An Ignoble Experiment

AT&T (NYSE: T) and Verizon (NYSE: VZ) are facing new heat from the American Civil Liberties Union (ACLU) of Northern California, which has filed a sharedholder proposal over how they share information with government agencies.

Joined by other investors, the organization says it wants the two telcos to publish transparency reports detailing how often they share information with the U.S. or foreign governments and what type of customer information is shared.

ACLU co-filed the AT&T proposal with the New York State Common Retirement Fund and the Verizon proposal with Trillium Asset Management LLC, a Boston-based investment management firm.

Both proposals point out that reports on government data requests are published on a regular basis by Internet companies such as Google (Nasdaq: GOOG), Microsoft (Nasdaq: MSFT), Twitter, LinkedIn, Facebook, Yahoo! (Nasdaq: YHOO), and Apple (Nasdaq: AAPL). Alternatively, AT&T and Verizon have not said what kind of information they give to the government.

"As shareholders, customers, and citizens we deserve to know if phone companies like AT&T and Verizon are handing our personal information over to the government," said ACLU of Northern California Executive Director Abdi Soltani. "Secret, unchecked surveillance is antithetical to democracy, and the government is going too far."

The ACLU's proposals follow the wave of controversy over a request made by the National Security Agency (NSA) for Verizon Business to provide it with its daily call detail records. That order was issued shortly after the bombing at the Boston Marathon in April.

It was later revealed that the NSA's phone and data collection effort included AT&T and Sprint (NYSE: S).

For more:
- see the ACLU release

Read more about: Verizon, AT&T
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2. Transtelco enhances Mexico, U.S. networks with XC Networks acquisition

By Sean Buckley

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Transtelco has completed its acquisition of XC Networks, enhancing its fiber and wireless assets to serve its growing customer base in Texas and in Mexico.

Like Transtelco, XC Networks owns and operates a number of data centers, fiber networks, and fixed wireless services.

"The combined Network and enhanced Portfolio of Services accelerates Transtelco's growth and allows us to meet the growing demands of Enterprise and Carrier customers," said Miguel Fernandez, CEO of Transtelco, in a release.

Oppenheimer & Co. Inc. served as the financial advisor and placement agent for Transtelco, while MC Credit Partners LP and affiliates led and provided acquisition financing.

This acquisition is another step Transtelco is taking to grow its network inside Mexico and along the border in Texas. In January, the service provider completed the buildout of its metro fiber network in Mexico City, enabling it to address growing wholesale and enterprise service opportunities in a high growth Latin American country.

For more:
- see the release

Read more about: Acquisition, Fiber Network
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3. Google applies fiber broadband expertise in Kampala, Uganda

By Sean Buckley

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Google (Nasdaq: GOOG) has introduced Project Link, a new fiber-based broadband initiative targeting Kampala, Uganda that it says will allow any local service provider or ISP to get access to higher speed metro network connections.

Click here to view Project Link video. (Source: Google)

As an open access program, the network is currently available to connect local providers to long-distance fiber lines.

What the new program helps to address is the broadband divide in the country. While parts of the country have built undersea cables and new wireless networks, Google said it will be able to build metro fiber networks "in between these points."

Today, there are over a billion people in Africa, but only 16 percent of them are connected to the Internet.

"Project Link goes beyond basic access; it enables local providers to offer new mobile data plans or high-speed Internet for office buildings and universities, and support newer technologies as they come to market," Google said in a blog post. "For Kampala, we hope it's a foundation to support the needs of a new crop of entrepreneurs and innovators: the media-rich projects of a successful musician, fast connections for local hospitals, or new digital learning tools for students."

For more:
- see this blog post

4. Week in research: Colocation growth rises, but varies by geography; North American WDM market rises

By Sean Buckley

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Colocation growth varies by region: As more service providers roll out cloud services for their business customers, colocation capacity has continued to rise in various geographies, reports TeleGeography. In North America, colocation growth varied. While some markets such as Dallas, Seattle, and Toronto saw capacity increase 20 percent and 28 percent, in New York and Washington, D.C., two of the world's largest colocation markets by floor space, grew only 12 percent and 11 percent, respectively. Leading the European market was Paris, which grew 25 percent to 2.6 million square feet. Frankfurt, Zurich, and Moscow also reported colocation growth of 16-18 percent compounded annually. However, in London, colocation capacity increased by only 8 percent. Finally, in Asia colocation capacity grew 15 percent compounded annually in both Singapore and Mumbai, while in Hong Kong it grew 34 percent per year, due largely to sizable investments by a couple of service providers. But in Tokyo capacity increased only 4 percent annually over the past four years. Jon Hjembo, a TeleGeography analyst, said that while colocation providers have continued to increase capacity to meet potential demands, "vacancy rates fluctuate widely within metro areas." Post

North American WDM market rises up: Driven by ongoing deployments of 100G by major service providers, the North American WDM market grew almost 20 percent in the first nine months of 2013, says a Dell'Oro Group report. From a vendor perspective, Ciena (Nasdaq: CIEN) and Fujitsu led the market, growing 9 and 65 percent, respectively. Driven by customer wins at service providers such as Shentel and TeliaSonera International Carrier (TSIC), Cisco (Nasdaq: CSCO) and Infinera (Nasdaq: INFN) reported 1 and 22 percent growth. "Demand in North America for optical transport equipment has been really strong," said Jimmy Yu, vice president of optical transport research at Dell'Oro. "Market revenue for WDM equipment in North America has increased year-over-year for the past three quarters." Reflecting a similar forecast made by Infonetics, Yu added that "we do expect equipment sales to be softer in the current fourth quarter as service providers conserve their capital." Release

Competition, friendly regulation drives Latin America FTTx: Latin America's fiber market may be still relatively nascent, but a mix of competition and friendlier regulatory policies will drive growth of fiber-based broadband. According to a Pyramid Research report, FTTx will rise from 2.2 accounts in 2013 to 11.8 million in 2018. With the exception of Western Europe, the research firm said it expects FTTx accounts to expand at a 40 percent compound annual growth rate (CAGR). What's hindered FTTx growth are inefficient and unbalanced telecom regulations. In Mexico, the lack of local loop unbundling (LLU) and a ban on incumbent telcos like Telmex from selling IPTV services has required competitive providers to build their own fiber networks to provide broadband and TV services. Daniele Tricarico, analyst at Pyramid Research, said that "supply-push forces" such as regulatory frameworks that encourage fiber deployments and cable and wireless competition "are playing the decisive role in the growth of fiber broadband." He added that without the presence of these supply side factors, service providers "are less likely to make the substantial investments needed to offer fiber broadband service." Release

5. FairPoint expands broadband to 600 homes in Maine, New Hampshire

By Sean Buckley

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