Telecom Ramblings

By Peter Radizeski, RAD-INFO

Let me start by saying this post will be all my opinion on the telecom industry.

The Vonage patent loss means that many more patent lawsuits will be coming.

Vonage turned to a competitor this week for help. VoIP Inc. was hired for its technology (which it wholly owns) and its network (such as it is). So Vonage adds insult to injury and adds an additional payment to its bills. This company won’t last. (Even Citigroup, who underwrote the IPO, gives Vonage less than 2 years.) Sprint Nextel is suing for patent violations. There are six shareholder lawsuits. Vonage has to pay 5.5 percent royalties that does not leave room for profit.

Profit, you laugh. I know, profit is not a word used in telecom. I am a man with a lantern looking for a CLEC or VoIP provider that can show me a true profit.

SunRocket just hit 200,000 subscribers making it the second largest pure-play VoIP provider. After just $80 million in venture capital cash, it gets 200,000 subs. It retails for the same or less than Vonage. And still in the world of VoIP, it is small potatoes. Over 9 million of the 10 million subs belong to Cable MSO’s or Vonage (for now on that last one). So more than 1,000 VoIP providers have about 800,000 subs (of which 250,000 are with Sunrocket and 8×8). Most of those providers don’t have to worry about a lawsuit – yet. They aren’t big enough.

Then there is cellular. After spending billions on 2G, 2.5G and 3G deployments, the cellular guys are set to spend billions more on AWS, WiMax and 4G, in a flat market driven almost exclusively by handset sales.

According to, ”fewer than 10 percent of domestic wireless subscribers utilize 3G services such as music downloads or streaming video. … Companies like Verizon and AT&T should consider shifting focus to customer retention and away from profit maximization.” Cellular has 3G but not E-911.

In the United States, the big two cell companies are also spending billions on triple-play. Verizon has a 9 percent take rate on FiOS so far with 200,000 subs.

People are so upset with cable costs, according to our esteemed FCC Chairman Kevin Martin, that where it is available 9 percent want to give Verizon any more of their money. With Verizon’s questionable marketing tactics (ask me about their $9.99 win-back plan) and miserable customer interaction, it will require a price blood bath for more people to switch, and even then it may only happen if the cable company messes up. (TWC and Bright House, give me a call!)

One more quick note on the RBOCs actions. DSL was introduced to businesses in 1997 by Covad, NorthPoint and Rhythms – the DLECs. Then in 1998 cable modems were gaining traction. Meanwhile, the RBOCs spent all their energy lobbying and litigating the CLEC’s and DLECs. And cable was kicking their butts.

Finally in 1999 the RBOCs got serious about DSL, but by then cable had a huge lead. Here we are 10 years later and Verizon is litigating Vonage for the 1 million customers that it lost to the upstart, while Cablevision is eating its lunch! Verizon has a petition in the FCC (Docket No. 06-172 filed on Sept. 7, 2006) whereby the company wants relief from its “dominant carrier” responsibilities in six major metro areas. These include Boston, New York, Philadelphia, Virginia Beach, Va., and Providence, R.I. So once again, the RBOC has its eye on the wrong ball.

What does this have to do with being a telecom agent? Well, not much, but I’ll try some speculation. Agents get paid mostly for acquisition. There are about 3,600 companies with more than 2,500 employees. There are only 17,000 businesses with 500 or more employees. Chances are your carrier has locked the 3,600 companies up with internal account teams. And with 5,000 telecom agents and roughly 5,000 direct account executives – that’s less than two medium businesses each. However, there are 4.5 million businesses with less than 20 employees. Find a regional CLEC or VoIP provider and a non-RBOC cellco and go make some money on these 4.5 million underserved businesses in America.

Oh, yeah: please take our quick survey.

And plan ahead for the Channel Partners Expo on Sept. 26-28 at the Meadowlands in New Jersey.

Peter Radizeski is president of


. He can be reached at


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