An Ignoble Experiment

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CenturyLink (NYSE: CTL) is looking to disrupt the public cloud services industry dominated by Amazon by offering a series of new pricing plans and support elements as part of a broader move to illustrate the growing set of capabilities it built organically and through key acquisitions like Tier 3.

Set to go live in mid-June, the service provider said it is reducing cloud-based CPU, RAM and block storage pricing by 60 percent and bandwidth pricing by 50 percent. In particular, it will charge $0.05 GB out/per month.

"CenturyLink over many years gets this concept of bringing value to customers by reducing price," said Andrew Higginbotham, senior vice president, cloud and technology, at CenturyLink Technology Solutions, in an interview with FierceTelecom.

Besides the pricing, the service provider is also introducing a series of support bundles. Customers can choose from three support tiers, select from a list of its most popular NOC service items, or work with CenturyLink's professional services team.

All of these new elements are supported by its growing base of data centers. To date, the service provider has a total of 56 data centers, including 16 nodes offering its public cloud product.

Higginbotham said the company is seeing "not only seeing new customers come in, but also CenturyLink customers as well as legacy Savvis customers moving onto this platform."

Although much of CenturyLink's key technical talent resides in its Monroe, La., location, much of the cloud services team resides in Seattle, where the telco established Cloud Development Center. Housing the cloud team there makes sense because it is the place where other dominant players like Amazon, Google and Microsoft also reside.

Following recent expansions of the public cloud capabilities into Toronto and London, CenturyLink is looking to expand into Singapore, with other possible sites in either Australia or Japan.

However compelling CenturyLink executives believe their new pricing regime is, John Dinsdale, a chief analyst and research director at Synergy Research Group, says this is an inevitable move they have to make in order to stay competitive with Amazon (NASDAQ: AMZN), Google (NASDAQ: GOOG) and Microsoft (NASDAQ: MSFT).

"The public IaaS market is essentially becoming commoditized," he said. "While there may be some additional selling points, a lot of buying decisions are being based on a pure price-per-unit basis – and it is very easy to get comparative pricing from the various cloud operators. Companies like CenturyLink have little option but to respond to pricing initiatives from AWS (and Google and Microsoft) if they want to aggressively grow their IaaS revenues."

For more:
- see this blog post

On the hot seat: CenturyLink's Wyatt: It's about driving value with a broad solution set

Read more about: public cloud
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This week's sponsors are Neustar and Spirent.

While the market for data-driven telecom analytics is expected to grow, service providers are still in the learning phase with data analytics. FierceTelecom explores the different tools and techniques that operators can use to analyze and mine their data. Download today.

2. TDS furthers broadband, business growth strategy with $261M BendBroadband acquisition

By Sean Buckley

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Telephone and Data Systems (TDS) has added another element to its growing cable broadband and business strategy by reaching an agreement to acquire Bend, Oregon-based cable operator BendBroadband for $261 million.

Upon completion of this deal, TDS will immediately expand not only its broadband and video reach, but also its managed services capabilities for business customers.

Through the acquisition, TDS will gain a provider whose network passed about 79,000 homes and businesses, with approximately 36,000 video subscribers, 41,000 high-speed broadband subscribers and 22,000 digital voice subscribers.

In addition to the broadband and fiber assets, TDS will gain two other affiliated companies: BendBroadband Vault, a Tier III data center providing colocation and managed services, and Zolo Media, a cable advertising and broadcast business.

Providing managed services is another key angle of this acquisition. Similar to its earlier purchase of Baja Broadband, TDS can also extend its managedIP services via its OneNeck subsidiary to regional businesses in Oregon. It already has begun extending business services such as its security products PC Defender and online backup to the existing Baja Broadband business customer base.

"We will leverage BendBroadband's considerable expertise across our growing cable business, driving residential and commercial growth by delivering competitive broadband, video and managed services over the high-capacity network," said David A. Wittwer, president and CEO, TDS Telecom, in a release.

After last year's Baja deal, TDS' President and CEO LeRoy Carlson told investors in February that the telco would look at similar details in the future. At that time, Carlson added that if Comcast (NASDAQ: CMCSA) was successful in purchasing Time Warner Cable (NYSE: TWC), his company would consider buying up regional assets that the proposed new company would be required to divest in order to get approval of the mega deal.

After meeting customary regulatory approvals and other conditions, TDS said the deal is expected to close in the third quarter of 2014.

For more:
- see the release
- here's FierceCable's take

Read more about: Bendbroadband
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3. HickoryTech's fiber and data revenue jumps 6 percent to $17.7 million, eases legacy losses

By Sean Buckley

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HickoryTech reported that its fiber and data segment was once again the shining star, with revenues rising 6 percent year-over-year to $17.7 million due to an increase in high capacity fiber and data sales to both retail businesses and wholesale carrier customers.

Business revenues rose 9 percent to $9.6 million, while wholesale rose 2 percent to $7.8 million. Fiber and data segment net income was $1.7 million, an 81 percent year-over-year increase.

"We continue to execute on our strategy and were able to grow fiber and data revenue 6 percent in first quarter as we expanded our fiber distribution networks and built fiber to additional business customers," said John Finke, HickoryTech's president and CEO, in the earnings release. "We delivered four consecutive quarters of consistent outcomes and growth in our fiber and data business."

However, the company saw declines in both its equipment and telecom segments.

Equipment segment revenue was $12.2 million, down 29 percent year over year. Likewise, equipment sales revenue was $10 million, down 35 percent compared to a year ago. HickoryTech said that equipment revenue tends to fluctuate quarter to quarter based on timing of sales and installation periods. One bright spot in the equipment segment was support services, which rose 19 percent from the first quarter of 2013 to $2.2 million.

Similar to other telcos, HickoryTech's telecom segment revenue dropped 2 percent to $14.4 million, a factor it attributes to legacy service declines primarily in network access and local service revenue.

Broadband service revenues grew 5 percent, offsetting part of the telecom revenue decline. DSL subscribers rose 4 percent and digital TV subscribers were up 8 percent, ending the quarter with a total of 21,178 and 11,788 subscribers, respectively. At the same time, competitive price compression is having an impact on broadband service growth rates.

Looking toward the rest of the year, the telco maintained its previous fiscal 2014 outlook that forecast revenue to be within a range of $189 million to $199 million. It also expects growth in business and broadband revenue to offset the majority of the declines in legacy telecom services.

Shares of HickoryTech were listed at $11.86, down 1 cent or 0.08 percent, on the Nasdaq stock exchange.

For more:
- see the earnings release

Special report: Wireline telecom earnings in the first quarter of 2014

Read more about: Service Revenues, Capacity Fiber
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4. FCC's Wheeler wants to eliminate municipal broadband barriers

By Sean Buckley

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FCC Chairman Tom Wheeler continues to tout his competition mantra with a call to challenge more than 20 state laws that prevent or discourage municipalities from building out their own broadband networks.

Two recent moves to ban muni broadband in Kansas and Georgia failed after local public protest. Meanwhile, Minnesota's HF 2695 explicitly bars any community from building a broadband network to serve their needs.

These laws have been driven by local cable operators and telcos like Time Warner Cable (NYSE: TWC), Comcast (NASDAQ: CMCSA), CenturyLink (NYSE: CTL) and AT&T (NYSE: T), which have been slow to expand broadband service.

Speaking at this week's NCTA trade show in Los Angeles, Wheeler said that the industry needs to find a way to "knock down public and private barriers to competition and avoid erecting new ones."

"I understand that the experience with community broadband is mixed, that there have been both successes and failures," Wheeler said. "But if municipal governments—the same ones that granted cable franchises—want to pursue it, they shouldn't be inhibited by state laws. I have said before, that I believe the FCC has the power – and I intend to exercise that power – to preempt state laws that ban competition from community broadband."

However compelling his intentions are to stop new bans on municipal broadband, Wheeler did not specify how he would address existing laws put in place.

An unnamed FCC representative told Ars Technica the agency does not know how Wheeler will address existing anti municipal broadband laws. "We will be taking up this issue in the technology transitions proceedings, and there should be an announcement about this in the next few weeks."

For more:
- see this blog post
- Ars Technica has this article

5. TDS Telecom's hosted and managed services revenue jumps 77 percent to $63.1M

By Sean Buckley

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