During a speech to the Detroit Economic Club today, AT&T CEO Ed Whitacre announced that the telco is expanding into the WiMax and satellite broadband arenas. Taking the latter initiative first, AT&T plans to offer satellite high-speed service in areas that its terrestrial networks don’t reach.
The offering will be extended in partnership with rural satellite service provider WildBlue with prices ranging from $49.95 to $79.95 per month, and broadband speed options ranging up to 1.5 Mbps downstream and up to 256 Kbps upstream. Like all AT&T Broadband services, this satellite option will come with a Yahoo co-branded portal.
The push into WiMax and other fixed wireless technologies will kick off later this year in Red Oak and Midlothian, Texas and Pahrump, Nevada, joining other AT&T fixed wireless service offers in Alaska, Georgia and New Jersey. You’ll notice that Red Oak and Pahrump aren’t teeming cities — they’re rural communities. The initiatives announced by Whitacre are aimed at expanding AT&T’s efforts to make sure that it’s hitting the less populous (and less well-to-do) regions.
A third initiative announced by Whitacre also bolsters the telco’s new-found goal of serving rural communities. He promised that within three years, AT&T will make its new IP-based, Lightspeed initiative video services available to more than 5.5 million low-income households within the 41 markets where the company is initially building its fiber-to-the-curb video networks.
Om says that these moves “could be attributed to some harsh business realities” faced by the former Bell companies, which are losing local access lines at a dismaying rate. He could be right, but I’m not so sure.
I bet that AT&T is polishing its image as a good corporate citizen, particularly by pushing into rural and lower income areas, so that it may earn brownie points as Congress weighs telecom reform legislation. Pushing the telco along, no doubt, is cable’s fight to impose “build-out” requirements on phone companies that enter the video businesses. The cable industry has accused AT&T and Verizon and the other top telcos of trying to redline their new video facilities by cherry-picking only the most profitable areas and avoiding the lower income and rural parts of franchises.
Posted by Cynthia Brumfield at 9:25 PM | Print | Comments (3)
The financial services industry has raised concerns that seem to support neutrality regulations and Verizon, for one, isn’t going to take that lying down. Reuters claims it got a hold of a memo written by Verizon’s chief congressional lobbyist Peter Davidson in which he warns financial institutions, which fear step hikes in the fees they pay to telecom service providers absent net neutrality, not to coming crying if they don’t get the kind of secure, reliable networks they need if net neutrality regulations are indeed passed.
“They are being fed a lot of cock-and-bull, Chicken Little stories about how the future of their industry is at stake because another network industry might have the freedom to price broadband services according to market demand,” Verizon’s chief congressional lobbyist Peter Davidson said in the memo. He warned that the financial services industry “better not start moaning in the future about a lack of sophisticated data links they need” if Net neutrality laws were passed because the communications industry may not invest in new networks.
Later in the memo, Davidson said
“Why in the world should broadband network providers, who have invested billions to create those networks, be denied such pricing freedom?” Davidson said.Posted by Cynthia Brumfield at 5:54 PM | Print | Comments (0)
Cable operators are on a tear, with the Q1 06 earnings reports bearing witness to the power of the triple-play platform — cable operators are getting a lift across the board from their voice-video-data combos. Wall Street is starting to take notice and the conventional wisdom now (not three months ago, however) is that cable will grab a substantial chunk of the voice business before the phone companies even get their IPTV initiatives seriously off the ground.
And the new conventional wisdom is right…but one interesting overlooked fact is that the phone companies are offering video services today. It’s just that they’re not transmitting video over their own networks; they’re offering co-branded DBS services delivered by EchoStar and DirecTV.
No one seems to be paying attention to this telco video service, but during Q1 06, the phone companies posted healthy gains in their DBS-based subscribers.
| Incumbent Telco Video Subscribers via DBS Partnerships (000s) | |||||
| Total Subs. | Total Subs. | Total Subs. | Total Subs. | Total Subs. | |
| Telco | 1Q05 | 2Q05 | 3Q05 | 4Q05 | 1Q06 |
| AT&T | 394 | 404 | 419 | 457 | 491 |
| BellSouth | 314 | 394 | 460 | 523 | 628 |
| Qwest | 100 | 120 | 151 | 183 | 228 |
| Verizon* | 200 | 250 | 305 | 349 | 415 |
| Total | 1,008 | 1,168 | 1,335 | 1,512 | 1,762 |
| Net Change | NA | 161 | 166 | 178 | 249 |
| *1Q05 and 2Q05 are estimates. | |||||
At the end of Q1 06, the top four incumbent telcos laid claim to 1.762 million video customers through these marketing and sales alliances. Collectively the four telcos added around a quarter of a million net new video customers during Q1 06, a run-rate 40% higher than the 178,000 net new video customers added during Q4 05. The biggest gainer: BellSouth, which added 105,000 net new video customers through its pact with DirecTV.
(For more on the telcos’ Q1 06 video subscriber gains, see my pub IP Media Monitor — free registration required.)
Posted by Cynthia Brumfield at 1:19 PM | Print | Comments (0)
In a very interesting move, independent VoIP provider Vonage, which has filed for an initial public offering (IPO), is offering its customers shares in the company’s stock at the IPO price. Vonage sent an email to its customers this morning stating
As you may know, Vonage has filed a registration statement with the Securities and Exchange Commission (SEC) related to its proposed initial public offering (IPO) of common stock. Because much of our success is attributable to our customers, we have asked the underwriters of the IPO to reserve shares of common stock for sale to certain Vonage customers at the IPO price in a Directed Share Program.
You may be eligible to participate in the Directed Share Program if you meet certain eligibility requirements, including having been a Vonage customer from December 15, 2005 through February 1, 2006. You do not need to continue to be a Vonage customer in order to participate.
Vonage directs customers to a web site that spells out the terms and conditions of this offer (which are also found in a revised S-1 filed by Vonage this morning), among which are the requirements that a customer:
—signed up at least as early as 12/15/05
—is a U.S. citizen
—has a valid social security number
—is a person as opposed to a corporation or other commercial entity
—is eligible to open a limited purpose brokerage account at specified financial institutions including Smith Barney, Deutsche Bank Alex.Brown, a division of Deutsche Bank Securities Inc., or UBS Financial Services Inc.
Customers are required to open up their brokerage accounts by May 19, 2006 and are required to purchase at least 100 shares and are eligible to purchase no more than 5,000 shares. A customer is required to make a conditional bid on the share price — if the pre-IPO price (currently $16 to $18 per share) covers that bid, the customer’s bid will be accepted.
If valid bids are received for more shares than have been reserved for allocation in the “Vonage Customer Directed Share Program,” Vonage will reduce the customer’s shared by a formula spelled out in the offer.
The site for enrolling in the Vonage customer share program goes to great lengths to 1. ensure the customer has read the prospectus and 2. in the event the customer didn’t read the prospectus, identify the risks of investment anyway.
That’s about as far as I got given that I’m not going to open up a brokerage account.
My question: what is this? Is anyone aware of any other company offering its mass market customers pre-IPO shares? Is this truly a reward for customers or is it a way to ensure that Vonage is fully subscribed before hitting the public markets?
Posted by Cynthia Brumfield at 9:02 AM | Print | Comments (0)Apple Computer Inc. won a victory today in its high-profile trademark fight with the Beatles’ record company Apple Corps. Ltd. The long-standing legal tussles between the two companies appears to have ended - the High Court in London rejected the famed label’s arguments that it held the exclusive right to use the “Apple” logo under a 1991 agreement.
Somehow the issue boiled down to whether Apple Computer was branding the music it sells with the iconic Apple logo. The Court ruled that Apple’s use of the logo didn’t constitute branding the music. “The marks are used on and in connection with the service, and they are still not, in my view, used to ‘frank’ the recordings as well,” Justice Edward Mann wrote in the decision.
Posted by Cynthia Brumfield at 6:59 AM | Print | Comments (0)
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