An Ignoble Experiment

Check out The Contenders: Municipal fiber providers meeting or beating the incumbent competition.

This week, FierceTelecom takes a look at five contenders in the municipal broadband space. It wasn't easy to pick just five--a growing number of communities are taking on the broadband challenge, building out or planning fiber networks to serve residents and attract more businesses. But the cost of this buildout can be crippling for cities, some critics say. Is it worth the cost?

Municipal broadband advocates think so. The problem, until recently, was a relative lack of data on the actual benefit to communities.

But that data is beginning to roll in. Craig Settles, an analyst and municipal broadband advocate, partnered with Broadband Communities Magazine to survey a number of municipal broadband buildouts about the minimum amount of speed necessary to achieve successful results.

"About one-third say about 100 Megs is what people are seeing as baseline (in rural areas). There were a decent number of respondents for 1 Gig," he said.

Survey: "In your opinion, what's the minimum symmetrical (both download and upload) broadband speed your area needs by the end of 2015 to directly impact these outcomes?" (Courtesy of Craig Settles)

Funding is another issue for municipal broadband, but in his survey Settles found cities pursuing a range of options.

"Among these variations, conventional banks and institutional financing was the one where the most number of folks said they could see their community doing that," Settles said. "In second (place) was bond measures. That's interesting because both options have been discounted (in the past). Many still think communities have to raise taxes or create public-private partnerships."

Settles, who will present his survey results at the upcoming Broadband Communities Summit, also found that Google's move into Kansas City is generating additional interest in public-private partnerships.

"This survey had 49 percent of those surveyed saying 'we can get a group to invest money.' The upcoming announcement that Google is going into Austin (is driving) people in a lot of smaller communities to say, 'these guys aren't Google but they're here,' Settles said. "They see some significant advantage to having these networks in place."

Survey: "How has fiber broadband impacted (or how would you expect it to impact) these economic outcomes in your community?" (Courtesy of Craig Settles)

In our second installment of The Contenders, I take a closer look at five municipal broadband providers: pioneer provider Bristol Virginia Utilities, the city of San Leandro's private-public hybrid project, EPB Fiber in Chattanooga, the city of Wilson, N.C., and Lafayette, La.'s LUS Fiber. Although detailed data is still rolling in, it's already clear that municipal buildouts are having an impact on incumbent telcos and cable operators in these areas.--Sam

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Today's Top Stories

1. Level 3 promotes Jeff Storey to CEO, replacing company founder James Crowe

By Sean Buckley

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Download this solution paper that examines IPTV and video streaming solutions available today and soon to be.

Level 3 Communications (NYSE: LVLT) has appointed Jeff Storey as its new president and CEO, taking over from company founder James Crowe, who announced he would step down last month.

Storey (Image source: Level 3)

In addition to his new role, Storey has been nominated to be elected as a member of the company's board during its upcoming stockholders meeting that will be held on May 23.

While the board did not indicate whether the company would look at internal or external candidates, Storey is a logical candidate to succeed Crowe. One of the crowning achievements Story has led in his five-year tenure with the company as COO was its multibillion-dollar deal to acquire Global Crossing in 2011.

Storey, who began his career at Southwestern Bell Telephone (now AT&T (NYSE: T)), has had a long history of finding new telecom industry opportunities. During his tenure at Cox Communications, he was one of the founding members of Cox Business Services, one of the dominant players in the Ethernet services segment, for example.

"With 30 years of industry experience and his intimate knowledge of Level 3's customers, employees and operating environment, Jeff is the right executive to lead Level 3 into the future," Walter Scott, Jr., chairman of Level 3's Board of Directors, in a release announcing Storey's promotion.

Crowe, the company said in a release, will not be seeking reelection to the company's board at the annual meeting.

At the time Crowe said he would leave the company this year it was revealed that he had been talking about a CEO succession plan, adding that he "felt that this was the right time to leave the company as it has gained a more consistent financial footing."

The service provider won't release its Q1 2013 earnings until April 25, but in Q4 2012 it reported that revenue was up $1.59 billion year-over-year with strong gains in both its Core Network Services and Enterprise CNS divisions.

For more:
- see the release

Read more about: James Crowe, personnel changes
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This week's sponsor is ZyXEL.

Connectivity options have become the leading driver of high end TV sales, according to GigaOM Research, boosting the importance of HD media / IPTV streaming solutions and driving the upgrade cycles for home connectivity devices. So the growing tide of connected consumers can enjoy their entertainment even on the back porch.

2. NTT, AT&T, Verizon topped 2012's revenue charts, says Infonetics

By Sean Buckley

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NTT, AT&T (NYSE: T) and Verizon (NYSE: VZ), a new Infonetics report reveals, were the three dominant revenue generators in world's top 60 service providers.

"NTT, which passed AT&T as the top revenue-generating service provider in 2011, remains the number-one service provider in the world in terms of revenue and capital expenditures, and in 2012 it became the leader in terms of operating expenses as well," said Maria Zeppetella, market analyst manager at Infonetics Research and lead analyst on the report.

Despite NTT's lead, AT&T and Verizon continue to be strong domestic and global players.

AT&T reported in 2012 revenues of $127.4 billion with ongoing gains in next-gen consumer and business services such as Ethernet. It also made its boldest capex announcement in 2012 with the announcement of its $14 billion Project VIP initiative, which will expand both wireless and wireline capabilities.

Verizon, meanwhile, reported that 2012 revenues rose 4.5 percent to $115.8 billion. Like AT&T, it saw gains in its FiOS subscribers and IP-based business services such as cloud and Ethrernet.

Of course, AT&T and Verizon face some key challenges, especially on the business services side, due to the ongoing economic crisis in the U.S. and in Europe.

But one company that the telcos need to fear is Comcast (Nasdaq: CMCSA), which Infonetics says is "the only pure cable operator among the top 10 revenue generators."

For more:
- see the release

Read more about: Ntt, Business Service Provider
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3. AT&T ups its FTTH speed to 24 Mbps

By Sean Buckley

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AT&T (NYSE: T) is increasing the speeds for customers that are on its fiber to the premises (FTTP) U-verse network to 24/3 Mbps, up from 18/1.5 Mbps, according to a Broadband DSL Reports article.

While the service provider has been an advocate of fiber to the node (FTTN), it does offer FTTP-based services in some select locations, particularly in Greenfield housing developments.

One of the users in Broadband Reports' forums said that they were only told about the speed boost when they notified AT&T they were going to switch to Time Warner Cable (NYSE: TWC).

"I called to cancel U-Verse because Time Warner offers Docsis 3.0 speeds for far cheaper in the Austin area," the user wrote. "Uverse told me that select FTTH customers can now get 24/3 instead of the previous cap of 18/1.5."

What's interesting about the new tier is that FTTP can offer much higher speeds. Besides Verizon's (NYSE: VZ) 300 Mbps Quantum offering, Google Fiber (Nasdaq: GOOG) and municipal providers such as Chattanooga, Tenn.-based EPB Fiber are providing 1 Gbps.

As part of its Project VIP initiative, AT&T said it plans to deliver 45 and later 75 Mbps to users that are close to a VRAD on their FTTN network, and possibly its FTTP infrastructure, later this year via VDSL2 with bonding and vectoring.

Following Google Fiber's announcement in Austin, Texas, on Tuesday, AT&T quickly said it would offer a 1 Gbps service in the city without offering any specific timeline.

For more:
- Broadband DSL Reports has this post

Editor's Corner: Is AT&T's 1 Gig response to Google Fiber real or fantasy?

Special report: The Contenders: wireline companies challenging the status quo and poised for success

Read more about: Fttp, U-verse
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4. Lightower completes its $2 billion merger with Sidera

By Sean Buckley

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Lightower has completed its $2 billion merger with Sidera Networks, creating what the two providers claim will be one of the largest U.S.-based metro fiber providers.

With the merger complete, the combined company will be led by Rob Shanahan and retain the Lightower brand.

As a combined service provider, the new Lightower network will have over 20,000 route miles with over 7,500 on-net locations. In addition, Lightower's network connects more than 130 data centers, over 115 carrier hotels and central offices, 40 financial exchanges and 18 Lightower colocation centers.

Another added bonus of the deal is that Lightower will gain Sidera's 1,000 route mile network that is scheduled to be completed by the end of the year.

Leading the deal was Boston-based Berkshire Partners, one of Lightower's key investors. Meanwhile, Pamlico Capital, a significant Lightower investor, and ABRY Partners, a significant Sidera investor, will remain as investors in the new company.

The service provider, however, has not revealed other financial details.

Seeing that both Lightower and Sidera were born as the product of acquisitions themselves, the next question is what will be Lightower's next acquisition move?

Some possibilities could include Tech Valley Communications, DukeNet or even Lumos Networks (Nasdaq: LMOS).

By acquiring Tech Valley, Lightower could deepen its presence in upstate NY state and northern New England states such as New Hampshire. Tech Valley expanded its Northern New England and Canadian presence via its recent acquisitions of TelJet and New Hampshire-based segTEL.

With DukeNet, Lightower could establish a foothold in the Southeast, while Lumos could give them deeper presence in West Va. and other nearby states.

Lumos itself has been cited by Cowan and Company as a possible acquisition target given the traction it has made in the enterprise and wholesale markets.

Stopping short of revealing any other deals in 2013, Shanahan told FierceTelecom in a previous interview it will keeping a close eye on other assets that could add value to its network.

"There are other smaller independents that would be a good fit for Lightower/Sidera," he said. "We're going to have our organic growth strategy as well as acquisition opportunities for growth as well."

For more:
- see the release

On the Hot Seat: Rob Shanahan on merging Lightower, Sidera's futures

Related articles:
Lightower and Sidera come together
Lightower Fiber Networks and Sidera to merge in $2 billion deal
Sidera to supply managed 100G wavelength service to MetroCast
Sidera adds to 100 GB network in Chicago area

Read more about: Lumos Networks, Lightower
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5. Integra makes its 100G move with Ciena

By Sean Buckley

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