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Verizon Employees to Return to Work

Greg Bensinger — Sat, 20 Aug 2011 20:45:48 +0000

About 45,000 Verizon Communications Inc. workers agreed to return to work Tuesday, under a previous contract, after striking to protest benefits cuts that the telecommunications giant sought to offset declining sales in its traditional wireline business.

The old contract will go back into effect Tuesday, while negotiators continue to work towards a new resolution, said Larry Cohen, president of the Communications Workers of America, which represents about 35,000 Verizon employees. He said workers were willing to return because the company seemed ready to negotiate.

“The strike was about the process. We are now convinced that a change to the process is possible,” Mr. Cohen said. “The risk of going back to work while negotiating this is worth it to us.” He said talks would resume late next week.

Read the rest of this post on the original site »

Decoding Google's Net Neutrality Proposal Blog: The Pixie Dust-Free Edition!

Kara Swisher — Fri, 13 Aug 2010 12:51:51 +0000

The opening line of the classic J.M. Barrie book “Peter Pan” reads, “All children, except one, grow up.”

Actually, that one grew up, too, and now the whole Internet is angry at Google (GOOG) and taking shots, because of the Silicon Valley search giant’s recent joint public-policy proposal with Verizon (VZ) over net neutrality.

Many are claiming Google–in the most cynical of ways–sold out its long-standing commitment to the open Internet to make a corporately favorable deal.

Thus, Google–in this case, Richard Whitt, Washington Telecom and Media Counsel–took to the corporate blog yesterday to explain it all away in a post titled “Facts About Our Network Neutrality Policy.”

It practically begs for translation, so BoomTown shall not disappoint:

Google wrote: Over the past few days there’s been a lot of discussion surrounding our announcement of a policy proposal on network neutrality we put together with Verizon. On balance, we believe this proposal represents real progress on what has become a very contentious issue, and we think it could help move the network neutrality debate forward constructively.

We don’t expect everyone to agree with every aspect of our proposal, but there has been a number of inaccuracies about it, and we do want to separate fact from fiction.

Translation: Wait, the hypnotic multicolored letters aren’t working anymore? What about the cute logos on the homepage–didja see our whimsical “Wizard of Oz” montage? Hey, our founders still wear wacky shoes!

And look over here at the Googleplex: Segways with wings and coconut-water lattes for all!

Okay, we’ll come clean: This band of Lost Boys–and Wendy who runs search–didn’t want to grow up, either.

But Sheryl Sandberg did an Indian talent raid and convinced Tinkerbell to take all her fairy dust to work on magical social-marketing features at Facebook. Also, Captain Hook and that alligator are working up some geo-location thing with the ticking clock over at Foursquare.

In other words, that’s Mr. Peter Man to you now.

Google wrote: MYTH: Google has “sold out” on network neutrality.

FACT: Google has been the leading corporate voice on the issue of network neutrality over the past five years. No other company is working as tirelessly for an open Internet.

But given political realities, this particular issue has been intractable in Washington for several years now. At this time there are no enforceable protections–at the Federal Communications Commission or anywhere else–against even the worst forms of carrier discrimination against Internet traffic.

With that in mind, we decided to partner with a major broadband provider on the best policy solution we could devise together. We’re not saying this solution is perfect, but we believe that a proposal that locks in key enforceable protections for consumers is preferable to no protection at all.

Translation: We caved. In fact, we spelunked. All right, we journeyed to the center of the earth. Second to the right and straight on till morning, times a google.

But it is not technically selling out, since we got no money in the deal. I mean, not yet.

That comes later, when we and Verizon control all the tolls on the private and exclusive Schminternet, named for Fearless Leader and CEO Eric Schmidt (pictured here), coming to you in 2020!

We’re not saying the solution is perfect. But we believe that a proposal that locks in key moneymaking fees for us is preferable to having to struggle later–like those losers at Microsoft (MSFT) do today–when the search business goes the way of boxed software.

Google wrote: MYTH: This proposal represents a step backwards for the open Internet.

FACT: If adopted, this proposal would for the first time give the FCC the ability to preserve the open Internet through enforceable rules on broadband providers. At the same time, the FCC would be prohibited from imposing regulations on the Internet itself.

Here are some of the tangible benefits in our joint legislative proposal:

* Newly enforceable FCC standards
* Prohibitions against blocking or degrading wireline Internet traffic
* Prohibition against discriminating against wireline Internet traffic in ways that harm users or competition
* Presumption against all forms of prioritizing wireline Internet traffic
* Full transparency across wireline and wireless broadband platforms
* Clear FCC authority to adjudicate user complaints, and impose injunctions and fines against bad actors
* Verizon has agreed to voluntarily abide by these same requirements going forward–another first for a major communications provider. We hope this action will convince other broadband companies to follow suit.

Translation: Did you ever do the Hokey Pokey? Jockeying for political power in Washington is like that, except someone always loses an eye.

You put your eternal soul in,
You put your ethics out;
You put your corporate standards in,
And you shake them all about.
You do the Hokey-Pokey,
And you turn yourself around.
That’s what it’s all about!

Which is why they say you should never watch sausage being made.

Google wrote: MYTH: This proposal would eliminate network neutrality over wireless.

FACT: It’s true that Google previously has advocated for certain openness safeguards to be applied in a similar fashion to what would be applied to wireline services. However, in the spirit of compromise, we have agreed to a proposal that allows this market to remain free from regulation for now, while Congress keeps a watchful eye.

Why? First, the wireless market is more competitive than the wireline market, given that consumers typically have more than just two providers to choose from. Second, because wireless networks employ airwaves, rather than wires, and share constrained capacity among many users, these carriers need to manage their networks more actively. Third, network and device openness is now beginning to take off as a significant business model in this space.

In our proposal, we agreed that the best first step is for wireless providers to be fully transparent with users about how network traffic is managed to avoid congestion, or prioritized for certain applications and content. Our proposal also asks the Federal government to monitor and report regularly on the state of the wireless broadband market. Importantly, Congress would always have the ability to step in and impose new safeguards on wireless broadband providers to protect consumers’ interests.

It’s also important to keep in mind that the future of wireless broadband increasingly will be found in the advanced, 4th generation (4G) networks now being constructed. Verizon will begin rolling out its 4G network this fall under openness license conditions that Google helped persuade the FCC to adopt. Clearwire is already providing 4G service in some markets, operating under a unique wholesale/openness business model. So consumers across the country are beginning to experience open Internet wireless platforms, which we hope will be enhanced and encouraged by our transparency proposal.

Translation: By transparency, we mean a backroom deal so covered in the fog of compromise that it was like the Smoke Monster in “Lost.”

And you know what happened when he (she? it?) showed up. Not pretty.

Neither was the fact that we had to throw wireless–the most promising of networks–under the bus right now. While there is likely to be some crushing of competition and mangling of the bones of this little baby, you can be sure Congress can always step in to protect consumers’ interests with regard to wireless broadband.

In fact, Congress just hired Kate and Jon Gosselin to give parenting tips on how not to completely take advantage of the wired Internet’s most valuable offspring.

Google wrote: MYTH: This proposal will allow broadband providers to “cannibalize” the public Internet.

FACT: Another aspect of the joint proposal would allow broadband providers to offer certain specialized services to customers, services which are not part of the Internet. So, for example, broadband providers could offer a special gaming channel, or a more secure banking service, or a home health monitoring capability–so long as such offerings are separate and apart from the public Internet. Some broadband providers already offer these types of services today. The chief challenge is to let consumers benefit from these non-Internet services, without allowing them to impede on the Internet itself.

We have a number of key protections in the proposal to protect the public Internet:

* First, the broadband provider must fully comply with the consumer protection and nondiscrimination standards governing its Internet access service before it could pursue any of these other online service opportunities.

* Second, these services must be “distinguishable in purpose and scope” from Internet access, so that they cannot over time supplant the best effort Internet.

* Third, the FCC retains its full capacity to monitor these various service offerings, and to intervene where necessary to ensure that robust, unfettered broadband capacity is allocated to Internet access.

So we believe there would be more than adequate tools in place to help guard against the “cannibalization” of the public Internet.

Translation: Yes, the very same government that protected its citizens from the sub-prime mortgage mess by monitoring those giant, risk-mad banks so well.

The same government that was making sure oil giants like BP adhered to strict safety standard for its offshore wells.

The same government…well, you get the general idea, but you should have no fear of cannibals.

Of sharkish telcom companies, yes. Of man-eating lions from the cable business, certainly.

But of multicolored, letter-decorated piranhas who look harmless with their big squishy balls and organic guava smoothies but will cut you as soon as you stick one consumer finger in the digital pond?

Let’s just say: Don’t go in the water.

Google wrote: MYTH: Google is working with Verizon on this because of Android.

FACT: This is a policy proposal–not a business deal. Of course, Google has a close business relationship with Verizon, but ultimately this proposal has nothing to do with Android. Folks certainly should not be surprised by the announcement of this proposal, given our prior public policy work with Verizon on network neutrality, going back to our October 2009 blog post, our January 2010 joint FCC filing, and our April 2010 op-ed.

Translation: Rachel, are you in London or back in Mountain View? Please ring us up asap, as you need to come up with some fancy new talk. I don’t think they are buying this policy-proposal-not-a-business-deal pablum.

In fact, I am even giggling every time I write it.

Google wrote: MYTH: Two corporations are legislating the future of the Internet.

FACT: Our two companies are proposing a legislative framework to the Congress for its consideration. We hope all stakeholders will weigh in and help shape the framework to move us all forward. We’re not so presumptuous to think that any two businesses could–or should–decide the future of this issue. We’re simply trying to offer a proposal to help resolve a debate which has largely stagnated after five years.

It’s up to Congress, the FCC, other policymakers–and the American public–to take it from here. Whether you favor our proposal or not, we urge you to take your views directly to your Senators and Representatives in Washington.

We hope this helps address some of the inaccuracies that have appeared about our proposal. We’ll provide updates as the situation continues to develop.

Translation: Indeed, two corporations are not legislating the future of the Internet.

In point of fact, there were at least a half-dozen of us on the G5 on the way back from divvying up the Web in D.C.

And we’re not so presumptuous to think that any two businesses could–or should–decide the future of this issue.

We are planning on including at least six or seven more businesses, since it will cost an awful lot of money to peddle all that influence in D.C.

Of course, that Mark Zuckerberg over at Facebook seems to be holding out and even criticizing our Verizon bear hug.

That kid has some guts all right–but he can’t live in Neverland forever.

At some point, you’ve got to grow up. You can’t clap your hands and believe you can fly. Even pixie dust eventually runs out.

And that’s something we at Google know very, very well by now.

And until the magic returns, please relish the incomparable Mary Martin in the famous stage version of “Peter Pan” singing “Never Never Land.” As Peter Pan described himself, “I’m youth, I’m joy. I’m a little bird that has broken out of the egg.” Martin is all that and more:

"Never Never Land"
Uploaded by computergirl07. – Music videos, artist interviews, concerts and more.

Google, Verizon Announce a Cake-Having, Eating "Policy." But It's Not a "Business Arrangement."

Peter Kafka — Mon, 09 Aug 2010 19:09:02 +0000

The Google and Verizon plan that the New York Times reported on last week is out. And, as Google and Verizon have said, it’s not what the New York Times had reported: A pay-to-play arrangement where Google gets the ability to speed its stuff across the Web by paying a premium.

Instead, it’s a three-tiered policy proposal–and absolutely not a “business arrangement,” the two sides insist–that will both mollify “network neutrality” advocates and worry them.

You can read the full thing here, and see Google and Verizon’s explanation of the policy/plan below. The fast version:

The Web stays open, everyone gets treated equally–everyone with “legal content,” that is–and Google won’t be paying to move its stuff faster than the competition. It’s what everyone who says they care about network neutrality demands.
But! Verizon and/or others telcos/cable guys/ISPs want the right to build and/or use “new services.” And those could have different rules.
And! The open Web policies described above are for “wireline” services–i.e., pipes and cables into your home or office. But wireless broadband is a different animal. And it would have different rules, too.

The second and third points, of course, are where things will get sticky. The Google/Verizon statement is intentionally vague about what these new services would be and who would build them and what would be on them. But in the conference call to explain the statement, reporters immediately began referring to the “new services” as a “private Internet,” and I bet that name will stick.

Google CEO Eric Schmidt, for his part, insists that his company wants no part of the “private Internet” or whatever it is that may or not be built. Google “likes the public Internet,” he said, and later upgraded his affection to “love.” And asked repeatedly whether Google would use any of the new services, he repeatedly said no.

Which makes it appear as if Google has made the following trade: Give us unfettered access to whatever we want on the public Web, and we won’t squawk about secondary services you build on your “private Internet.” Which we’re not calling the “private Internet” and we’re not going to use anyway. And when it comes to mobile, well, that’s a different discussion.

There was very little discussion in the press Q&A about wireless, which is odd, given the amount of time my colleagues (and our readers) spend obsessing about the iPhone and Android and the BlackBerry, etc., etc. But surely we’ll hear more soon enough.

Meantime, what about the thing-that-doesn’t-exist-and-is-not-a-private-Internet? What are you supposed to do with it anyway? Especially, since, according to Schmidt, you won’t be using it for Google search or to watch YouTube clips?

The policy statement offers some suggestions: “Health care monitoring, the smart grid, advanced educational services, or new entertainment and gaming options.” Okay, but aren’t all of those things best used on the Web–the “open Web,” that is–anyway?

And here Seidenberg is quite vague. On two separate occasions, he suggested that the “private Internet” might be a good place to stream 3-D video. But surely he’s thinking about uses beyond “Pirhana 3D.”

But for better or worse, all of this is going to get thoroughly vetted in Washington, so I’m sure we’ll hear more about in the future. For now, enjoy your open Internet!

Earlier:

Google and Verizon are about to conduct a joint press conference, presumably to explain what the two companies are and aren’t doing with regard to network neutrality.

Last week, the New York Times reported that the two companies were working to push forward legislation that would allow Internet service providers to prioritize certain traffic on their wireless networks. Verizon and Google, in unusually loud proclamations, said the Times got the story wrong; the Times said it was sticking by its story.

Verizon and Google both plan to publish statements on their public policy blogs at 1:25 pm Eastern, and the call with Google CEO Eric Schmidt and Verizon CEO Ivan Seidenberg is scheduled for 1:30. I’ll cover it live here:

Live Blog

1:28 pm: Waiting on the promised policy blog posts. Nothing yet. *Unless Google and Verizon are conspiring to keep my computer from getting the information!*

Verizon blog now sputtering, gurgling. Perhaps something’s about to emerge…

Well, if you’re bored, here’s a Tom Petty video.

1:36 pm: No blog statements, but call is starting anyway.

Here’s Schmidt, introducing Seidenberg and their respective public policy chiefs.

Over past years, to Schmidt’s surprise, VZ and GOOG have found “more and more” that they agree w/r/t public policy.

Google needs investment and infrastructure that VZ and telcos provide; he hopes they need Google and others software..

So public policy statement coming.

But first more about Google: Open internet very important to us. Google has has enough money to get whatever it needs on the Web, but next generation of companies will need access to open Internet.

Schmidt: Lots of chatter and reporting about this since last Thursday, “Almost all of which has been completely wrong”, even though we love “sophsticated critcism.” So please read what we have to say before you talk or type.

Here’s the link. Schmidt summarizing but I’m linking. So you’ll have to read for yourself…

Seidenberg finishing up list of talking/policy points that Schmidt started. But trying to paraphrase what he’s saying nearly impossible, since it is laden with legalese and is oblique (intentionally so, I assume). So going to hang tight for a minute.

Seidenberg. “Why now, why Google”? “This debate has been somewhat hijacked by a lot of discussion and issues that are not really reflective of what the company is doing”…
So….”we agree with Google” that proposal is to “follow a consumer-driven orientation”. Ugh. Such non-language.

Q&A

Q on principle six. What does that mean? Would it mean that Google, using Android phone, on a non-public Internet, could buy up capacity to offer YouTube on Fios at a better price or speed?

Seidenberg: I think the answer is “no”. But let’s explain this. “There’s no paid priortization that would come from Google over the Internet, period.” BUT. If google or someone wants to bundle a new service with new features and that was transparent to everybody, that would be permitted.

Schmidt: Right!

Q: But you could have YouTube channel on Fios, right?

Seidenberg: Sure.

Schmidt: We wouldn’t do that. “Google likes the public internet”

Q: Richard Waters from the FT seems to be underwater.

But Seidenberg thinks he can hear him. We couldn’t degrade capacity of public internet in order to build up private capacity. We’ll start out by serving public internt. But if we have additional capacity we’ll build out both.

Q: What’s your incentive for building out public internet.

Seidenberg: “So many ways” to monetize growth.

Schmidt: Verzion and others have incentive to make pubic internet more useful, “simply because it’s what their customers want”. And there’s enough excess supply to build both. And we’ll make sure that they follow up on these promises.

Q: And to be clear – Google, including YouTube, will always be on public internet?

Schmidt: Yes.

Q: Someone from Reuters, speaking very quietly.

Schmidt: “There is no business arrangement.” btw us and Verizon. Want to be very clear that those reports (in the Times) were “false, misleading and incorrect”.

Seidenberg: “There is no business arrangement”

Q: Talks with FCC?

Both Schmidt and Seidenberg. Yeah, we’ve talked to them.

Seidenberg: We’re doing this call now to clear up erroneous reports.

Missed a question. Apologies.

Q: Please talk more about the alternative non-public internet thing you’re talking about is. What is it? And why not run it w/same rules as public internet. And Eric, are you really sure you won’t use this thing?

Schmidt: Nope. We won’t’. “We love the public internet”

Seidenberg: We’re not saying there’s an alternative internet or that we’ll build it. But if someday someone builds it, we’d like to be able to use it.

Q: OK, so what would an entertainment service on this non-public Internet be like?

Seidenberg. I’ll give you an answer “and then you’ll trivialize it”. But! Let’s say the Metropolitan Opera wants to do 3-d broadcast. Maybe they don’t want to use the public internet for that.

Q: I know there’s not a business arrangement. But why do it behind closed door?

Schmidt “This is not a deal. This is a joint policy announcement”. It’s in everbody’s interest to follow the policy, and that’s what we’ll do.

Seidenberg: “Ditto!”. And of course, we’ve talked to others as well. Carriers, folks in government, etc.

Q: All of these services (like video) are moving into IP networks, which is the Internet. So what wouldn’t be in included in the public internet here?

Seidenberg: Do you think 3-d should go over the internet? Then recites talking points from memo again. “It’s not that difficult” to understand.

Schmidt thanks everyone for getting on call (No problem!). And thanks for Verizon management for their help on this, because it’s a really big deal for everyone in the United States.

Call ends.

[Image credit: James Thompson]

Big Red in the Red

John Paczkowski — Tue, 26 Jan 2010 14:00:28 +0000

Reporting fourth-quarter earnings this morning, Verizon posted revenue that jumped 9.9 percent to $27.09 billion and said it added 2.2 million mobile subscribers. Yet the company reported a loss of $653 million, or 23 cents a share, for the quarter–mostly because of costs related to layoffs in the period.

Quite a change from the profit of $1.24 billion, or 43 cents a share, the carrier reported in the quarter a year ago.

Analysts polled by Thomson Reuters (TRI) had been expecting earnings of 54 cents a share on $27.33 billion in revenue.

Revenue from Verizon’s (VZ) wireline services declined 3.9 percent to $11.5 billion. But data revenue rose 31 percent, to $16 billion. And wireless data revenue accounted for 32 percent of all service revenue, up from 26.5 percent a year earlier.

“Today’s 4Q results were eye-opening, if only because of the magnitude of the divergence,” Bernstein analyst Craig Moffet said in a research note issued after earnings. “Amidst an aggressive campaign to reinforce their positioning as the best-in-class network, and no doubt aided by AT&T’s well-publicized network travails, Verizon Wireless pulled away, with a solid 1.15M subscriber gain in post-paid and, more surprisingly, a huge opportunistic 1.0M subscriber gain in wholesale.”

But, Moffett cautioned, “…Wireline results were at least as weak as Wireless was strong, and Wireline remains the company’s center of gravity. Notable in the Wireline results were a worsening of trends in the legacy copper business and–perhaps worse–a serious miss in the growth of their FiOS business as well….Overall, we think the results must be judged as something of a disappointment.”

Apple's Tablet: MacBook Airbus?

John Paczkowski — Fri, 22 Jan 2010 13:00:56 +0000

If the bandwidth-guzzling iPhone is truly the “Hummer of cellphones,” as the New York Times dubbed it last year, you might figure that Apple’s coming tablet will swill data like an Airbus. And that could be true eventually. But at first, analysts say, the tablet is not likely to put much strain on the mobile broadband infrastructure of whatever carrier it ends up with, whether Verizon (VZ) or AT&T (T).

Why? Do they expect the tablet to be Wi-Fi-only like the iPod touch? That would certainly make things a lot easier for the carriers.

No. Most analysts I spoke to said the probability that Apple’s new offering will support mobile broadband is quite high. “I can’t imagine it not having it,” Piper Jaffray analyst Gene Munster told me.

There are other good reasons not to fear the tablet as a bandwidth hog. First, the device will presumably rely heavily on Wi-Fi to off-load wireless traffic onto the wireline network, the assumption being that it will be used most often in locations with Wi-Fi access–homes, schools, libraries, cafes and whatnot. Moreover, a mobile broadband plan will likely be optional.

Second, despite all the hype and hoopla, initial unit sales of an Apple (AAPL) tablet are likely to be too low to have much of an impact.

As Munster told me: “…turn the clock back and look at the iPhone and the first year Apple sold 5.5 million units in the US and the ASP was $475. At that time there were no issues with AT&T’s network. The issues began occurring last year, right around the time we saw the hockey stick in iPhone adoption.”

Regarding the tablet, Munster says, “If this device is $800-$1000, I think adoption is going to be much lower than the hype would lead you to believe. So the bottom like is this: on a per-unit basis it might put a lot of stress on the network, but there will be too few of them on the street to collectively have a real negative impact.”

Presumably, that will give the carrier, whatever company that may be, time to build out in anticipation of increased adoption. A good thing, since a tablet may well pose unique network challenges, particularly if it is used as a streaming video viewer, says Sanford C. Bernstein analyst Craig Moffett.

“Streaming video is uniquely demanding traffic, as it is both bandwidth intensive AND latency sensitive,” Moffett explained. “That’s a recipe for disaster. For that reason, it’s unlikely that carriers would invite that type of usage. A large screen tablet would likely rely heavily on download-to-watch-later to sidestep the latency problem, and would almost certainly provide incentives to shift the most bandwidth-intensive applications to the wired network via Wi-Fi.”

But that’s a future scenario. “I don’t see this as a device that will in the next 12 months inspire people to save their money to buy it, the way they have with the iPhone,” says Munster, who sees Apple selling about 1.4 million tablets in calendar year 2010, assuming it ships in March.

“Certainly, it will take off in due time–this is the future of publishing,” Munster concludes, “but it takes 2-3 years for these things to really get going.”

PREVIOUSLY:

Windows 7: Does the Wow Start Now?

John Paczkowski — Thu, 22 Oct 2009 18:00:28 +0000

[ See post to watch video ]

AT&T Activates Record 3.2 Million iPhones in Q3

John Paczkowski — Thu, 22 Oct 2009 12:05:21 +0000

How badly does AT&T want to renew its iPhone exclusivity contract with Apple?

Pretty damn badly.

Posting third-quarter earnings that topped Wall Street expectations this morning, AT&T (T) said it activated a record 3.2 million iPhones during the period (not surprising given Apple’s blowout quarter).

Of those, 40 percent were for customers new to the carrier. That’s quite a bit more than Wall Street expected, and this surge did much to balance continued weakness in AT&T’s wireline business (click on slide below to enlarge). In fact, if that 40 percent metric is accurate, then Apple’s (AAPL) iPhone single-handedly generated an astonishing 92 percent of AT&T’s post-paid subscriber growth.

“We delivered a terrific wireless quarter, IP data growth was strong and execution across the business continues to be solid,” AT&T CEO Randall Stephenson said in an earnings release, and indeed, that would seem to be the case.

Wireless data-services revenue spiked 34 percent. And revenue from the wireless segment overall increased 8.2 percent as profit grew 41 percent. Wireless turnover rate fell to a record low of 1.4 percent.

Meanwhile, wireline revenue fell 7.1 percent, profit 30 percent.

So in the end, AT&T posted earnings of $3.2 billion, or 54 cents a share, down from $3.23 billion, or 55 cents a share, a year earlier. Revenue slipped 1.6 percent to $30.86 billion. Analysts polled by Thomson Reuters expected per-share earnings of 50 cents on revenue of $30.88 billion.

At $26.86, shares of AT&T are up about 3.5 percent in early morning trading.

AT&T Activates Record 3.2 Million iPhones in Q3

John Paczkowski — Thu, 22 Oct 2009 12:05:21 +0000

How badly does AT&T want to renew its iPhone exclusivity contract with Apple?

Pretty damn badly.

Meanwhile, wireline revenue fell 7.1 percent, profit 30 percent.

At $26.86, shares of AT&T are up about 3.5 percent in early morning trading.

AT&T Earnings Expected to Be Better Than Expected

John Paczkowski — Wed, 21 Oct 2009 12:01:45 +0000

AT&T reports third-quarter earnings Thursday and by most accounts, they should be strong enough, thanks to the sheer size of the company’s footprint and, of course, its exclusive carrier rights to the iPhone. Apple said Monday that it sold more than 7.4 million iPhones in the quarter, half a million more than in same quarter a year ago.

Now, that figure includes sales made abroad, so we don’t yet know how many were sold by AT&T (T), but it’s clear that the number was substantial. In its third quarter last year, AT&T activated 2.4 million iPhones and 40 percent of those were for subscribers who switched from other carriers. So the fact that Apple (AAPL) sold as many iPhones as it did in the company’s most recent quarter, bodes well for the carrier.

As Craig Moffett over at Bernstein Research notes, “It is entirely conceivable that AT&T’s iPhone alone will account for more than 100 percent of the entire industry’s post-paid subscriber growth in the third quarter.”

But therein lies the rub. For while sales of Apple’s handset remain strong, the heavy subsidies it requires have pushed AT&T’s wireless margins down. And the heavy data traffic associated with the handset have led to widespread complaints about AT&T’s network, forcing infrastructure upgrades. Worse, AT&T’s dependence on iPhone exclusivity at a time when Apple is clearly transitioning away from such a model leaves it quite vulnerable.

“While the strong sales of the iPhone are positive for AT&T in the near term, they increase the company’s reliance on a product for which we do not believe it will be able to maintain exclusivity,” Pali Research analyst Walter Piecyk wrote in a note to clients Tuesday. “We believe more than one third of AT&T’s post paid customer base is tied to an iPhone user and that mix is likely to rise significantly over the next few quarters.”

But not this quarter. This quarter, AT&T is expected to add 1.5 million to 1.7 million net wireless customers, driven by demand for the iPhone 3GS, which was released early on in the quarter. And while another drop in wireline customers is likely to weigh on results, it will be tempered once again by the iPhone. AT&T is expected to earn 50 cents a share, compared to 55 cents in the year-earlier third quarter, according to analysts polled by Thomson Reuters, who see revenue falling to $30.9 billion from $31.3 billion.

AT&T Earnings Expected to Be Better Than Expected

John Paczkowski — Wed, 21 Oct 2009 12:01:45 +0000

AT&T, Google: Nuns on the Run

John Paczkowski — Thu, 15 Oct 2009 12:00:17 +0000

In the rhetorical battle over net neutrality, Google may have regulatory capitalism with which to bludgeon and batter AT&T, but AT&T (T) has Benedictine nuns, an entire convent of them.

In a 13-page letter to the Federal Communications Commission Wednesday, the carrier again said that Google should play by the same rules as its telecom competitors. AT&T also took issue with the search giant’s claim that Google Voice restricts calls to certain rural areas to avoid the so-called traffic pumpers that route calls there to drive up charges.

“Contrary to the public pronouncements of Google and its allies, Google’s rural call blocking regime is not limited to Google simply blocking calls to ‘adult sex chat lines’ and ‘free’ conference calling services to avoid high access charges,” wrote AT&T’s senior vice president, Bob Quinn, in the letter to the FCC’s wireline bureau. “In fact, Google is blocking calls to, among others, an ambulance service, church, bank, law firm, automobile dealer, day spa, orchard, health clinic, tax preparation service, community center, eye doctor, tribal community college, school, residential consumers, a convent of Benedictine nuns, and the campaign office of a Member of the U.S. House of Representatives.”

My God. Google, the company whose business philosophy proudly proclaims “you can make money without doing evil,” blocking calls to small businesses? To Benedictine nuns? Don’t be evil?

Don’t be evil, my ass.

“We can now see the power of Internet-based applications providers to act as gatekeepers who can threaten the ‘free and open’ Internet,” Quinn continues. “Google’s double standard for ‘openness’–where Google does what it wants while other providers are subject to Commission regulations–is plainly inconsistent with the goal of preserving a ‘free and open’ Internet ecosystem.”

That established, Quinn goes in for the kill, arguing that the FCC should regulate the search giant not just on the wires, but on the Web as well.

“Google’s call blocking begs an even more important question that the Commission must consider as it evaluates whether to adopt rules regarding Internet openness,” he writes. “If the Commission is going to be a ‘smart cop on the beat preserving a free and open Internet,’ then shouldn’t its ‘beat’ necessarily cover the entire Internet neighborhood, including Google? Indeed, if the Commission cannot stop Google from blocking disfavored telephone calls as Google contends, then how could the Commission ever stop Google from also blocking disfavored websites from appearing in the results of its search engine; or prohibit Google from blocking access to applications that compete with its own email, text messaging, cloud computing and other services; or otherwise prevent Google from abusing the gatekeeper control it wields over the Internet?”

An interesting question. And one for which Google (GOOG) is presumably already preparing a long-winded answer. This is far from over yet, and we’ll continue to go round and round until the FCC puts a stop to it.

AT&T, Google: Nuns on the Run

John Paczkowski — Thu, 15 Oct 2009 12:00:17 +0000

In the rhetorical battle over net neutrality, Google may have regulatory capitalism with which to bludgeon and batter AT&T, but AT&T (T) has Benedictine nuns, an entire convent of them.

My God. Google, the company whose business philosophy proudly proclaims “you can make money without doing evil,” blocking calls to small businesses? To Benedictine nuns? Don’t be evil?

Don’t be evil, my ass.

That established, Quinn goes in for the kill, arguing that the FCC should regulate the search giant not just on the wires, but on the Web as well.

Google to AT&T: "Noisome Trumpeter"? Takes One to Know One.

John Paczkowski — Fri, 25 Sep 2009 21:46:00 +0000

Google is violating the Net neutrality principles it so strongly advocates–according to AT&T, anyway. In a letter to the head of the Federal Communications Commission’s Wireline Competition Bureau Friday (see below for full text), the telephone company described Google (GOOG) as “one of the most noisome trumpeters of so-called net-neutrality” and asked the FCC to order it to “play by the same rules as its competitors.” (As folks are noting in the comments below, AT&T, by describing Google as “noisome” is either using the word incorrectly or being extraordinarily honest about it’s opinion of the company)

Seems AT&T (T) feels that Google’s Google Voice Internet call-forwarding service violates federal rules designed to ensure that phone companies connect all calls. From the company’s letter:

Numerous press reports indicate that Google is systematically blocking telephone calls from consumers that use Google Voice to call telephone numbers in certain rural communities. By blocking these calls, Google is able to reduce its access expenses. Other providers, including those with which Google Voice competes, are banned from call blocking because in June 2007, the Wireline Competition Bureau emphatically declared that all carriers are prohibited from pursuing “self help actions such as call blocking.” The Bureau expressed concern that call blocking “may degrade the reliability of the nation’s telecommunications network.” Google Voice thus has claimed for itself a significant advantage over providers offering competing services. Google casually dismisses the Bureau’s Order, claiming that Google Voice “isn’t a traditional phone service and shouldn’t be regulated like other common carriers.” But in reality, “Google Voice” appears to be nothing more than a creatively packaged assortment of services that are already quite familiar to the Commission….

[The FCC] cannot, through inaction or otherwise, give Google a special privilege to play by its own rules while the rest of the industry, including those who compete with Google, must instead adhere to [FCC] regulations.

AT&T’s letter comes just days after FCC Chairman Julius Genachowski proposed six Net neutrality regulations that will apply to both wireline and wireless platforms. Interestingly, it also follows an FCC investigation into the rejection/delay of Google Voice for the iPhone.

UPDATE:

Google’s responded to AT&T’s letter in a post to the company blog, pointing out the differences between Google Voice and traditional phone service and questioning AT&T’s motives for appealing to the FCC.

“AT&T is trying to make this about Google’s support for an open Internet, but the comparison just doesn’t fly,” Richard Whitt, the company’s Washington telecom and media counsel, wrote. “The FCC’s open Internet principles apply only to the behavior of broadband carriers–not the creators of Web-based software applications. Even though the FCC does not have jurisdiction over how software applications function, AT&T apparently wants to use the regulatory process to undermine Web-based competition and innovation.”

Google to AT&T: "Noisome Trumpeter"? Takes One to Know One.

John Paczkowski — Fri, 25 Sep 2009 21:46:00 +0000

Seems AT&T (T) feels that Google’s Google Voice Internet call-forwarding service violates federal rules designed to ensure that phone companies connect all calls. From the company’s letter:

Numerous press reports indicate that Google is systematically blocking telephone calls from consumers that use Google Voice to call telephone numbers in certain rural communities. By blocking these calls, Google is able to reduce its access expenses. Other providers, including those with which Google Voice competes, are banned from call blocking because in June 2007, the Wireline Competition Bureau emphatically declared that all carriers are prohibited from pursuing “self help actions such as call blocking.” The Bureau expressed concern that call blocking “may degrade the reliability of the nation’s telecommunications network.” Google Voice thus has claimed for itself a significant advantage over providers offering competing services. Google casually dismisses the Bureau’s Order, claiming that Google Voice “isn’t a traditional phone service and shouldn’t be regulated like other common carriers.” But in reality, “Google Voice” appears to be nothing more than a creatively packaged assortment of services that are already quite familiar to the Commission….

[The FCC] cannot, through inaction or otherwise, give Google a special privilege to play by its own rules while the rest of the industry, including those who compete with Google, must instead adhere to [FCC] regulations.

UPDATE:

Sprint to Ericsson: Take My Network Operations…Please

John Paczkowski — Thu, 09 Jul 2009 19:00:24 +0000

Sprint has found a novel way to improve its network operations: Turn them over to Ericsson. On Thursday, the wireless carrier announced a long-rumored plan to outsource its network to Ericsson. The seven-year, $5 billion deal will see Ericsson servicing, provisioning and maintaining Sprint’s CDMA, iDEN, and wireline networks. Under its terms, Ericsson (ERIC) will take on 6,000 Sprint (S) employees as part of the arrangement. Sprint will retain ownership of its cell towers and control over its network strategy and investment decisions.

For Sprint, which is suffering from declining revenue and a thinning subscriber base, the move is a quick-and-dirty way of cutting costs and freeing up resources to focus on innovation and remedying the real and perceived issues with its services.

“This is about improving our customer experience,” Steve Elfman, head of Sprint’s network operations, said during a conference call this morning. “While we get the benefit of Ericsson’s expertise…we can focus our attention on bringing great devices, great services, great applications to them….We’ll benefit from the current scale and efficiency and expertise of Ericsson, and this will keep improving over time.”

Sprint Leaves the Networking to Ericsson

John Paczkowski — Thu, 09 Jul 2009 18:00:41 +0000

[ See post to watch video ]

AT&T CEO Randall Stephenson: "Wireless Is the Priority of This Business"

John Paczkowski — Wed, 27 May 2009 15:17:09 +0000

Randall Stephenson is just two years into his tenure as CEO of AT&T (T) but he faces challenges that have been decades in the making. Among them: remaking AT&T amid the steady decline of its landline business, future-proofing its business as our appetites for bandwidth grow, competing with the likes of Comcast (CMCSA) in the cable TV market and fending off the proponents of Net neutrality, who don’t care much for the idea of a two-tiered Internet.

Beyond this there is the issue of continuing to build out AT&T’s wireless business, which–if not iPhone-dependent–is certainly nursing a hell of a habit. In its fourth-quarter AT&T added 2.1 million wireless subscribers. 1.9 million of them were iPhone accounts. Astonishing. But AT&T’s exclusive deal to peddle the Apple iPhone in the U.S. expires next year. The company is obviously eager for an extension. But what is it willing to do to get it?

Incidentally, we had a fairly big announcement from AT&T this morning. The company said it is upgrading to High Speed Packet Access 7.2 technology. That means considerably faster mobile broadband speeds. The upgrade is slated to begin later this year, with completion expected in 2011.

Session Highlights

[ See post to watch video ]

Live Blog

After some brief introductory remarks from Wall Street Journal Managing Editor Robert Thomson, who jokes about implementing an 18-second delay for expletive-fond Yahoo CEO Carol Bartz, and a welcome song from Jill Sobule, Walt welcomes Randall Stephenson to the stage and the second day of D7 begins.
For a first question, Walt, referring to poll data, asks Stephenson why some folks might not be interested in buying an Apple iPhone because of AT&T. Stephenson notes that AT&T is improving network quality and reducing churn.
Walt says he gets frequent reader mail complaining about AT&T service coverage. Stephenson says the company is way down the road in terms of the level of data traffic on the networks. Behavior changes radically. He says AT&T is a year ahead of other carriers in terms of network management, managing the volume and behavioral changes from adoption of new devices.
Walt: Let’s talk for a moment about the iPhone. It’s a data-intensive device. You weren’t ready when you first launched the iPhone 3G. What happened? Stephenson says the company wasn’t quite ready. “But we’re improving.”
Walt asks the audience how many people use AT&T. Many hands raised. How many had it before the iPhone? A fair bit. How many are satisfied with the service? Also a fair bit. Clearly, AT&T’s service must be getting better.
The level of data volumes we are seeing on our networks is changing customer behavior dramatically, says Stephenson. This is challenging, but the company is addressing it.

Walt: If we project out farther past the iPhone, are the mobile networks we have going to be able to handle these new data-intensive devices? Stephenson: The answer is clearly no. That’s why we’re buying more spectrum and moving toward LTE. What’s so good about LTE? Speed levels of 20 megs plus, for one, says Stephenson, who admits that real-world performance will be somewhat less than that.
Stephenson says AT&T is more than doubling the theoretical speed of the network. Does this mean the speed of our handsets will also double, asks Walt. Not on current handsets. But on future ones, which will all be backward-compatible.
When you upgrade the network to 7.2 will it have any negative impact on the network as data demands grow, asks Walt. Stephenson says no. “It’s all network management….We’ll have a whole new capacity.”
Walt: In a world where both you and Verizon (VZ) go to LTE, will I be able to take my handset and switch to Verizon’s network? Stephenson says the LTE standard is consistent and should permit that.
The conversation shifts to Wi-Fi. Walt asks about AT&T’s Wayport efforts. “When we look at the world today and the world of the future, the fixed-line bandwidth requirements are not slowing. Then you move to the wireless broadband world, where bandwidth requirements are not slowing either. You need a bridge between the two.” That bridge is WiFi, adds Stephenson, noting that the company sees extraordinary WiFi usage among it smartphone users.
Stephenson talks for a moment about automatic authentication and says AT&T is working to implement it. “The current system is kludgey. People want it seamless.”
Walt asks about the company’s broadband business. Stephenson says it’s doing well. Notes that it is doing nearly as well as Verizon’s FIOS business.

Walt asks how the economy is affecting AT&T’s various businesses and the advance of the company’s capital spending plans. Stephenson says the board business has obviously been affected. Business is slowing especially in enterprise and the consumer phone business. Interestingly enough, people are more apt to disconnect the home phones than they are broadband. So AT&T continues to aggressively invest in mobile apps and in wireless infrastructure. He notes that the company is really pushing hard to build out its U-verse network. “I’ve been through a few of these recessions in my 20 years in this business, and it will turn. So you must continue to invest and prepare for the day when it does.”
What about competitors? What are they doing? In wireless, says Stephenson, competitors also investing. A lot of capital is coming into the wireless business. In broadband, cable guys have not slowed down. Telecom structurally in a good place. Regulatory structure continues to bring in capital.
Back to the issue of the iPhone. Was it worth it to sign the deal with Apple (AAPL)? How has it worked out? “It’s worked out terrific. We have no complaints.” He notes that the company incurred dilution, but has benefited by getting the premier customer in the space–one with high data usage and low churn. “I’m very pleased with the deal.”
Walt asks if the company has suffered from the iPhone’s fixed data charges. It’s not a variable charge. How does that offset the dilution that AT&T has to pay? We made a bet, says Stephenson, that the industry was heading toward smartphones, and that was a good bet. Now we’re seeing dramatic uptakes in usage, so the pricing model must change. And it will change. The market will dictate that change more than anything else. But right now the economics of the iPhone are very good for us.
Walt: Have you ever called Steve Jobs and just asked him to put a keyboard on the iPhone? Stephenson chuckles. No. “If Steve wants to put a keyboard on the iPhone, I’m sure he will.”
Walt: Are all these new operating systems arriving at market problematic for AT&T? The iPhone, Palm’s (PALM) WebOS, Android? Would it be easier if there were fewer platforms? Stephenson: Do I want to see fewer platforms? Yes, it’s better for my business. Will I see fewer platforms? I don’t think so. So we need to take advantage of it and use it as an opportunity.

What about the Palm Pre? “Would I like to see the Pre on our network some day? Of course I would,” says Stephenson. “We obviously talk to all the handset manufacturers. We want a broad selection of devices in the lineup. That’s important. Devices right now are what’s driving the customer adoption as much as anything.”
Stephenson says he’s seeing dramatic uptakes in data usage. Pricing models will change over time, he says. How it changes will depend who you are. He notes that costs are variable in wireless–every new bit has a direct cost tied to it, unlike wireline business. AT&T margins are 40 percent-plus in Q1 on wireless business.
Walt: Can you foresee a day when you’re not running retail stores? Why do you want to run stores when you’re really a network company? Stephenson says distribution is changing. But a retail presence is always going to very important, and I always want to have a part of that.
Moving on to the Q&A: How do you transform wireline customers into wireless and broadband customers? Integration is very important, says Stephenson. If you already have AT&T Wireless, it’s a natural step to add broadband and even wireline if it’s offered as a bundle.
Why can’t we have data roaming on LTE from the beginning and avoid the mistakes of the 3G networks? Stephenson says the LTE network will have similar roaming agreements as those on the current networks. “It’s in all our best interests.” The industry always evolves to a point where broader coverage is needed and these agreements become necessary. You’ll see that with LTE as well.
Question about SlingBox on 3G network being rejected: Who decided that? Stephenson says that terms of service agreement for the customer do not allow customers to move live stream video over the wireless platform. Not like the fixed line side. If you start congesting network with data, voice quality goes down. We have to maintain some quality, so it’s not allowed under terms of service.
Responding to a question on warrantlessly providing data about customers to the government, Stephenson says AT&T will act within the law in all regards to customer information and privacy. “We will comply with the law, absolutely,” he says.

A note about our coverage: This liveblog is not an official transcript of the conversation that occurred onstage. Rather, it is a compilation of quotes, paraphrased statements and ad-lib observations written and posted to the Web as quickly as we were able. It was not intended as a transcript and should not be interpreted as one.

Verizon: Look Ma! No iPhone!

John Paczkowski — Mon, 27 Apr 2009 17:07:09 +0000

Verizon may well want to add the iPhone to its mobile device lineup but it’s doing perfectly well without it. The company posted earnings this morning that bested analyst estimates thanks to a strong wireless business that continues to compensate for its declining wireline division.

Verizon (VZ) reported net income of $3.21 billion. Adjusted for one-time items, the company earned 63 cents a share. Analysts had expected 59 cents a share. It added 1.3 million new wireless customers, that number bolstered by the purchase of Alltel, and ended the quarter with 86.6 million mobile subscribers. Verizon’s FiOS fiber network is also doing quite well. It added 299,000 new subscribers, pushing the total to 2.2 million. (Click on graph below to enlarge.)

Quite a performance given the current economic climate.

And what of those rumors of an iPhone deal with Apple (AAPL)? During a conference call to discuss earnings, Verizon COO Denny Strigl declined comment but didn’t rule such a deal out: “We’re always open to discussions with any supplier,” he said, adding, “We have no announcements to make relative to Apple today. Historically we haven’t been dependent on any one device. We’ve been well-positioned with high-value customers.”

Translation: Do we look like a company in need of a Jesus phone?

No. I guess not.

With 1.6 million iPhones sold in its first quarter and 40 percent of those activated during that time new to its network, AT&T (T) sure does, though. Zing….

Oppenheimer Sees Cyclical Slowdown in Consumer Communications

Eric Savitz — Mon, 29 Sep 2008 16:21:48 +0000

What we have here is a failure to communicate. Or maybe, too many ways to communicate, but not enough communicating.

Oppenheimer’s Timothy Horan this morning asserted in a research note that “we are in the midst of a cyclical slowdown in consumer communications that reflects the convergence of increased supply with slowing consumer demand.” Horan thinks the environment will “worsen noticeably” in the second half, “coinciding with a land grab for high-value customers in the wireline and wireless industries.” His advice is to avoid consumer-focused communications stocks for the intermediate term, and to look for cheaper bets.

Read the rest of this post

You Gotta Know When to Hold 'Em, Know When to Fold 'Em

John Paczkowski — Mon, 28 Apr 2008 18:00:02 +0000

[ See post to watch video ]

You Gotta Know When to Hold 'Em, Know When to Fold 'Em

John Paczkowski — Mon, 28 Apr 2008 18:00:02 +0000

[ See post to watch video ]

Ted Stevens–Melon Crazy!

John Paczkowski — Fri, 13 Jul 2007 11:18:05 +0000

If Sen. Ted Stevens (R., Alaska) keeps on the way he’s going, he may soon have enough material for a stand-up act. Last year it was ‘Net neutrality, trucks and tubes:

I just the other day got, an Internet was sent by my staff at 10 o’clock in the morning on Friday and I just got it yesterday. Why?

“Because it got tangled up with all these things going on the Internet commercially.

“… the Internet is not something you just dump something on. It’s not a truck. It’s a series of tubes. And if you don’t understand those tubes can be filled, and if they are filled, when you put your message in, it gets in line and it’s going to be delayed by anyone that puts into that tube enormous amounts of material, enormous amounts of material.”

This year, it’s motorcycles and wirelines. From the Senate Commerce Committee hearing on number portability yesterday:

Stevens: Let me be just the devil’s advocate here. Could I just decide I want to keep my wireline and I want to add wireless to it? Can I have two providers on the same number?
Answer: … um, I don’t think that technology exists right now.
Stevens: If I had an IP phone, by definition, I’d have to leave the wire… wireline phone to use it?
Answer: I think that is the case with the technology today.
Stevens: Is it coming? Why shouldn’t I be able to say, just by a little switch on my phone at home that’s wired, I’m going off on the wireless now, I want to use this as I ride my motorcycle. … I’m bad. Pardon me.

See what I mean? Comedy gold. Give him a few props and he’d be giving Gallagher a run for his money …