Today's Top Stories Cisco reported that while the service provider segment is improving, weak demand for its products drove orders down 5 percent year-over-year in fiscal third-quarter 2014. Its three main segments--switching, NGN routing, and service provider video--all declined during the quarter. Switching and NGN routing revenues were $3.4 billion and $1.94 billion, while service provider video was $961 million. One bright spot in the product mix was the ASR 9000 platform, where revenue grew 59 percent year-over-year. Meanwhile, the 6000 and CRS-X also grew above expectations, but Cisco cautioned they are still early in their ramp-up phase. From a geographic perspective, the company said orders strengthened in the U.S. and European markets during the quarter, led by the commercial and enterprise segments and demand for its high-end routing platforms, data center and security products. Americas revenue was $4.93 billion, while EMEA and Asia Pacific revenue was $2.5 billion and $1.42 billion. However compelling its gains were, emerging markets saw a number of challenges, with orders down 7 percent from the previous quarter. Overall company revenues were $11.5 billion, down 5.5 percent. Fiscal third-quarter profit also fell 12 percent to $2.2 billion, while EPS declined 8.7 percent to 42 cents. After operating cash flow of $3.2 billion in the quarter, Cisco ended April with total cash of $50.5 billion. Cisco said it was pleased with the better-than-expected results. Looking toward FY Q4 2014, Cisco expects total revenue to decline up to 3 percent or rise up to 1 percent from a year earlier. Shares of Cisco were listed at $24.35, up $1.54 or 6.77 percent, in Wednesday morning trading on the Nasdaq stock exchange. For more:
- see the earnings release Special report: Wireline telecom earnings in the first quarter of 2014 Related articles:
Cisco's Q2 revenue declines 8 percent, but sees bright spots in security, data centers
Dell'Oro: Alcatel-Lucent, Cisco, Juniper edge routers to benefit from wireless backhaul growth
Cisco, Ontario government ignite high tech job creation
Cisco lowers its revenue, earnings estimates Read more about: Cisco, first quarter earnings 2014
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The FCC voted today to pass Chairman Tom Wheeler's proposal for a new net neutrality framework, beginning what will be a multiple-month process. The FCC seeks comments on a number of key issues that are at the heart of the net neutrality topic. Service providers would have to provide a minimum quality for any service, while adhering to "commercially reasonable" standards. The regulator wants comments on what those standards should be, including whether service providers should not be allowed to strike deals with content companies like Netflix to pay for better service on their network. In addition, the FCC wants to create greater oversight for service providers, proposing an ombudsperson who would represent Internet users and examine possible violations of the order. One of the controversial elements of the FCC's proposal is to reclassify Internet service providers as Title II services subject to common carrier regulation. Wheeler has maintained he will apply Title II if any service provider abuses its market power. However, Internet industry advocates say that applying Title II could have various repercussions. "Although the intent in pushing reclassification is to make the Internet more open and free, in reality such a move could backfire badly," wrote Eli Dourado, a Mercatus Center research fellow in a new blog post. "Activists don't seem to have considered the effect of reclassification on international Internet politics, where it would likely give enemies of Internet openness everything they have always wanted." Even those FCC commissioners who did vote for the proposal expressed their misgivings about the NPRM. "I would have done this differently. I would have taken the time to consider the future," said Democratic Commissioner Jessica Rosenworcel during the vote. She added that the FCC should have taken more time to vote on the rulemaking. "I believe the process that got us to rulemaking today was flawed," she said. "I would have preferred a delay." Republican commissioners Ajit Pai and Michael O'Reilly voted no on the proposal. Wheeler emphasized that he was not going to create rules that would enable paid prioritization of a content provider's traffic over a broadband provider's last mile network. "Nothing in this proposal, by the way, authorizes paid prioritization, despite what has been incorrectly stated today," he said. "Personally, I don't like the idea that the Internet could be divided into haves and have-nots, and I will work to see that does not happen." Wheeler added that prioritization would not enable a service provider to degrade or throttle a consumer's Internet connection speed. "When a consumer buys a specified bandwidth, it is commercially unreasonable ... to deny them the full connectivity and the full benefits that connection enables." Now that the proposal has passed, it will move into a 60-day public comment period, followed by 60 more days for response. For more:
- hear the FCC webcast Related articles:
FCC's Wheeler realigns net neutrality proposal, promises ISPs can't give preferential treatment
Report: FCC's proposed middle ground net neutrality rules come under fire
FCC to rework existing net neutrality rules, won't appeal Verizon ruling
FCC loses neutrality battle as court strikes down rules Read more about: Net Neutrality
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Level 3 has been awarded a nearly 300-site contract to provide network services for the federal judicial system via the General Services Administration (GSA) Networx Enterprise contract. Under the terms of the agreement, the service provider will deliver direct connections to each of the designated sites, including the U.S. Courts of Appeals, U.S. District Courts, U.S. Bankruptcy Courts and U.S. Courts of Special Jurisdiction, via IP VPN, optical wavelength and Ethernet access services. One of the key features of the expanded WAN architecture is that Level 3 says it will "maximize network routing options and redundancy for nationwide communications traffic between all U.S. Courts sites to ensure greater reliability, security and operating efficiencies." In addition, Level 3 will provide complementary SIP trunking voice services, which it says will deliver enhanced service options and ensure greater continuity of operations and disaster recovery (COOP/DR) in the event of a natural disaster. Winning this contract is important for Level 3 as it continues to ramp up its enterprise sales in the U.S. market. During the first quarter, the service provider reported that Enterprise Core Network Services (CNS) revenue rose 11 percent year-over-year to $962 million. For more:
- see the release Related articles:
Level 3, Digital Realty provide direct connection to Amazon, Microsoft cloud services
Level 3 gets ISO certification for security services in Latin America
Level 3 grabs two new multi-national enterprise wins
Level 3 connects network to 50 U.S. Air Force sites Read more about: Level 3 Communications
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Lumos Networks has bolstered its business services sales power, announcing that it has named Glenn Lytle as the new vice president of Enterprise Sales.  | | Lytle | Reporting directly to Lumos' Chief Revenue Officer Joseph McCourt, Lytle comes to the telco from Comcast Business Services, where he led the cable MSO's movement into the larger multi-location business market for the past six years. Similar to CTO Craig Drinkhall, Lytle spent eight years at Telcove, serving as the competitive carrier's general manager for its central Pennsylvania, North Carolina and Virginia markets.
Lytle comes to Lumos at a time when it is enhancing the reach of its network to capture more enterprise customer opportunities. The service provider added 53 fiber route miles and now has a fiber route mile network of 7,467 as of the first quarter of 2014. In addition, Lumos added 43 on-net buildings in the quarter to reach a total of 1,387. Besides enterprise services, Lumos has raised its target for connecting its fiber to data centers from 20 by the middle of 2015 to 20 by the end of 2014. One of Lytle's initial challenges will be in turning around the Enterprise Data and Transport segments revenue fortunes, which declined sequentially to $10.5 million and $11.1 million from $10.6 million and $12.1 million, respectively. This will continue to be an issue as more of its customers migrate off legacy platforms to the next-gen service platforms. For more:
- see the release Related articles:
Lumos adds 633 cell sites in Q1, reiterates year-end targets for more fiber to sites
Lumos employs Cisco for its Project Ark wireless backhaul initiative
Lumos to add 200 wireless towers to fiber network in 2014
Lumos Q4 strategic data revenue jumps 11.3% to $31.2M, offsets legacy voice losses Read more about: Carrier Ethernet, Business Services
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Comcast's (NASDAQ: CMCSA) proposed $45 billion acquisition of Time Warner Cable (NYSE: TWC) is not necessarily expected to punch up the volume of dealmaking this year, but it is expected to boost prices, according to a new study by PricewaterhouseCoopers. The volume of dealmaking over the last year actually dropped a bit, according to PwC. However, the average size of those deals grew by 80 percent, with the 209 deals announced in the first three months of this year valued at $74 billion compared to $41 billion to start last year. PwC attributed this to four megadeals including Comcast-TWC, Facebook's (NASDAQ: FB) $19 million acquisition of WhatsApp, Lenovo's purchase of Motorola Mobility, and Media General's purchase of LIN Media. Other mega-deals are expected including AT&T's (NYSE: T) possible acquisition of DirecTV (NASDAQ: DTV), which could reach $50 billion. Dish Network (NASDAQ: DISH) is said to be courting suitors and there are several wireless pairings that could come to fruition this year as well, experts said. So what's driving this renewed frenzy toward big deals? Goldman Sachs attributes it to CEO confidence. Bankers are having more dialogue with CEO about dealmaking than any time before 2007, when the wheels on the M&A bus started to slow down pre-recession, Gregg Lemkau, Goldman Sachs head of global M&A told Reuters. The Conference Board and PwC's measure of CEO confidence hit 63 in the first quarter, up from 60 in quarter. At the same time, a TD Bank survey of chief financial officers released on May 8 showed that nearly 60 percent of them are optimistic about U.S. economic growth this year, up from 46 percent in 2013. "While the Comcast/TWC deal was the trigger, the backdrop of a slow macro economy, new competitors, shifts in technology and consumer habits all come together and force the need for more scale," Highmark Capital Management fund manager Todd Lowenstein told Bloomberg. Competitors understand that scale matters, and the Comcast-TWC merger is a perfect example of that. The evolution of delivering video via the Internet is forcing all media businesses to reevaluate their business models or seek mergers, Walt Piecyk, an analyst at BTIG LLC, told Bloomberg. Competitors such as DirecTV and Dish Network Corp. recognize that a combined Comcast-Time Warner Cable will have the ability to move aggressively into delivering video through the Internet, which may soon supplant cable and satellite technologies, Piecyk said. That evolution is forcing incumbent businesses to evaluate their models, or seek mergers, Piecyk said. For more:
- The Wrap has this story
- Reuters has this story
- CNN Money has this story
- Bloomberg has this story Related articles:
The rise and rise of OTT messaging apps
Multiscreen still a challenge for VOD-focused pay-TV operators Read more about: ComcastTWC, DirecTV, Dish Network
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