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Friday, June 14, 2002 |
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• ACA criticizes the EchoStar-DirecTV merger, again • President Bush comes out in support of broadband • SEC investigates Metromedia Fiber • Study: MSOs to gain in biz sector • Nortel sees better days in China Another VoIP company has been kicked to the curb -- TollBridge Technologies has ceased operations. According to a company spokesman, TollBridge was unable to secure funding, but it is unclear what will happen next. Bankruptcy? An asset sale? More than likely, the answer to both is yes. In June of last year, the company said it had secured $22 million in funding, but now needed another influx of funds to keep operations running. Since opening its doors in 1998, TollBridge has burned through $82 million in funding. TollBridge vendor competitor Jetstream closed up shop in April. The voice-over-DSL hardware provider blamed the financial climate in the telecommunications industry for its inability to continue as a stand-alone business. Shortly after the filing, Paradyne Networks purchased Jetstream's assets and intellectual property. A similar scenario will likely play out at TollBridge. John Chang, senior analyst at Allied Business Intelligence Inc., agrees that TollBridge will likely meet the fate that befell Jetstream. If that happens, he expects that TollBridge’s technology will live on as other vendors, including the possibility of Arris, snap up TollBridge’s assets. Despite its inability to secure more funding, TollBridge was making some progress in the cable telephony sector, including participation in Comcast Corp.’s recently completed VoIP technical trial in the Detroit, Mich. area. In that trial, Comcast tested IP telephony in the access network by leveraging TollBridge’s TB300 gateway, Arris’ C4 cable modem termination system and Motorola Broadband’s cable modems. In that scenario, Comcast used TollBridge’s gateway to tap into an traditional Class 5 switch. The TB300 was also designed to migrate to a pure-IP PacketCable-complaint network. What remains unanswered is what impact TollBridge’s shutdown will have on its business relationship with Arris. In a deal signed earlier this year, Arris agreed to re-sell TollBridge’s gateway equipment as part of its “CompleteVoice” cable telephony suite, which also includes multimedia terminal adapters, telephony modems and CMTSs. It is possible that Arris could swoop in and snatch up some of TollBridge's assets and intellectual property. Arris officials were not immediately available for comment. Chang says the downfall of TollBridge doesn’t mean the future of
VoIP is in question, particularly in the cable sector. “There is
a market for it,” he says. “The venture funding has just dried up.”
He added that other VoIP gateway upstarts, including Nuera, could
step in and benefit from TollBridge’s funding collapse. Related stories:
ACA criticizes EchoStar-DirecTV merger, again The American Cable Association is continuing its fight to defeat the proposed EchoStar Communications-DirecTV merger. In a letter to the FCC, the faction claims EchoStar's notion that DBS is at a competitive disadvantage to cable systems is hogwash. The ACA is trying to rebuff statements made by EchoStar and DirecTV recently to the FCC that the merger would help level the playing field in the cable vs. satellite race. The organization, however, believes that the merger would effectively weaken or eliminate smaller cable firms from the competition. "Competition would be eliminated and hundreds of small, local communications businesses could be destroyed," the ACA said in a letter to the FCC. This is not the first time the ACA, which represents nearly 1,000 smaller, independent cable businesses serving roughly 7.5 million subscribers, has come out against the merger. In February, the organization said the merger would "create a giant, entrenched satellite monopoly," and would reduce or eliminate competition, deployments, diversity and small communications businesses in the smaller markets. The ACA also questioned EchoStar's math regarding subscribers, saying "The average ACA member company serves 8,000 subscribers, more than 16,292,000 fewer subscribers than the post-merger EchoStar would serve. EchoStar cannot seriously maintain that it needs a DBS monopoly to compete against small market cable companies." The EchoStar-DirecTV camp has said it welcomes open debate on the merits of its merger. The companies stand by their claim that the merger would heighten competition. In October, Hughes' parent General Motors officially accepted EchoStar's $25.8 billion offer for the unit. The merger is designed to combine the No. 1 and No. 2 satellite providers -- both of which are offering high-speed Internet access via two-way satellite -- to create a powerhouse that could effectively compete with cable and increase broadband options for rural Americans, according to EchoStar. EchoStar submitted its merger application for review to the FCC in early December. In May, the ACA came out in favor of the AT&T Broadband-Comcast
merger. Related stories:
President Bush comes out in support of broadband In what was most likely music to the tech industry's ears, President George W. Bush said "this country must be aggressive about the expansion of broadband, we have to." In a speech to high-tech executives yesterday, Bush said the country should commit to deploying high-speed Internet access more rapidly, although he did not outline a specific plan to make this happen. He instead said, "a lot of the action is going to come through the FCC." "The role of government is not to create wealth; the role of our government is to create an environment in which the entrepreneur can flourish, in which minds can expand, in which technologies can reach new frontiers," said Bush. Broadband has been a hot topic of debate in the House of Representatives and the Senate, but tech leaders have been pushing for White House support since January. A group of tech heavyweights visited Washington just before the State of the Union to try and get Bush to mention broadband on the national stage. That obviously did not happen, but many believe the President's speech yesterday is a step in the right direction. "There's a growing demand for a greater supply of broadband. (Yesterday) the President joined that chorus and we are thrilled," said Michael Boland, senior vice president for Legislative Affairs at Verizon Communications Inc. Related stories:
Cramer Systems has partnered with Cisco Systems Inc. to enable automated, low-cost provisioning of xDSL services over Cisco-powered networks. The companies have integrated Cramer's network inventory and provisioning automation solution with Cisco's CNS Configuration Engine network activation platform. The proof-of-concept integration enables the management of prerequisite or dependent activities such as ordering or installation of hardware at customers' homes. The Cramer-Cisco combination offers totally automated xDSL service delivery, tracking of network resources and inventory management and fulfillment, according to Cramer. The network inventory and provisioning automation software provider has said the proof-of-concept integration illustrates how new technologies and services such as metro Ethernet and Ethernet-to-the-home can be deployed in line with anticipated demand. Related story:
SEC investigates Metromedia Fiber The hits just keep on coming at Metromedia Fiber Network. As if defaulting on bank loans, being delisted from the Nasdaq and filing for bankruptcy wasn't enough, now the embattled company is being formally investigated by the Securities and Exchange Commission. The probe surrounds past accounting practices that led to the restatement of MFN's operating results for the first three quarters of 2001. The company delayed its 10-K filing with the SEC in April, citing a need to restate results for those three quarters. MFN said it is cooperating fully with the investigation, but had no further comment. In May, MFN filed for bankruptcy protection from its creditors. "Our objective is to move through Chapter 11 expeditiously and have the 'new MFN' emerge with a sound capital structure and operational base, fully positioned to take advantage of market opportunities," MFN President and CEO John Gerdelman said at the time of the filing. MFN's stock was delisted from the NASDAQ National Market on May 20. It has been a rocky road for MFN, and many investors
have gotten nervous. In the spring, Salomon Smith Barney Inc., like
Citicorp USA, resigned as the company's financial adviser and UBS
Warburg replaced it. Kronish Lieb Weiner & Hellman LLP was hired
as the company's legal adviser. In March, Verizon and its Internet
transport affiliate, Genuity Inc., terminated contracts with MFN.
The folks at the SEC have been busy little beavers ever since the Enron scandal began to unfold. Since then, the commission has launched several investigations, including WorldCom Inc., Adelphia Communications Corp., Qwest Communications International Inc., Network Associates and Williams Communications Inc. Related stories:
Study: MSOs to gain in biz sector While it hasn’t been cable’s strong point historically, research firm The Yankee Group thinks recent technology tweaks have positioned MSOs to make healthy gains in the business-services market. With cable operators showing increasing interest in extending their residential coaxial networks to reach business customers, start-up companies including Narad Networks Inc. and Advent Networks Inc., as well as longtime vendor Arris, have begun offering products that deliver large-bandwidth dedicated access. While there are several flavors, these technologies all bank on existing networks, cutting the need for expensive line extensions to business customers, according to the report. MSOs are particularly interested in reaching small and midsized business customers that have been somewhat overlooked by major incumbent Bell operators for communications services. That will likely fuel further development of products that can deliver hefty multiservice bandwidth, the report concluded. "Considering the MSOs' increasing need for cost-effective
large-bandwidth solutions, it is clear that this will be an area
of growth for the broadband sector," analyst Lindsay Schroth
said.
Copyright 2002 Reed Elsevier Inc. By Pamela McClintock WASHINGTON --- In a boost for the satcasting biz, the Federal Communications Commission on Thursday extended for another five years a rule forcing cablers to make their programming available to their winged competitors. The program access rule was set to expire in October, with the cable biz arguing that satcasting giants EchoStar and DirecTV hardly represent a fledgling industry anymore that needs special dispensation. By a 3-1 margin, the FCC disagreed, saying the pay TV playing field still isn't even between cable and other providers, such as cable overbuilders or satcasters. In recent weeks, several Capitol Hill pols have urged the Republican-controlled FCC to leave the rule on the books until a thorough study can be completed on the impact of rampant media consolidation. The satcasting biz applauded the FCC's decision. "The program access rules were instrumental in helping DirecTV obtain programming to compete with entrenched cable operators, and today's decision by the FCC preserves competition and diversity in the multichannel TV marketplace," said DirecTV prexy-chief operating officer Roxanne Austin. "This five-year extension will be of great benefit to our customers, who will continue to have access to a wide variety of quality programming on DirecTV," Austin said. The rule at issue, enacted by Congress in 1992, prohibits a cabler from entering into exclusive contracts with other cable operators. Rule applies only to programming distributed by cablers via satellite, which encompasses most channels. Regional channels, such as sports nets, are exempt from the rule ---causing satcasters no small amount of consternation. The FCC said Thursday it had declined to consider whether the exemption should be scuttled. Since the overall program access rule was adopted, cable's share of the overall market has dropped from 95 percent to 78 percent, according to the FCC. Voting against the five-year extension, Republican FCC commissioner Kathleen Abernathy said there is no longer any need for the rule, considering that there are about 18 million satcasting customers, nearly one-quarter of total subscription TV customers. "This vigorous, substantial competition assures that the vast majority of programming, whether owned by a cable operator or not, would be available to all distributors. The cable industry has dramatically increased programming diversity and choice and will continue to do so," National Cable & Telecom Assn. senior veep Dan Brenner said. "Nevertheless, eliminating this rule this year would have restored balance in allowing limited exclusivity to be used to differentiate competitive offers --- as Congress contemplated in proposing a sunset back in 1992," Brenner said.
Nortel sees better days in China Copyright 2002 Toronto Star Newspapers, Ltd. Tony Munroe, Reuters News Agency Canadian telecommunications equipment giant Nortel Networks says demand from China will start to pick up later this year, although the mainland market for networking gear won't soon return to 2001's boom levels. "We think the market in 2003 will not be as big as in 2001," said Robert Mao, president of Nortel in China, describing the first half of this year as slow. "Maybe 2004 will be as big as 2001," Beijing-based Mao said in an interview while in Hong Kong for the 3G World Congress on telecommunications. Mao figures the mainland market for fixed and wireless network infrastructure, not counting cables, was worth roughly $7 billion to $9 billion (U.S.) in 2001. Last year, beleaguered foreign gear makers found a measure of comfort in the thriving mainland, which mushroomed into the world's biggest mobile phone market. But both of the country's wireless giants, China Mobile (Hong Kong) and China Unicom Ltd., have said they will slash capital expenditures this year. "CMCC (China Mobile) and China Unicom, after two years of rampant growth, are in a period of digestion," Mao said. China Mobile pared its capital expenditure plans for 2002 and 2003 to $4.5 and $4.1 billion, respectively, from earlier plans to spend $5.4 billion each year. Unicom said it would cut capital spending in 2002 by 30 per cent from a year ago to $2.62 billion. Meanwhile, the recent restructuring of China's creaky fixed-line former monopoly, China Telecom, took longer than expected, putting purchasing decisions on hold. Mao said, however, there is hope on the horizon in China. Any such sign of growth would be welcomed by Nortel and its rivals, including Ericsson AB, Motorola Inc., Lucent Technologies Inc. and Nokia Oyj, which are suffering through a deep revenue slump. In the near term, Mao said, Nortel expects soon to announce contracts to provide optical fiber networks in metropolitan areas. The metro network market in China has traditionally been the domain of rivals, including Lucent, Alcatel and local player Huawei Technologies, he said. Mao also said he expects the second round of contracts for China Unicom's new CDMA-standard network to be awarded this summer. Last year, Nortel won $275 million of a total $1.46 billion outlay to build the first phase of the network. Now that China Telecom has been carved into two carriers along north/south lines - with rights to enter each other's markets - Mao figures there will be opportunities to sell equipment to both so they can try to steal high-end customers on each other's territory. Finally, both the fixed-line giants are expected to be granted mobile network licences, perhaps next year, Mao said. If they begin operations in 2004 or 2005, most observers expect they will do so using third-generation networks. "That will provide great impetus for another round of market growth," Mao said.
• Adelphia appoints new auditor • Loudeye names Heymann to board Heymann fills a vacant Class III seat and will stand for election at next year's shareholder meeting. • Convergys rolls out Mediation Manager Release
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