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2013/04/16

| 04.16.13 | AT&T, CenturyLink, others do the broadband pricing shuffle

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April 16, 2013

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Editor's Corner:
AT&T, Verizon, and other telcos look to get the broadband price right

Today's Top Stories:
1. Sprint extends Ethernet reach into Spain via Interxion
2. Interoute invites Infinera to its 100G party
3. Time Warner Cable shutting down circuit-switched phone service on former Insight system
4. Report: AT&T, Verizon retain dominant spots in cloud market
5. Kordia sells off Orcon to Vivid Network-led investor group

Spotlight:
Is IPTV becoming an outdated term?

Also Noted:
NSA denies it will eavesdrop on U.S. citizens' e-mails; Nuro offers 2 Gbps in Tokyo Much more...

News From The Fierce Network:
1. Malone: ESPN could cost $20 monthly if cable breaks up bundle
2. Cox trademarks 'Simplify, Sync & Socialize'
3. Tier 1 operators say networks not shut down in aftermath of Boston explosions
4. More headlines...

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eBook | Advanced Advertising Revenue Set to Soar

Despite expanding advertising options, cable spots still remain the most popular. This eBook explores the growth and potential of new ad platforms, citing specific real-world examples. Download for free today.


Editor's Corner

AT&T, Verizon, and other telcos look to get the broadband price right

By Sean Buckley Comment | Forward | Twitter | Facebook | LinkedIn

Sean Buckley, FierceTelecomIn our new report, Comparing broadband pricing: where do AT&T, Verizon, Cincinnati Bell and others stand?, FierceTelecom looks at how U.S. broadband providers are pricing their consumer standalone broadband services.

Building broadband value is important not only for Tier 1 telcos that serve larger markets, but also smaller Tier 2 and 3 telcos that see broadband service as part of a bigger strategy to step outside their traditional voice-centric telephone company shells.

The price of broadband really depends on a number of factors, including access method (DSL or fiber to the home), speeds, bundles, and contract terms.

On the access end, we saw a noticeable gap between what a telco charges for DSL versus fiber to the home (FTTH) services.

Lumos Networks, a service provider that serves mainly smaller rural markets in Virginia, offers a 6 Mbps DSL service for $34.95, while the first tier of its Broadband XL FTTH service is $54.95 a month.  

The other factor is the bundle. While not all subscribers like or want bundles, many telcos will give users a discount on broadband service if they purchase their broadband service as part of a dual- or triple-play bundle.

AT&T offers a triple-play bundle with U-verse TV, its Max Plus 18 Mbps broadband tier, and a 250 minute wireline voice plan with 20 calling features for $109.99, while a standalone 18 Mbps offering costs $56 a month.

There is value in the broadband bundle, however, for both consumers and service providers alike.

A consumer can gain immediate savings on their monthly bill and have one source to call if they have a problem with their service, while a service provider increases ARPU.  AT&T reported in Q4 2012 that subscriber ARPU was $170 and Verizon saw FiOS average revenue per user of $150. Not far behind AT&T and Verizon was CenturyLink, which reported that more than "90 percent of its Prism IPTV subscribers also purchased broadband service" during the fourth quarter. 

Finally, there are the contract terms. To lure new subscribers and even those existing subscribers that want higher service, all of the service providers we profiled offer a promotional period typically of 6 or 12 months. At the end of that period, the price rises.

Cincinnati Bell offers its 20 Mbps Fioptics FTTH tier for $34 a month for a year. After the one-year trial is over, the price rises to $49.99 a month. Meanwhile, Windstream does raise its promotional broadband prices, but those prices will remain unchanged for the entire time that the user maintains its relationship with the service provider.

In our new report, we examine what all of the top U.S. service providers are offering for either standalone DSL or FTTH services. While this is our first report on broadband pricing, service providers will continue to evolve their broadband pricing schemes and bundled offerings to stay on competitive footing with cable. -Sean

Check out our special report, Comparing broadband pricing: where do AT&T, Verizon, Cincinnati Bell and others stand?

Read more about: Broadband, Subscriber Base

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Today's Top Stories

1. Sprint extends Ethernet reach into Spain via Interxion

By Sean Buckley Comment | Forward | Twitter | Facebook | LinkedIn

Sprint (NYSE: S) is extending its Ethernet service presence deeper into Europe by establishing a new point of presence (PoP) at Interxion, a carrier-neutral colocation data center provider in Madrid.

By establishing this relationship with Interxion, Sprint can quickly access the data center provider's broad range of carriers and ISPs while creating new opportunities for multinational customers that want to expand further into Europe. 

Interxion and Sprint are hardly strangers. Sprint previously established PoPs in Interxion's Dusseldorf, Frankfurt, Brussels and Vienna data centers.

Albeit a bit later to the Ethernet services game, Sprint has been expanding its Ethernet access capabilities to its growing MPLS service through its work with various access provider partners and data center providers. To date, it offers MPLS services in 157 countries and Ethernet access in 80 countries as well as in 147 cities in the United States.

Ethernet access services continue to be a priority for Sprint. In 2013, the service provider plans to continue building out existing markets with Ethernet while adding new markets in the United States, Asia and Europe.

Besides Ethernet, Sprint could use the latest data center expansion to extend its SIP trunking capabilities to more existing and new customers that are considering, or are in the process of, migrating away from TDM-based trunking services.

While known more for its wireless skills, Sprint's wireline growth efforts for large enterprises have gotten the attention of Gartner Group, which upped its profile from niche player to challenger on its latest Magic Quadrant for Global Network Service Providers.

For more:
- see the release

Related articles:
Gartner: Sprint's MPLS, Ethernet expansions advance its standing
Sprint's Q4 wireline revenues rise to $949 million sequentially on IP sales
Sprint finds utility in Ethernet access for growing IP/MPLS service
 

Read more about: Sprint, Business Services
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2. Interoute invites Infinera to its 100G party

By Sean Buckley Comment | Forward | Twitter | Facebook | LinkedIn

Interoute, a European cloud service platform provider, has chosen Infinera's (Nasdaq: INFN) DTN-X platform as its 100G platform of choice on its Pan-European network.

Having already deployed Infinera's DTN platform last October for 100 Gigabit Ethernet (GbE) services, Interoute's choice of the DTN-X or its 100G backbone is not all that surprising.

The service provider's network is far-reaching with connections in 102 cities and 30 countries with 21 dense city networks located in Europe's major business centers and nine subsea landing stations.

While the initial focus of the deployment is on 100G, the DTN-X can deliver 500Gbps long-haul super-channels based on its photonic integrated circuits (PICs).

"Infinera's solutions have enabled us to deliver anywhere from 10Gb/s to 500Gb/s capacity quickly and allows us to efficiently provision services, as the market dictates," said Jonathan Wright, vice president, Service Provider at Interoute, in a release about the deployment.

Complementing the network capacity, the DTN-X will give Interoute a common management system for end-to-end service delivery.

Being able to name Interoute as one of its DTN-X customers is another positive proof point for Infinera, which will announce its Q1 2013 earnings next Wednesday.

Since introducing the DTN-X, the Sunnyvale, Calif.-based vendor has won a number of high profile deals with a number of existing customers, including CenturyLink (NYSE: CTL). The telco is using the DTN-X to support its mix of video and cloud-based services, while supporting 100 GigE services for data center transport and end-user business customers that are requesting larger Ethernet pipes.

For more:
- see the release

On the Hot Seat: CenturyLink's Poll: We're ready to put 100G at the edge

Related articles:
Infinera Q4 revenues rise to $128.1 million with increase in Tier 1 carrier DTN-X deals
Infinera's DTN-X, DTN add OSMINE certification to gain appeal with Tier 1 users
Optical growth in 2013 driven by 100G, says Infonetics
Coherent optics and 100G - Top wireline technologies in 2013

Read more about: Interoute, 100G
back to top


3. Time Warner Cable shutting down circuit-switched phone service on former Insight system

By Steve Donohue Comment | Forward | Twitter | Facebook | LinkedIn

Time Warner Cable (NYSE: TWC) will pull the plug next month on a circuit-switched telephone service in Kentucky that It acquired from Insight Communications, according to an FCC notice.

The cable MSO is offering the approximately 700 customers on its cable system in Lexington who rely on the circuit-switched product the option of moving to its VoIP-based digital phone service or to another provider, according to the filing, which refers to the system as Insight Phone of Kentucky. Subscribers were mailed notices about the shutdown on March 18. The phone service will be discontinued "on or after" May 20, according to the FCC notice. 

The FCC said it set a deadline of April 29 for public comments about the shutdown of the circuit-switched phone service. It'll automatically grant the application on May 10 "unless the Commission notifies Insight that the grant will not be automatically effective," according to the FCC.

Time Warner Cable closed its $3 billion acquisition of Insight and its cable systems in Ohio, Indiana and Kentucky in March 2012. Insight co-founders Michael Willner and Sidney Knafel bought the controlling interest in IP video software firm Penthera Partners in September 2012.

For more:
- see the FCC notice

Related articles:
Time Warner Cable transitioning from Insight in Northern Kentucky
Willner recruits former Insight exec Melani Griffith for Penthera post
Insight founders Willner and Knafel buy IP video company Penthera
Time Warner Cable to drop NFL Network from Insight systems
WOW: Most Sigecom phone customers in Indiana have switched to VoIP

Read more about: Time Warner Cable
back to top


4. Report: AT&T, Verizon retain dominant spots in cloud market

By Sean Buckley Comment | Forward | Twitter | Facebook | LinkedIn

AT&T (NYSE: T) and Verizon (NYSE: VZ), according to Gartner's Magic Quadrant report on managed hosting providers in North America, have established themselves as key players in the segment.

Having built a broad presence in the U.S. and international markets with its set of private IaaS and colocation services, AT&T provides cloud and managed services out of 23 data centers in North America in addition to facilities in Europe and Asia.

The telco's depth and experience in providing managed hosting services continues to be a selling point for its large multinational corporation (MNC) customers that have complex enterprise application and hosting needs.

"AT&T is able to use its network as a differentiator for use cases where network access is a heavily weighted criterion, or where end-to-end service management with SLAs is required," Gartner wrote.

While AT&T won't release its Q1 earnings until next Tuesday, in Q4 2012  business services rose 0.6 sequentially from Q3 2012 to $9.1 billion with strong Ethernet, IP/VPN and hosting sales.

However, AT&T's one drawback, Gartner says, is that its operations processes "are heavyweight in nature."

"This level of operational rigor can be beneficial from the perspective of the long-term stability of environments and the management of the complexities of change and risk, but it quickly becomes burdensome when customers want to be more agile and to move more quickly," Gartner wrote.

Verizon, through the Terremark subsidiary it purchased in 2011, has also built a sizeable hosting, colocation and cloud business.

Like AT&T, it offers its set of public cloud IaaS and colocation services from 25 data centers located in North America, Europe, Asia, and Latin America.

Network depth and reach into key markets, particularly Latin America, is a key strength of Verizon and Terremark.

"Verizon Terremark is one of the few North American providers with strong Latin American capabilities, largely due to the company's NAP of the Americas peering hub in Florida, a key landing point for fiber routes from South America," Gartner wrote. "Verizon is able to use its network as a differentiator for use cases where network access is a heavily weighted criterion, and where end-to-end service management with SLAs is required."

Terremark has been a major revenue driver for Verizon at a time when its business revenues have suffered due to the economic issues taking place in both Europe and the United States.

In Q4 2012, Verizon reported that the sale of strategic services, including Terremark cloud and data center services, security and IT solutions, and Ethernet, increased 5.3 percent compared with Q4 2011 and represented 54 percent of global enterprise revenues.

But like AT&T, Verizon Terremark is not without its flaws.

"Although the integration of legacy services has been completed, Verizon Terremark has yet to consolidate all its service offerings in a single portal. This means users have to sign into different portals to manage different infrastructure stacks," wrote Gartner.

For more:
- see Gartner's report

Related articles:
Savvis takes top cloud ranking in Gartner study
AT&T sees consumer services grow to $5.5 billion in Q4, driven by IP data
Verizon FiOS lifts wireline consumer revenues to $14 billion in 2012

Read more about: Managed Services, Terremark
back to top


5. Kordia sells off Orcon to Vivid Network-led investor group

By Sean Buckley Comment | Forward | Twitter | Facebook | LinkedIn

New Zealand's Kordia has sold its Orcon residential ISP operations to a group of private investors led by Vivid Networks director Warren Hurst for an undisclosed amount.

Hurst, according to a report in Computerworld, will become a director with a 48 percent stake in the company. The remaining 52 percent piece of the company will be held by a legal nominee company.

Although he would not reveal the names of the other investors, Hurst said they include a group of smaller New Zealand investors that previously invested in other telecom companies and "and the wider ICT area in general."

Orcon is focused on providing residential services to about 56,500 subscribers in New Zealand.

Kordia began negotiations with Hurst, who is listed as a shareholder in Semple investments which registered the name Orcon Holdings Limited in February, last month.

Hurst said that they will announce a new CEO to run Orcon soon and that all of Orcon's staff will remain with the new company. Under the new structure, the Vivid Networks will be integrated into the Orcon business and the new company will take on the Orcon name.

Orcon, which was acquired by Kordia in 2007, was integrated into one common brand called Kordia New Zealand last October.

By selling off Orcon, Kordia's CEO Scott Bartlett said they will be able to "reset our strategy to better focus on delivering exceptional service to our business customers."

For more:
- Computerworld has this article

Related articles:
Kordia, Orcon integrate to become Kordia New Zealand
New Zealand government's UFB network passes 100,000 homes
New Zealand's TeamTalk makes $34.7M bid for Farmside
Vodafone's TelstraClear acquisition gets New Zealand regulatory approval

Read more about: Acquisition, Kordia New Zealand
back to top


Also Noted

TODAY'S SPOTLIGHT... Is IPTV becoming an outdated term?

Jim Barthold, FierceIPTVAlthough it initially represented the notion of telcos delivering an alternative TV service to compete with cable, IPTV, much like the term CATV, is no longer accurate. Jim Barthold, editor of FierceIPTV, says that IPTV "is becoming only a fraction of what service providers are delivering across their IP networks." Read more

Wireline news from across the web:

@FierceTelecom RT @shiralevine: Bell Canada: Policy platform is useless without data to make decisions about #Policycontrol | Follow @FierceTelecom

> The U.S. National Security Agency denied that the $1.2 billion data center it is building in Utah will be used to eavesdrop or monitor U.S. citizens' e-mails. Article

> Verizon's MERIT Hazmat team is celebrating 20 years of service as it gets ready to host a series of disaster recovery and hazmat exercises in the Dallas metro area. Release

Cable News

> Dish Network's $25.5 billion bid to acquire Sprint could help it compete with the quadruple-play bundles marketed by Comcast, Time Warner Cable, Verizon and other pay TV rivals. Article

> CBS Corp. has named former Fuse and CTV executive Brad Schwartz to the president of entertainment and media for TV Guide Network. Article

IPTV News

> RigNet, a company that provides managed remote communications solutions to the oil and gas industry, is collaborating with SnapTV to deliver IPTV to offshore drilling rigs. Article

And finally … Nuro, a Sony-backed ISP, is offering a 2 Gbps FTTH service in Tokyo for about $50 a month. Article

News From The Fierce Network:

> Fuel cells could raise outage management efforts Post
> Microsoft plots expanded Xbox capabilities Post

Webinars

> Creating new business opportunities with customer data - Thursday, May 16, 2pm ET / 11am PT

It's no secret that wireless operators have a lot of interesting data on their customers, but privacy concerns have always kept operators from profiting from that data. Join us to discuss how operators can leverage their customer data, while still protecting customer privacy. Register Today!

Events

> Competitive Carriers Global Expo - April 17-19 - New Orleans

CCA is the premier trade show and conference for the competitive mobile ecosystem and brings together decision-makers for networking, learning and sharing best practices. CCA is the nation's leading association for competitive wireless providers. To register www.ccaevents.org.

> Fierce Innovation Awards 2012 Live Announcement of this Year's Winners - Now Available On-Demand

Please join Jason Nelson, Publisher of FierceWireless, FierceTelecom, and FierceCable as we announce the winners of the Fierce Innovation Awards 2012. Click here to RSVP today.

Marketplace

> eBook: Smarter Service: The Contract Center of the Future

This eBook explores the challenges facing traditional contact centers and the benefits of deploying the contact center of the future. You'll find links to further resources on the final page. Download today.

> eBook: How to Get a Return on Knowledge in a Big Data World

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> Whitepaper: VoLTE: Why, When and How?

This whitepaper will argue that VoLTE creates a significant opportunity for operators, but warns that the evolution from existing voice services will place before them a number of serious challenges. Read More.

> Research: How to Unlock Knowledge from Big, Unstructured Data to Improve Customer Service

Learn how to unlock knowledge trapped in silos and systems and read how advanced enterprise search technology can put your organization's collective knowledge in the hands of your service reps. Watch your service performance improve and customer satisfaction soar. Download Now!

> eBook: Advanced Advertising Revenue Set to Soar

Despite expanding advertising options, cable spots still remain the most popular. This eBook explores the growth and potential of new ad platforms, citing specific real-world examples. Download for free today.

> Whitepaper: Cisco Small Cell Solution: Reduce Costs, Improve Coverage

Address the challenge of mobile service coverage and expand network capacity with the Cisco Licensed Small Cell Solution. Using small cells, service providers extend voice and data services to mobile subscribers while offloading traffic. Read this whitepaper today.

> Subscriber Data: Creating New Opportunities in a Competitive Market

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> eBook: eBook | Avoiding the Pitfalls of Android Fragmentation

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