Today's Top Stories Windstream (Nasdaq: WIN) is the latest service provider to ask the FCC to take a closer look at AT&T's (NYSE: T) proposal to eliminate discounts for five-year and longer term plans for its TDM-based special access services. Echoing comments made by other CLECs such as cBeyond (Nasdaq: CBEY) and tw telecom (Nasdaq: TWTC) to the regulator, Eric Einhorn, senior VP of government affairs for Windstream wrote in a letter to the FCC that if AT&T's plans move forward it "would be forced either to pay the higher three-year-term rates or purchase the closest bandwidth Ethernet equivalents, which, as discussed below, are frequently not substitutable." Operating both a traditional ILEC and CLEC via its purchase of NuVox and Paetec, Windstream must purchase AT&T's TDM facilities to serve its growing base of business customers. "Despite investing billions of dollars in recent years to expand and upgrade its network throughout its incumbent (ILEC) and competitive (CLEC) local exchange areas, Windstream's substantial CLEC operations still rely on AT&T's ILEC facilities for last-mile access to serve consumers in AT&T operating territories," Einhorn wrote in a letter to the FCC. "In many cases, it is not economically feasible for Windstream, or any other competitive provider, to extend its non-incumbent facilities over the "last-mile," especially when addressing single-tenant buildings." A big driver in AT&T's reasoning is that they are transitioning its network to IP by the year 2020. As part of that migration, AT&T will offer IP and fiber-based services such as Ethernet. However compelling fiber-based Ethernet services are, the reality is that they are not widely available. "Circuits provided through AT&T's special access tariff remain critical to CLECs' ability to provide competitively-relevant alternatives to AT&T because Ethernet is not fully substitutable," Einhorn wrote. "As an initial matter, Ethernet is not ubiquitous--in particular, many single-tenant buildings are not served by fiber. While AT&T "offers" to construct fiber to such locations, its special construction charges are exorbitant, and are sometimes further inflated by unexplained charges that can increase such already high quotes by more than 50 percent." In addition to not being widely available, fiber-based 10 Mbps Ethernet services aren't appropriate for every business customer. "Low-bandwidth customers in single-tenant buildings--which often are small businesses--instead typically purchase service in the capacity range of 2 to 5 Mbps, because DS1 pricing at five-year and longer terms is far more favorable than Ethernet pricing," Einhorn wrote. "AT&T's recent action suggests that the company effectively is seeking to increase the prices charged to these customers in single-tenant buildings, by raising prices for their special access services and ultimately driving them to a more expensive Ethernet offering." If AT&T is permitted to eliminate longer-term plans, service providers like Windstream would have to pay "the higher three-year-term rates or purchase the closest bandwidth Ethernet equivalents." Thus far, the FCC has not publicly responded to AT&T's request. Following protests from other providers, AT&T decided to delay making a decision as it talked to its special access customers to address their concerns. In September, the regulator released its revised data request on the Report and Order and Further Notice of Proposed Rulemaking providing instructions covering special access. It will use it to see if it has to make any changes to its pricing flexibility rules. For more:
- see the FCC letter
Related articles:
AT&T responds as Wheeler sets pace for TDM to IP transition
Sprint, other competitive carriers rail against AT&T's special access rate increase Read more about: FCC, AT&T
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Walter Scott, Jr., the chairman of Level 3 Communications' (NYSE: LVLT) board of directors, announced he will retire when the service provider holds its annual stockholder meeting next May by not standing for reelection. Since 1979, Scott served as the chairman of Level 3 and its predecessor Kiewit Diversified Group Inc. (KDG), a subsidiary of Peter Kiewit Sons', Inc. (PKS), 100-plus year old construction, mining, information services and communications company. Taking Scott's place will be James O. Ellis, Jr, who has been a board member since March 2005 and is the chairman of the Board's Classified Business and Security Committee and a member of the Nominating and Governance Committee. A retired U.S. Navy admiral, Ellis is also currently a member of the Board of Directors of Lockheed Martin Corporation, Dominion Resources, Inc. and Inmarsat PLC. Scott's impending departure from the company is part of an ongoing transition of its management team and its ongoing movement to become profitable. The biggest change came last April when the company appointed Jeff Storey as its new president and CEO. Storey took the reins over from company co-founder James Crowe, who announced he would step down in March. For more:
- see the release Special report: The 25 Most Powerful People in U.S. Wireless and Wireline 2013
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Level 3 adds space to Bogota data center to accommodate cloud growth
Level 3 expands Latin America fiber, Ethernet network to accommodate surging business growth
Level 3 expands CDN footprint in EMEA, Latin America, Asia
Level 3 CNS revenues climb to $1.4B, helping narrow losses Read more about: Level 3 Communications
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AT&T (NYSE: T) continues to make headway with the fiber to the building (FTTB) portion of its Project VIP initiative, lighting up 232 multi-dwelling units (MDUs) in Nevada and San Jose, Calif. In Nevada, the telco has installed fiber in 32 buildings. As a result, its suite of fiber-based services, including Ethernet and IP/VPN, are now available to over 600 business customer locations. Through its Project VIP initiative, the telco has invested $110 million in Nevada to expand the reach of its on-net fiber building footprint and its consumer U-verse network. Over in San Jose, the service provider installed fiber to over 200 MDUs, making fiber-based broadband services available to more than 5,000 business customer locations. Besides San Jose, the telco completed a fiber build to over 450 multi-tenant office buildings throughout the San Francisco metro area earlier this month. California has been a big investment target for AT&T. The service provider plans to invest $1.5 billion in the state to bring fiber to 800 buildings and serve a total of 30,400 businesses. AT&T's FTTB initiative is quite extensive. By the end of 2013, it plans to pass 250,000 business customer locations and 1 million additional business customer locations by the end of 2015 with fiber. While AT&T continued to see revenue compression in the business services market due to a challenging economy and declines in its legacy Frame Relay and ATM services, strategic Ethernet and IP VPN business services grew 15.7 percent in Q3 2013 vs. Q2 2013. For more:
- see the Nevada release
- and the San Jose release Special report: AT&T's $14B Project VIP: breaking out the business service, U-verse numbers
Related articles:
AT&T U-verse revenues rise 28 percent to $3.1B, subscribers top 10 million
AT&T extends fiber to 450 San Francisco buildings
AT&T extends fiber into 107 buildings in Ohio through Project VIP initiative
AT&T lights 93 North Carolina buildings with fiber as part of Project VIP initiative Read more about: FTTB
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Cincinnati Bell (NYSE: CBB) has appointed company veteran David L. Heimbach as its new chief operating officer, reflecting the latest in several shifts in its management team.  | | Heimbach (Source: Cincinnati Bell) | In his new role, Heimbach will oversee day-to-day operations in the areas of network operations, information technology, call centers and field operations in addition to overall responsibility for the company's performance in the consumer wireline, small business and carrier markets.
Heimbach brings plenty of experience at the regional telco to his new post.
A 14-year company veteran, Heimbach previously served as senior vice president and general manager of Business & Carrier Markets from 2010 to 2013 before being named chief operations officer at Cincinnati Bell Telephone Company in March 2013. His appointment comes at a time when Cincinnati Bell has been refreshing its top management team. In addition to Heimbach, fellow company veteran Leigh R. Fox became CFO. Earlier, Ted Torbeck took over from Jack Cassidy as president and CEO. The regional telco is focusing more of its attention on providing fiber-based broadband services to its consumer and business wireline customers. In Q3 2013, the telco reported that its Fioptics fiber to the home (FTTH) service was once again a key driver in its wireline revenue portfolio, rising 48 percent to $26 million. For more:
- see the release Related articles:
Cincinnati Bell's Cassidy retires, telco adds two board members
Cincinnati Bell's Fox to take over CFO reins from Freyberger
Cincinnati Bell's Fioptics revenues jump 48 percent to $26M Read more about: Cincinnati Bell
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The National Football League could use the Internet to stream live games, but whether the nation's most popular sport moves to virtual distribution is "completely a business issue," Google (Nasdaq: GOOG) Chairman Eric Schmidt said Friday. Schmidt noted at the Paley International Council Summit in New York that even wireless carriers have the capabilities to stream live football games. "I'm also very impressed that Verizon (NYSE: VZ), and AT&T's (NYSE: T) tough competition between them has produced 20,30 megabits brought to your mobile devices. That's an extraordinary shift in [the last] five years," he added. Schmidt's remarks, in response to a question from BTIG analyst Rich Greenfield, came three months after Google CEO Larry Page held a meeting with NFL Commissioner Roger Goodell that reportedly included discussion about Google acquiring the "NFL Sunday Ticket" subscription video package. DirecTV's (Nasdaq: DTV) exclusive "Sunday Ticket" distribution contract, which costs it about $1 billion annually, expires at the end of the 2014 season. Greenfield said in a research note on Friday that it's only a matter of time until Google or another major tech company acquires a "meaningful package of sports rights." "Schmidt's comments make us believe the only issue standing in the way of a virtual MVPD [multichannel video programming distributor] becoming a reality is the capital to launch (guaranteeing subs to programmers and start-up marketing costs)," Greenfield added. In June, Verizon Wireless signed a deal with the NFL that will allow its subscribers to watch live games produced by Fox and CBS in their home markets, in addition to playoff games and the Super Bowl, beginning in 2014. But no tech company has signed a deal yet with the league that involves exclusive rights to football games. For more:
- see Greenfield's note (reg. required) Related articles:
Bornstein: NFL could sell games on another network or the Internet
NFL to stream games to Verizon Wireless smartphones
Verizon signs FiOS Quantum marketing pact with NFL team
DirecTV floats possibility of sharing NFL Sunday Ticket rights with cable operators
NFL reportedly talking to Google about 'Sunday Ticket' rights Read more about: Google, nfl
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Verizon, AT&T, Sprint and T-Mobile ramp up their wireless holiday advertising campaigns
The Ethernet services pricing conundrum
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