Category: Cloud Computing
At the CompTel Plus show this week, I was reminded of the prediction made at last year’s show that 2010 would represent something of a volume peak for fiber-based mergers and acquisitions. That prediction appears to have been borne out, with dealmakers reporting this week that, even assuming some more transactions before the holidays, fiber M&A in 2011 will be “not even close” to the volume seen in 2010. There simply aren’t as many assets left on the market these days.
As my hastily assembled list indicates, telecom M&A in 2011 shifted more toward cloud-centric services, including hosted communications, particularly after the starting gun of Verizon’s (VZ) $1.4-billion acquisition of Terremark Worldwide in January. (Yes, I know: This list is far from exhaustive. Please feel free to harangue me about the ones I omitted in the Comments section below.) Cloud M&A will continue to hold the spotlight for some time (more on those trends here and here), but even large-scale fiber M&A hasn’t closed its curtains yet; expectations for cable MSOs to buy nationwide fiber networks continue to grow as trade associations lobby regulators for a green light to such deals.Read more
Amid a wave of cloud-centric M&A from historically rural carriers large and small – CenturyLink’s (CTL) acquisition of Savvis, Windstream’s (WIN) purchase of Hosted Solutions, TDS Telecom’s (TDS) VISI deal – one carrier we haven’t seen make a cloud acquisition yet is Frontier Communications (FTR). That’s primarily for the obvious reason that Frontier currently has its hands full digesting its last acquisition — Verizon (VZ) wireline properties in 14 states – which closed at the beginning of last year’s third quarter.
As with any telecom carrier, key to Frontier’s success is its penetration of business customers, which contribute 51% of its revenue. But attacking that market – or even retaining it — while assimilating Verizon’s properties has not been easy for Frontier, and the next nine months will be a crucial period for it to make progress.
Before Frontier acquired it, Verizon’s business it was losing about 30,000 access lines per quarter on the business side alone (nearly quadruple that on the residential side). In the long months leading up to the acquisition’s close, as both companies plodded through a politicized regulatory approval process, Frontier could only stand by and watch as cable companies (Comcast [CMCSA] in particular) pilfered those Verizon customers, easily spreading fears that the transition to Frontier would create the kind of horrible service headaches that FairPoint Communications (FRP) saw when it executed a similar deal. (That’s another reason why Frontier had to make the integration of these assets its sole focus throughout this transition before tackling any other new initiatives.)Read more
When will we reach the point at which the value of a voice call is eclipsed by the value of the data surrounding the call?
Businesses are rapidly learning how valuable call metrics are to their operations in multiple ways: Knowing how the length and volume of customer service calls can be affected by the particular customer service rep, the particular customer, the particular topic or circumstances, time of day, etc. – all of these things can help businesses optimize their processes and keep customers happier.
The more call data is unleashed, the more businesses and service providers will learn about how best to harness it. And more data is being unleashed all the time. This week Google added its Voice service to those included in its Takeout offering, which allows users to download data associated with services like Gmail and Google+’s social app, Circles. So now Google Voice users will be able to download their call history, voicemail (both audio and transcripts), greetings, recordings and so on.
Google has long offered APIs for its services that allow others to cultivate and process data surrounding their use. Various developers have created mashup apps for tracking call data through Google Analytics. And Google also offers call metrics with its AdWords advertising service, so that users can measure the effectiveness of ads by looking at the number of people who place calls through the ads. But that application serves Google’s ad sales (as a sort of ad-spend-ROI calculator) more than it serves users’ own direct needs.
What may turn out to be especially valuable about Takeout for Google Voice is itsRead more
Masergy is looking for acquisitions to beef up its bottom line following the new injection of capital it will receive from being acquired by private equity firm ABRY Partners. As it’s shopping, the provider of global VPNs and MPLS services would do well to add hosted VoIP and other cloud services to its in-house capabilities, emulating the strategy of several others including Cbeyond (CBEY), which last year acquired both a cloud computing firm and a hosted VoIP provider.
Masergy made the case fairly well for combining its own services with hosted VoIP in the press release announcing its partnership with hosted VoIP provider Thinking Phone Networks: When you blend the benefits of a cloud-based application with the performance quality and QoS controls of a secure, intelligent MPLS connection, you have a powerful package. (Throw in SIP trunking, and customers have a way to get the most of their existing premise-based PBXs.)
But wait, you say: Doesn’t Masergy mainly serve large businesses? What do large businesses want with hosted VoIP? Isn’t that just for small businesses that don’t have their own dedicated IT staff?
On the contrary. Hosted VoIP is not just for small businesses anymore. As I detail in a new report just recently made available (“Hosted Business VoIP: UpMarket Opportunities”), demand for hosted VoIP services is quickly catching fire among businesses with hundreds or thousands of employees.Read more
As network operators point to the rising bandwidth consumption of mere websites in general as a mounting challenge, it’s worth stepping back from time to time to see what bandwidth management challenges might be coming down the road. Here’s just one example that came to mind this week:
The rock band U2 is taking 360-degree “gigapixel” pictures of the audiences on its current tour. The entire audience. Take a look; you can scan the front row, the back row and everything in between. (You may have seen similar ultrahigh-resolution images from Barack Obama’s inauguration or the 26-billion-pixel picture of Paris, both of which are essentially fusions of multiple images.)
Audience photos in general are becoming more popular because even standard-resolution photos at smaller venues are being uploaded to Facebook, where the audience members can “tag” themselves. For concert-goers, it adds another social layer of value to the experience, since it allows them to connect with one another – for example, by sending a message to another audience member: “Hey, you were that girl banging your head near center stage! Remember when the drummer passed out? Wanna get a beer sometime?” For the bands, it can be an amazingly rich marketing resource, a way to easily contact fans (to alert them of future events – new albums, etc.) and a source of demographic, geographic and social information about them.
As these practices become more popular, imagine the next step.Read more
As cloud services snowball, they will place increasing strain on today’s telecom networks (in fact, the outlook is worse than you think; read this), putting their own performance quality in peril. The rockier things get, the more tempting it will be for telecom service providers and cloud service providers to pin the blame on one another in the public’s eye.
You can already see tensions starting to simmer: Netflix (NFLX) just updated the ranking of service providers it commenced after the high-profile spat between its CDN provider, Level 3 Communications (LVLT), and its competitor, Comcast (CMCSA). Though the ranking has the ironic side-effect of exonerating second-place Comcast, the message isn’t subtle: Carriers who displease us will be publicly shamed. And it comes from a company that produces 20% of all peak-time Internet traffic just by streaming a portion of its content online.
Telecom network providers, meanwhile, have their own complaints. At the Open Mobile Summit in London this month, some of Europe’s largest mobile operators called out app makers for clogging up their networks with excessive signaling – i.e., messages that update the current activity of the app are being sent too frequently. App makers are naturally incentivized to keep their apps chatting but less concerned about how that affects entire networks. So what are network owners to do?Read more
We don’t know yet all the ways in which cloud services will impact telecom network architectures and business models (a good place to start, though, is here). One potentially fundamental disruption is in the intersection between cloud services and content delivery networks (CDNs) – two seemingly opposing forces that are nonetheless converging.
Like most folks in telecom, CDN players might argue that they are a cloud service and were so before it was cool. But when I say “cloud” here, I’m not just talking about the Internet or a data center. I’m talking about the kind of cloud that was exciting enough to make the word “cloud” so ubiquitous in the first place – the virtualized, elastic, metered kind. I say CDN and the cloud are “seemingly opposing” for two reasons:Read more
The telephony API (application programming interface) and mashup market is growing more mature by the month, as voice increasingly fractures, from a discrete service into a variety of features within a range of applications. Just a few months after two cloud telephony platform providers bulked up with new waves of investment, a new startup is throwing its hat in the ring with aims to take telephony APIs higher upmarket.
Twilio, whose web-based platform has been helping application developers add telephony functions since late 2008, raised $12 million in new funding last fall after collecting more than 20,000 customers. A few months later, a similar outfit called IfbyPhone, raised $10 million, having already made its own cloud startup acquisition. And last week a new venture called Plivo launched a Twilio alternative aimed at the higher end of the market.Read more
Rackspace Hosting (RAX) set several new records in the first quarter, reporting its highest revenue growth since 2008 and continuing a break-neck pace of expansion that is emblematic of the cloud computing movement itself.
The company added 12,000 new customers, 230 new employees and more than 4400 servers in the quarter, each of which represents a new record (except for employee additions, which the company has exceeded before but not since 2008).
Here’s a look at the company’s current trajectory in three slides:
1. Though cloud services are only 16% of Rackspace’s overall business today (the rest being managed hosting), they’re growing rapidly – 93% from a year ago – driven by a mix of new and existing customers. These latest results were aided by the first full quarter of the company’s managed cloud offering and illustrate some of the upside potential in the cloud.Read more
CenturyLink’s (CTL) acquisition of Savvis (SVVS) illustrates a crucial dynamic in the current convergence of telecom and data center services. As I pointed out in my recent report on this sector, one of the key competitive battles going forward in the cloud space will be between players that bundle cloud services with their own networks and those who promise “network independence.” Today’s deal demonstrates just how important and valuable the network component is for cloud providers, especially those targeting managed services.
On a conference call today announcing the $2.5-billion deal, at least one analyst questioned whether Savvis was getting the best deal it could, citing the 13.5x EBITDA price Verizon recently paid for Terremark Worldwide and the 11x price CenturyLink appears to be paying for Savvis. So what is Savvis getting? For starters:Read more