Best Buy will merge its Speakeasy DSL business with Covad and Megapath, creating a managed service local exchange carrier, and sounding the death knell for independent DSL providers. It’ll get a minority stake in the combined company, which to me is a euphemism for fire sale.
If the Department of Justice wants to scrutinize the telecommunications industry, as The Wall Street Journal suggests it does, then it should get in line behind the new FCC, Congress and possibly the Federal Trade Commission. It also should focus on the much less sexy aspect of middle-mile access, rather than which network operator gets exclusive access to the iPhone. The Journal cites sources in the DOJ that say the agency is taking a close look at the influence and relationships Verizon (s vz) and AT&T (s T) have, and how they use their market power.
Potential targets for the investigation include handset exclusivity on wireless networks and net neutrality, according to the sources cited in the story. But for the Justice Department to bring a case, it needs to be sure it can prove that these firms have a monopoly, and that they are using their power to artificially keep it — something that could prove difficult in the above-mentioned areas, given the number of competitors in the wireless market and the amount of ISPs on the wired side. Read More about DOJ Wants to Probe Telcos? It Should Take a Number
After a really rough 2007, Vonage (VG), the independent voice-over-IP service provider, seems to be having a better 2008. This morning the company reported its first-quarter 2008 financial results, and well, things are not bad. Not spectacular, but not bad, either.
More importantly, the company announced plans to sell Covad DSL services, rebranded as Vonage Broadband and tightly coupled with its VoIP service. Read More about Now Vonage Will Also Sell Broadband
The Helio-MuniFi experiments haven’t really worked out for EarthLink. One of the leading independent service providers, it has hit the skids. They gave the pink slip to nearly 900 employees in August. And it seems the spending cutbacks on Helio and MuniFi came too late. Now we’re hearing from multiple sources that another round of cuts is coming — and this one is going to be deep. Our friends at DSL Reports have heard something similar.
Even the senior ranks aren’t going to be spared, we are told. Could the new CEO be on his way out as well? EarthLink might also lose its voice…its voice business, that is. Stay tuned for further details. I think this company might be getting ready to be taken over by a private equity shop, just like Covad.
Its been almost eleven years when the Telecom Act of 1996 was announced with much fanfare. It promised a telecom revolution, and instead it got a Bubble, Broadbandits and a battle of the lobbyists. And as they years passed, incumbents neutered it beyond recognition, leaving it toothless and lifeless, much like the royal family of a fallen colonial power. Sure there were some things that microscopically-tilted in favor of the small, independent carriers, but even those are at risk now. Read More about Forbearance Can Impact Telecom Choices
[qi:076] Covad to be acquired by
Providence Equity Platinum Equity Partners for $1.02 a share in cash, a 59 percent premium to its closing price on Friday. Covad is one of the handful of independent broadband service providers to have survived the telecom bust. Providence, I suspect, will have Covad focusing on wholesale and wireless broadband. Maybe it is time for the private equity guys to take a cold, hard look at EarthLink (ENLK).
[qi:017] Vonage and Verizon kiss and make up. The patent fracas is going to end with a settlement that will see Vonage (VG) paying out either $80 million or $120 million. Vonage has seen seeking a rehearing of its case, and if it wins, Verizon (VZ) gets $80 million. No one can tell me that this patent mess isn’t about the money. The ironic thing is that the shareholders who bought into Vonage’s independence have seen their dollars end up in the pockets of the incumbents.
[qi:83] Skype launches 3SkypePhone. It was rumored for a while, but Skype (EBAY) and 3 have launched a Skype-branded phone that lets 3 customers make free Skype-to-Skype calls and send free Skype instant messages from their mobile phone to other Skypers by pushing a single Skype button on the phone.
[qi:045] Hypres combines superconductivity with software radios. Hypres, a superconductor maker that we recently profiled, has signed a deal with SELEX Communications, a division of Finmeccanica Company (a huge defense and high-tech company in Italy), to develop an all-digital receiver for the SELEX Communications software-defined radio.
[qi:012] How good is Apple Airport Extreme (AAPL)? Information Week thinks it is better than the rest. It’d better be, given how expensive the damn thing is.
[qi:011] Best Buy (BBY), the large North American electronics retail chain, that recently snapped up Speakeasy, a DSL provider, is now interested in gobbling up Covad (DVW), a large wholesale broadband provider, according to Broadband Reports.
The discussions have a on-again-off-again nature, Broadband Reports says, and points out that the deal might be for Covad’s VoIP business. Covad which trades on American Stock Exchange for about 65 cents a share is valued at $194 million compared with $97 million Best Buy paid for Speakeasy. I have contacted Covad and am waiting to hear what they have to say.