobility Solutions

  • Enterprise Mobility Solutions segment sales were $2.0 billion, up 4 percent compared to the year-ago quarter. Operating earnings increased to $403 million, which represents an increase of 23 percent compared to operating earnings of $328 million in the year-ago quarter.

  • Expanded operating margin year-over-year from 17 percent of sales to 20 percent of sales

  • Continued to realize strong international demand in the government and public safety markets

  • Launched APX, the industry's first Project 25 multi-band radio with multi-agency interoperability, dual-sided portable operation and integrated GPS

  • Completed acquisition of AirDefense, a leading wireless LAN security provider, subsequent to the end of the quarter

  • Signed a definitive agreement to sell the biometrics business to SAFRAN, subsequent to the end of the quarter.

European Commission Opens Investigation into Telekomunikacja Polska

The European Commission has opened an anti-trust investigation of Telekomunikacja Polska S.A., the incumbent telecom operator in Poland. EC officials conducted an unannounced inspection at the company's premises on 23-September-2008.

The European Commission said it suspects that Telekomunikacja Polska may have infringed EC Treaty rules on abuse of a dominant market position (Article 82). The Commission officials were accompanied by their counterparts from the Polish national competition authority - Urząd Ochrony Konkurencji i Konsumentów.

"The Quilt" Research Network Extends Contract with Level 3

The Quilt, a coalition of regional network organizations representing many top U.S. research and education institutions, has renewed its multi-year contract with Level 3 Communications. The framework agreement gives Quilt members access to Level 3's Tier 1 Internet backbones in North America and Europe.

Most Quilt members are non-profit regional network aggregators that provide advanced network services in support of research and education. http://www.level3.com

TiVo and Netflix Announce Movie Streaming Deal

TiVo announced a deal that will give users of its TiVo Series3, TiVo HD, and TiVo HD XL DVRs the ability to have thousands of movies and TV episodes instantly streamed from Netflix.

The two companies said they are initiating a test of the new capability in several thousand U.S. households and expect it to be broadly available in early December. Users will need to subscribe to both Netflix and TiVO service.http://www.tivo.com

AT&T Provides iPhone and BlackBerry Customers with Complementary Wi-Fi

AT&T will begin offering free Wi-Fi service to current and new customers of select Blackberry smartphones and Apple iPhones. AT&T's Wi-Fi network includes 17,000 hot spots in Starbucks, Barnes & Noble, and thousands of other locations.

AT&T, Lenovo and Ericsson Partner on Embedded Broadband in Notebook PCs

AT&T , Lenovo and Ericsson announced an alliance to embedded 3G modems in certain ThinkPad notebook PCs in the U.S. The collaboration significantly lowers the price premium usually associated with built-in mobile broadband technology by up to $150 per PC from previous pricing.

Under the agreement, AT&T's 3G service is available on a full range of Lenovo ThinkPad notebooks, which come factory-equipped with Ericsson built-in mobile broadband modules. All three of the ThinkPad SL notebooks and all notebooks in Lenovo's T and X series are included in the offering. http://www.att.com

Verizon Cites FiOS Milestones for Q3

Verizon said customer growth accelerated for its FiOS services in the third quarter 2008 as the company's telecommunications group introduced new features and expanded the fiber network's footprint. Some milestones for the quarter:

  • Launched FiOS TV in four new markets -- New York City, Washington state, Harrisburg, Pa., and western New York. Overall, Verizon made FiOS TV service available for sale to a record 1.2 million additional premises in the quarter, bringing the total to 8.2 million.

  • Added 233,000 net new FiOS TV customers, compared with 176,000 in the second quarter 2008. The company has 1.6 million FiOS TV customers, compared with more than 700,000 FiOS TV customers at the end of third-quarter 2007.

  • Increased FiOS TV sales penetration (sales as a percentage of potential customers) to 19.7 percent, compared with 15.2 percent in last year's third quarter.

  • Continued to launch high-definition channels and now offers more HD than cable in each FiOS TV market, with 100 HD channels already available in several regions.

  • Began adding new features that take advantage of the fiber network's interactive capabilities including streaming of recorded HD video with Verizon's Home Media DVR; new free informational widgets; purchasing via remote control; and a feature that allows customers to pause live programming, change channels, and then return to the paused program and pick up watching right where they left off.

  • Added 225,000 net new FiOS Internet customers, compared with 187,000 in the second quarter 2008. The company has 2.2 million FiOS Internet customers, compared with 1.3 million FiOS Internet customers at the end of third-quarter 2007.

  • Increased FiOS Internet sales penetration to 24.2 percent, compared with 20.0 percent in last year's third quarter. FiOS Internet is available for sale to nearly 9.1 million premises.

  • Offered its broadband customers access to free parental controls and launched a Parental Control Center offering tips and tools for parents on how to protect their children when they're online.

  • Announced that it has completed almost two-thirds of its FiOS build-out in which the company expects to pass 18 million homes and business with fiber through 2010. At the end of the third quarter 2008, Verizon's broadband fiber-to-the-premises network passed 11.9 million premises.

  • Announced that fiber-to-the-home now covers more than one-third of Verizon's wireline households and that nearly 70 percent of these homes passed can buy Verizon's video service.

  • Continued building its all-fiber-optic network using GPON. The nearly 200 switching centers in 12 states where GPON is being deployed today will grow to 400 centers by the end of 2009. More than 40 percent of homes passed by fiber will be served by GPON technology by the end of next year, rising to 50 percent by 2010.

Verizon Wins Defense Contracts Valued at Up to $1.12 billion

Verizon Business announced two contracts with the U.S. Department of Defense's Defense Information Technology Contracting Organization (DITCO) valued t up to $1.12 billion. The services will be provided under the federal Networx contracting program.

Under one agreement valued at as much as $752 million, DITCO, the contracting arm of the department's Defense Information Systems Agency (DISA), selected Verizon Business in a Networx Fair Opportunity conducted in June 2008 to provide Defense Department agencies with data services. They include network-based Internet Protocol Virtual Private Network services based on multi protocol label switching; Internet protocol services; asynchronous transfer mode; and wireless and point-to-point private line for existing services.

DISA provides real-time information technology (IT) and communications support to the president, vice president, secretary of defense and the military services including the combatant commands. Critical IP VPN data traffic will ride on the Verizon Business vBNS+ (Very High Performance Backbone Network Service) network, which is dedicated primarily to government and educational institutions with high-performance network requirements.

In a separate agreement valued at as much as $368 million, DITCO designated Verizon Business in a Networx Fair Opportunity held in February 2008 as the primary provider for voice services to help more than 700,000 users at military locations worldwide communicate and collaborate effectively. Long-distance, toll-free, calling-card, ISDN (integrated services digital network) and video-teleconferencing are among the services Verizon Business will provide.

As the projects are implemented, DITCO will have the ability to order additional services from Verizon Business that could increase the value of the agreements. The agreements were awarded under the U.S. General Services Administration's Networx Universal contract, which covers 10 years. Networx is among the largest federal telecommunication contracts ever awarded by the General Services Administration (GSA), providing federal agencies with a common vehicle for purchasing a comprehensive set of networking and technical services.

Verizon noted that it has been providing voice and data services to DITCO under the GSA's Federal Telecommunications Service (FTS) 2001 contract, the predecessor to the Networx program.

Department of Justice Requires Divestitures in Verizon's Acquisition of Alltel

The U.S. Department of Justice will require Verizon Communications Corp. to divest assets in 100 areas in 22 states in order to proceed with its $28 billion acquisition of Alltel Corp.

The Department said that the transaction as originally proposed would have substantially lessened competition to the detriment of consumers of mobile wireless telecommunications services in those areas, and likely would result in higher prices, lower quality and reduced network investments.

Verizon and Alltel are significant competitors and each is the other's closest competitor for a significant set of customers in 94 Cellular Marketing Areas (CMAs), as defined by the FCC.

The divestitures cover the entire states of North Dakota and South Dakota; large portions of the states of Colorado, Georgia, Kansas, Montana, South Carolina, Utah and Wyoming; and portions of the states of Alabama, Arizona, California, Idaho, Illinois, Iowa, Minnesota, Nebraska, Nevada, New Mexico, North Carolina, Ohio and Virginia.

The Department's Antitrust Division, along with the Attorneys General of the states of Alabama, California, Iowa, Kansas, Minnesota, North Dakota and South Dakota, filed a civil lawsuit today in U.S. District Court for the District of Columbia to block the proposed acquisition of Alltel by Verizon. At the same time, the Department and state Attorneys General filed a proposed settlement that, if approved by the court, would resolve the competitive concerns in the lawsuit. Additionally, as a part of the settlement, the Department filed to modify two existing consent decrees.

The transaction also is subject to review by the FCC. The Department of Justice said it coordinated with the FCC throughout its deliberations.http://www.usdoj.gov
  • In June 2008, Verizon Wireless agreed to acquire Alltel Corporation for $5.9 billion. Based on Alltel's projected net debt at closing of $22.2 billion, the aggregate value of the transaction is $28.1 billion. Both carrier operate CDMA networks and plan future LTE migration. Together, the companies serve over 80 million wireless subscribers.

    Alltel serves more than 13 million customers in markets in 34 states. This includes 57 primarily rural markets that Verizon Wireless does not serve. Alltel is currently owned by Atlantis Holdings LLC, an affiliate of private investment firm TPG Capital and GS Capital Partners.

    At the time the deal was announced, Verizon Wireless expects to realize synergies with a net present value, after integration costs, of more than $9 billion driven by reduced capital and operating expense savings. Synergies are expected to generate incremental cost savings of $1 billion in the second year after closing.

One Minute Video: What is E-NNI?

One Minute Video presented by Jim Theodoras -- What is E-NNI?

Jargon Buster

Tuesday, October 28, 2008

Qwest Reports Mixed Q3 Results, Announces 1,200 Job Cuts

Qwest Communications reported Q3 net revenue of $3.4 billion, a decline of 2 percent year over year but flat with the second quarter of 2008. Q3 net income was $151 million, or $0.09 per diluted share. This compares to net income of $2.1 billion, or $1.08 per diluted share, during the same period in 2007. The year-ago period results included a one-time tax benefit of $2.1 billion and a $353 million charge for legal matters. The current quarter net income includes a charge of $63 million for severance and a lease restructuring benefit of $33 million. Adjusted EBITDA for the quarter was $1.08 billion compared to $1.15 billion in the prior year and $1.14 billion in the second quarter of 2008.

Some notable items from the Q3 2008 report:

  • Qwest expects to reduce its workforce during the fourth quarter by approximately 1,200, or a little more than 3 percent of the total workforce as of the end of the third quarter.

  • Customer demand for data services across all business segments contributed to 10 percent year-over-year growth in total data, Internet and video services revenue. Sequentially, data, Internet and video revenue grew by 4 percent on the strength of Business and Wholesale results.

  • Total voice services revenue of $1.8 billion declined 8 percent year over year and continued to be impacted by increased wireless substitution, cable competition and deteriorating economic trends. At the end of the third quarter, total access lines were 11.9 million -- a decline of 8.9 percent compared to the third quarter of 2007.

  • Mass Markets third quarter revenue was $1.4 billion, a 5 percent decline compared to the prior year and a 2 percent decline compared to the second quarter. Excluding wireless, revenue declined 4 percent year over year and 1 percent sequentially. Voice services revenue declined 9 percent compared to the prior year and 2 percent sequentially due to lower access lines. The launch of wireless customer migration efforts impacted wireless service revenue, which declined 15 percent year over year and 6 percent compared to the second quarter. This rate of decline is expected to accelerate in upcoming quarters. Data, Internet and video revenue improved 12 percent compared to the third quarter of 2007 and 1 percent sequentially.

  • Net broadband subscribers increased by 61,000 in the quarter with nearly 40,000 subscribers purchasing services over Qwest's FTTN network. The company continues to see strong demand for higher speed services with the majority of FTTN customers opting for connection speeds of 7Mbps or higher.

  • Video subscribers increased by 39,000 during the quarter resulting in total video subscribers of 761,000. Wireless subscribers fell by 45,000 due, in part, to migration efforts. At the end of the third quarter, Mass Markets access lines were 8.0 million, a decline of 9.7 percent from the year-ago period.

  • Mass Markets segment income declined by 7 percent sequentially and 5 percent compared to the year-ago period. Segment income margin of 47.2 percent fell from 49.9 percent in the second quarter and was flat compared to the year-ago period. In addition to the effects of on-going access line losses, the third quarter margin also reflects sequential increases in marketing and bad debt expense offset by lower wireless operating costs.

  • Third quarter revenue in Wholesale Markets was $815 million, a decline of 5 percent year over year as a result of local access line erosion and lower long-distance voice revenue. Sequentially, revenue declined by 1 percent as results in data and Internet revenue partially offset voice services revenue declines.

"In the quarter, our financial results were again mixed," said Edward A. Mueller, Qwest's chairman and CEO. "We are pleased with the rebound in broadband sales in the quarter, and our Business Markets reported a strong top-line. We also produced solid free cash flow. However, our margins were impacted by fewer consumer access lines and a less profitable revenue mix. Reflecting our cautious outlook on the near-term direction of the economy, we have taken a number of steps to keep our costs aligned with customer demand and maintain maximum financial strength and flexibility."

MetaSwitch and Data Connection Report Record Revenue

Data Connection Ltd (DCL) announced record revenues of $118.1 million for the fiscal year ending August 31, 2008, an increase of 15.4% year-over-year, making the company profitable for the 27th consecutive year.

The company's MetaSwitch division grew 22% compared to the same period last year, and now accounts for 78% of the total revenue. Growth was driven both by larger Tier 1 carrier deployments and continued expansion of the customer base, to a total of more than 400 service provider and 250 OEM customers.

"Clearly we and our customers are subject to the same macro forces as the rest of the economy," said Ian Ferguson, chairman and founder of Data Connection and MetaSwitch. "However, we are seeing benefits from the current slowdown as our carrier and OEM customers search out suppliers who can deliver clear and immediate positive impact on their bottom line. This is what we do, based on our reliability, exceptional customer support and service, quality engineering and innovation. While the future is less certain than ever, we see this fundamental value proposition continuing to drive strong growth through 2009." http://www.metaswitch.com

See also