History Repeats Itself, Yet Again…
June 30, 2009
For those of you reading this blog with Enterprise interests, I apologize. I need to once again address the senseless efforts by non-ILEC carriers via the FCC when it relates to Forbearance filings.
I wrote about Forbearance Petitions extensively in the latter half of 2008–please visit the Telecom Straight Shooter Blog Archives for a refresher.
Today I read in the Wall Street Journal that–after being denied Forbearance Relief by the FCC in 2007–a federal appeals court has once again told the FCC that you were wrong in denying said Forbearance. This is not the first or last time the FCC has lost in court versus an ILEC at the urging of CLECs, if I were keeping count there has been scores of losses. The ILECs just might be undefeated.
This time Verizon won in court. They want relief to raise wholesale prices to those carriers that rent (leach) off of them in Boston, New York City, Philadelphia, Pittsburgh and Virginia Beach, Va. Take a look at the size of these markets – there is plenty of competition and that is what Verizon stated in their denied petition by the FCC in 2007. A few years later, lots of lawyer$, and what do we have? Go look at it again, Mr. FCC–and this time apply the standards under the
Communications Act of 1996 and as amended! History just repeating itself! Definition of insanity anyone?
Here is the bottom line since 1996: CLECs why are you fighting to give money to your largest competitor to rent their legacy copper facilities or special access as they deploy fiber optics you can’t have access?
Why do you enjoy funding your largest competitor and all those back office costs to “bond” with them? Why are you jacking up their IRR’s on legacy facilities to the benefit of the ILECs share owners and not yours? What is this OCD in repeating over and over and over the same arguments with the FCC only to get taken out to the wood shed for another butt whipping by the Federal Court?
For god sakes, you have had 13 years to figure out how NOT to do business with your largest competitor but somehow the legacy crack cocaine they have you on is irresistible.
I would like a few CLECs to go add up all their ILEC rental fee’s paid since 1996, lawyer fee’s for arguing with the ILECs, lawyer regulatory filing fee’s, fee’s paid to lobbyists, political party contributions, ILEC related back office capital & expense, cost of churn, the loss of goodwill when Ma Bell did not perform and you got the black-eye plus 6% annual interest. Now, look at this number and try to figure out how you could have spent the cash to compete differently with
Ma Bell and what your returns might have been using this cash as capital for hard, fixed assets that you own and hold on a balance sheet. And, oh yes, this disciplined approach would have required planned growth, not just top line growth like the Real Smart Guys on Wall Street advocated.
I don’t know of any rehab for OCD-related CLEComania that can’t get off the ILEC’s legacy crack cocaine. As every day goes by, and we are witnessing bandwidth exploding for real (not like Wall Street said back in 1999-2000 — remember those Real Smart Guys?), the ILEC legacy
infrastructure is not and can not keep up. Even crazy AT&T is rethinking U-Verse aka Fiber-To-The-Pedestal (FTTP) and Cable Companies remain in denial that coax is not robust enough to be competitive. Wireless is not fiber, it has its access niche in more remote areas.
So, with Verizon’s latest win on behalf of ILECs everywhere, it’s just history repeating itself once again.
It’s time to get off the hamster wheel and out of the cage the ILECs watch you conduct business from as their personal economic experiment of legacy return rates continues only to be accelerated by future/additional Forbearance Petitions being approved.
The only people making money out of this legacy model are Ma Bell, the lawyer$ and lobbyists.
Life is Funny…
June 25, 2009
Just a passing thought on CEO’s and CFO’s in the telecom business since the Communications Act of 1996 with Wall Street and Investment Bankers as a constant backdrop.
If you owned a restaurant, and the Chef burned it down once, would you hire that Chef again?
How about if the Chef burned your restaurant down twice?
I still wrestle with how CEO’s and/or CFO’s that have burned down multiple companies or the same company multiple times somehow keep showing up and getting yet another shot in the kitchen. Doesn’t anyone do a background check? Does anyone check to see if they went to Culinary School?
How about the financial people that continually back the Chef? Maybe a little investment in a fire suppression system would be in order first.
I know…everyone in America is a victim. The Chef can’t be responsible.
Then there are the Chefs that run great restaurants and don’t burn them down. But, they are too small of Cheftom to possibly handle a “too big to fail” restaurant.
And then there are the financial investor Chefs in the kitchen with the Chef “helping out” …
Life is funny.
All You Ever Do is Talk Talk…
June 23, 2009
I wrote a blog a while back about an experience I had meeting with a person who could speak for an hour and say virtually nothing. Nothing of value or substance, that is–just lots of words, grandeur and noise.
And now I see a video clip from the Beltway–talk about saying and or knowing nothing. You just won’t believe what you are hearing in this clip. And it concerns trillions of our tax dollars which are not accounted for … yes, that’s trillions with a “T.”
If this doesn’t get your blood boiling, nothing will.
The Beltway: The Disneyland of the North.
The Cat and the Rat
June 18, 2009
Though I try to steer away from politics in general (not that I don’t have a thought or two), when former AT&T Chairman & CEO monopolist Ed Whitacre’s name pops up as the next Chairman of GM, I have to say something.
This whole car thing…Ed’s appointment, including the Car Czar Rattner, is getting more and more bizarre.
Let’s start with America first, a habit I have of doing. We have an unenjoyment (unemployment) rate over 9%. Amongst the 9% of people not working in America, who want to work, we can’t find anyone else for these positions except Whitacre and Rattner.
Ed Whitacre was not nominated by the GM Management Committee. Ed Whitacre is not being voted upon by the shareholders. Ed Whitacre was appointed Chairman post-BK (chosen) by the Treasury Department! The same Treasury Department headed up by a guy named Geitner, an ex-Goldman Sachs hash slinger. The same Geitner socializing, I mean nationalizing, our banks to “save” them. Think TARP with strings attached and changing the rules, stress tests and other gimmicks.
President Obama just appointed his 16th Czar who is accountable to no one. This is the Salary Czar.
Wouldn’t you think that a Salary Czar might be against hiring Whitacre on? After all, Mr. Whitacre is living off of a $158 million AT&T pension … just like most other AT&T retirees.
Sure I know, he and other government-picked–I mean, independent–Board Directors will work for a dollar a year until things get better at GM. However, Ed Whitacre openly admits he knows nothing about the auto industry and has no experience manufacturing anything. So, at a dollar a year, I guess you get what you pay for. Even unenjoyment pays more than a dollar a year.
(Please don’t tell me how a Chairman is focused on strategy because you would be wrong — a Chairman’s primary duty, I think it is called a Fiduciary Duty, is to make sure all shareholder interests are represented at the table … emphasis on the word “all.” Many companies have separated the Chairman’s role from the CEO’s role for this exact reason – CEO focuses on strategy and execution; Chairman focuses on shareholder interests.)
Are we sure there is no other choice in the 9% unemployed that could use this job? A $158 million pension package … how does Ed get by? Really sorry to see a guy leave retirement to make ends meet. But social security being the mess it is in, can you blame him?
Now the Car Czar, Steve Rattner. Stevie has a reported net worth of at least $188 million, some say over $600 million. He is also building a small $18 million cottage on Martha’s Vineyard. Like our buddy Ed, I just don’t know how he makes ends meet.
In his role as Car Czar he is not accountable to anyone in terms of our Constitution–not even Ed. But if recent history is any indication of the future – if Ed and the Car Czar disagree — bye-bye Eddie!
Our Car Czar does have some history in the auto industry. In the recent past he invested into Cerberus Holdings. Yes– the Cerberus Holdings that took Chrysler private. Yes–the Chrysler with TARP money, who is now owned by Fiat; and well, let’s say Cerberus did not do quite well in the deal. Steven also owns $1000.00 in Ford Motor Company stock in a family trust. Seems qualified to me.
But Rattner’s specialty is really deal making and knowing how to invest in really good things! Yet another Real Smart Guy from Wall Street at the helm! I am not quite sure but Stevie may have been involved in some of those credit default swap things that are way too sophisticated for people like you and I to understand. I wonder how Stevie made out with his packaged paper?
Ed and Stevie probably crossed paths years ago. As Ed was putting Humpty-Dumpty (Ma Bell, aka: the ILECs) back together again by acquisitions which the government turned a blind-eye upon, I am fairly confident an investment banking firm that Mr. Rattner was with may have been involved in a few of those transactions … for a fee of course and independent judgment.
My point: we should all feel good that Ed and Stevie share common history – the formation of a team nucleus for the new GM.
What about GM in all this? Let’s see… Senior secured bondholders were trashed (forget about contracts and that pesky Constitution). Junior, unsecured debt became senior when converted into shares. We have a monopolist as Chairman while the government under its Car Czar owns 62% of the new GM.
I really don’t see a happy ending to this story. Do you?
Negotiating 101
June 16, 2009
Some day, I plan on sharing with you a few thoughts on what makes a sales person a professional sales person–and not just a self-proclaimed professional sales person. Next month, I’ll give a few questions you can ask any salesperson to determine the kind of professional they are.
That said, the sales process is a two way street and hopefully the end result creates a win-win, not only in a transaction, but also in building a forevermore relationship. No one should walk away from the table feeling cheated, used or manipulated. “No” is a very acceptable word to use reasonably in negotiations.
In previous lives, I have conducted business all over the globe. I enjoyed conducting business in Japan the most. Why? It’s a cultural thing there – if a deal is not good for your Japanese counterpart they will say “no” and conversely you are expected to also do the same. It’s a very honest way to conduct business with one party realizing that I can only get what I can afford or am willing to pay for, and the seller recognizing they can only negotiate to a certain point having a long term need to stay in business. Also, by the way, Japanese customers prefer you stay in business if they buy from you. It is definitely a different experience from other parts of the world.
Summarily, it’s all about The Golden Rule.
One of our sales folks at AFS whom is a professional, sent along a YouTube clip. Though humorous, it speaks volumes of how buyers sometimes try to conduct themselves which is frustrating to professional sales people. Though it is satire – it makes some good points.
Enjoy:
The softest pillow is a clear conscience.
Have a Coke and a Smile…
June 11, 2009
I ran across an interesting article while traveling recently. It has to do with service firms that operate based upon retainers or billable hours. In my world, I affectionately refer to such arrangements as the Vortex*.
What I read is not new to us smaller firms…but a giant company has taken the lead to compensate service suppliers based on results instead of retainers and billable hours.
The Coca-Cola Company has implemented a “value-based” compensation system for their advertisers that handle over 400 brands. Coke is no longer just paying for hours “worked”–Coke will pay for results achieved. Imagine that!
Let me digress for a moment…the reason I put “worked” in quotations is based upon experiences we have had with law firms. In one particular situation, given the time frame of certain events compared to the bill we received from one particular regulatory Law Firm, I ran some numbers. Based on there submission, every attorney in this firm would have to have worked on our project well over 60 hours each … let’s just say once we shared the math (read: logic) with them, the bill dropped by 60%. I am sure this was a remote incident, an “error”, a “miscommunication”… After all, lawyers are sworn Officers of the Court and of the highest integrity and ethics.
Back on point – Coca-Cola. Under the new “value-based” model, Coke will cover agencies’ actual costs, plus a bonus up to 30%. The bonus depends on a set of metrics which include sales and market share results. Procter & Gamble has also moved to value-based compensation over hourly fees with a focus on profits results. Coke and P&G believe this is the direction service-based businesses are heading.
This trend is also starting to show up in accounting, consulting and law firms – driven by clients.
Hey, God knows there are more than enough lawyers, accountants and consultants out there – just find the firms willing to work based upon results. We (AFS) have done this in several instances. You just need to have the capacity to say “no” to the legacy hourly billing model. The general idea to me is that service firms do not sell time, they sell ideas, and should be compensated for being the best for having those ideas tied to results. Your business should not be some type of economic, creative or legal experiment where you take all the risk.
We are in a results based world economy.
I wonder if Government Motors will seek value-based contracts going forward … somehow, I doubt it.
Imagine if elected officials were only paid upon results – like GDP growth, currency value, global market share, Return on Tax Dollar spent (i.e. Social Services, Healthcare, Social security), crime data, etc. … I am getting crazy now!
If you have any thoughts on this or experiences – please feel free to comment.
*Vortex: When 2 or more competing lawyers on billable hour compensation argue over insignificant points in a contract, deal, litigation matter, etc. The more they argue with each other, the more billable hours they create for themselves –the billable circulating Vortex just gets bigger and bigger. A Vortex is a continuous circle that just sucks your cash into it with no end in sight.
Stay out of the Vortex!
Don’t You Know That Up to 10 Megabits is Just Fine?
June 9, 2009
I really dislike beating a dead horse when it comes to US Telecom competitiveness globally in bandwidth speed (not to be confused with access, which is a nice warm, feel-good, placating number.)
As I have written previously, I mentioned how a host of carriers and other sorts have filed opinions with the NTIA on how to expend the $7.2 billion in “stimulus” funds for broadband infrastructure. Much debate remains on such definitions as open access, broadband, under-served, un-served, etc. Yours truly proposed a definition that anyone, or any business, being served with less than 100 megabits today is under-served and un-served. Also, within a decade we should have a National Communications policy objective of 1 gigabits delivery covering 90% of the United States.
To see the various pubic comments submitted to the NTIA the link is:
http://www.ntia.doc.gov/broadbandgrants/comments.cfm.
When I have the time, I enjoy reading some of the filings–a reflection on a filing party’s business interests, not the strategic or economic interests of the United States. Some are off the wall, but what the hell–it’s America after all.
Anyhow, a few notable filers I wrote about previously think it is perfectly acceptable that America has broadband speeds at or below 1.5 megabits per second. Yes, that is a dot between the 1 and the 5. A few notable characters believe up to 10 megabits is perfectly acceptable. Translated: if you receive services at these rates, you have more than enough bandwidth and Federal stimulus funds should not be applied to improve these speeds – they should be applied to build out more infrastructure to make sure more residents and businesses get these wonderful speeds. Pure genius if you ask me!!!!
So briefly, I want to share some recent articles I ran across where either these companies are clueless relative to bandwidth demand or are “pure genius” of Model T bandwidth and very insightful.
- Verizon Business is in the UK (yes, that’s a K, not an S), driving a 100 gigabit services trial for the UK’s national research institutes and education network known as JANET. This was not a lab trial where someone runs 100 gigabits fifty feet in a lab and declares victory; this was a 103- kilometer route (about 60 miles). Oh–by the way–on the same route, they also ran 10 gigabit and 40 gigabit signals simultaneously (for those of you technically astute, this simultaneous bandwidth transport is huge, but I won’t get into nanometer windows today.) My Question: Those stupid Brits – don’t they know that 1.5 megabits or up to 10 megabits is perfectly acceptable?
- AT&T announced a 4G deployment of wireless in California (US California, not Mexico). They are delivering data at 20 megabits per second for starters. My question: Those idiots at AT&T, don’t you know that that 1.5 megabits or up to 10 megabits is perfectly acceptable? Why are you over engineering your network? Go read the NTIA filings.
- Spain just announced the launch of a GPON access program to bring fiber to 14 million households and businesses. And get this; incumbent Telefonica SA (NYSE: TEF) is required to make available to alternative providers Telefonica ducts and trenches. Well, the last time I checked the G in GPON, it stands for Gigabit. My question: Hey Spaniards, what is wrong with you? Don’t you know that 1.5 megabits or up to 10 megabits is perfectly acceptable? You don’t need fiber, copper works perfectly well or try some of that 4G wireless stuff AT&T is tinkering with – you can really be at the edge of technology with that.
- In the sort of related department, a study on customer satisfaction in the United States released by the University of Michigan last week ranked the United States Postal Service and energy utilities higher in customer satisfaction over Telecommunication services. But don’t feel bad, Telecommunications services ranked higher in customer satisfaction over airlines!
Maybe we need to promote the energy utilities and the USPS to take over Telecom infrastructure? Imagine getting beat by a 44-cent snail mail provider and energy concerns just discovering how to remotely read a meter!
Can Anyone Hear Me?
June 4, 2009
Here I go again … Wake up America!
The Organization for Economic Co-Operation and Development (OECD) has issued its latest report on global broadband.
The Report covers the following topics with all sorts of data points and excel spreadsheets:
- Actual Penetration
- Actual Usage
- Coverage and Geography
- Prices
- Services and Speeds (My personal favorite)
Let me give you my Executive Summary: The United States is woefully behind and even France is kicking our ass!
Click here for the portal and the data.
Can you hear me inside the Beltway? If so, click above!
The Land of Milk and Honey
June 2, 2009
I hate to beat a dead horse. However, those living in the Doris Day Land of milk and honey where everything is nice– while recommending to the Federal Government (NTIA/RUS) that 1.5 megabits of broadband service in America is perfectly acceptable and only those below 1.5 megabits should be considered “under-served”–need a reality check.
This little ditty from dslprime.com:
Verizon: FiOS Service To Everyone
All of D.C. suburb Gaithersburg will get fiber “within four (4) years,” after a new franchise deal for Verizon. Eric Rabe writes “We’ll meet our commitment to offer service to everyone in the time period specified. How many homes we actually serve will depend, of course, on how many subscribers we are able to sign up.” This follows Verizon’s historic commitment to for universal fiber to 3M homes in New York City, and I believe similar in the works for D.C., Philly, and Boston. The Verizon crews were working around the corner from Jennie. We’ll probably soon be able to choose between Verizon and Time Warner Cable for 50 megabit downloads.
Verizon’s GPON is designed for 200 meg in both directions. TWC is so far holding back on upstream DOCSIS, so VZ will have a natural edge to exploit.
Five years ago, Ivan decided “We have to get fiber out of the house,” and upstream is emerging as a crucial weapon. So is the quality of the FiOS network, designed to take almost any bandwidth demand thrown at it and not requiring caps. Time Warner has pressed hard for the opposite, looking at caps and brutal bandwidth charges to protect their video revenue. That’s not because a cable network needs caps; Cablevision serves half of New York and doesn’t need them, nor traffic management.
So, non-ILEC carriers and non-Cable Companies supporting bandwidth rates at low rates as acceptable–you are headed for disaster. Sitting still because you locked into copper is a fools bet.
Think about the Federal stimulus package for Telecom at $7.2 billion – it is a paltry sum when we encourage the government to measure under-served as anything less than 100 megabits. At 100 megabits, the vast super majority of all consumers and businesses are radically under-served.
I will spare you today – I won’t revisit what the rest of the world is doing at a minimum threshold of 100 megabits. On a global basis, I am less concerned about Fiber-To-The-Barn, and more concerned about our global ability to compete using bandwidth.
Wake up America!
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