by Cynthia L. Webb
SBC Communications is the latest Baby Bell to jump headlong into the world of Internet telephony, a move aimed at boosting its offerings in an increasingly competitive broadband marketplace and at catching up with upstart 'Net phone players like Vonage that have seen a surge in business as consumers look for cheaper calling plans.
But SBC's move also amounts to "the latest salvo in what's fast becoming a high-stakes race between phone and cable-TV companies. Both are hoping to woo customers with a full menu of phone, data and video services," USA Today reported.
"None of the Bells have a choice," telecom consultant Raul Katz told USA Today. SBC senior VP Scott Helbing put it more directly: "It's a game of chicken, to a certain extent," he told the newspaper. "Cable operators have been pushing to get into our bread-and-butter business, and now we're going to get into theirs." * USA Today: SBC To Offer Net TV, Phone Service
SBC officially announced its voice-over-Internet-protocol (VoIP) service today. The San Antonio, Tex.-based company already has a trial run of the service in Los Angeles, Dallas, Chicago and San Antonio. "The long-awaited move comes nearly a year after Qwest Communications International Inc. launched its Internet calling service, or voice over Internet protocol, in its territory. Verizon Communications Inc. , the nation's largest phone company, launched an Internet calling service earlier this year," the Wall Street Journal noted. "Phone companies are rolling out Internet calling to respond to startup rivals like Vonage Holding's Corp. and Skype Technologies SA , which have been offering cut-rate and even free phone calls for consumers using Internet technology. The startup companies have been successful so far, signing up hundreds of thousands of customers," the paper reported. * The Wall Street Journal: SBC Test VOIP Service Aimed AT Consumers (Subscription required)
USA Today noted, however, that SBC still relies on traditional phone service for its bottom line. That is the case for long-distance firms like AT&T and local phone monopolies (the Baby Bells) that are trying their own hands at Internet calling: "For all the buzz around Internet-based services, basic phone service -- delivered over old-fashioned copper phone lines -- still accounts for the bulk of the company's profit. Most of the big phone carriers probably would prefer not to sell Internet-based phone service, because it competes with their own higher-profit basic service. But SBC, Verizon and the other big carriers really don't have a choice. Cable companies are rapidly rolling out Internet phone service. ... At the same time, cell phones are gaining favor as a substitute for traditional 'wired' phones. The two developments, driven by advances in technology, are forcing SBC and the others to respond. Verizon, based in New York, already offers VoIP for consumers."
The Ann Arbor News of Michigan on Sunday reported that consumers are set to be the big winners in the VoIP wars: " Comcast Corp. and SBC Communications Inc. have already revved up their broadband engines to attract the coveted high-speed Internet customer. But the next two years could bring nothing short of an broadband arms race, as cable TV and Baby Bell phone companies joust to furnish your home's every communication and entertainment need. Phone companies say they're committed to spending billions to build fiber-optic networks capable of bringing high-definition TV, Internet services and phone systems directly to homes. Meanwhile, cable firms hope to cut into the phone market by rolling out Internet-based calling, possibly next year," the paper said. "For consumers, the rivalry could yield a cornucopia of new features -- and possibly lower prices - as the nation's seemingly insatiable thirst for a flash-like Web pace persists. But some observers wonder whether broadband proliferation will result in real competition -- or merely create cable-only or fiber-only territories. One thing is certain: The lines traditionally separating cable and telephone companies are blurring." * Ann Arbor News: Race Is On To Plug In High Speed Net Links
Meanwhile, back in Washington, VoIP providers must be celebrating the feds' decision to take the lead in regulating Internet phone services. In a ruling issued late Friday , the FCC "asserted their control of Internet phone service but have not yet fleshed out important details, including potential taxes and fees," CNET's News.com reported. More: "FCC Chairman Michael Powell has said he favors a light regulatory touch for VoIP. But complicating an already complex situation is how Congress might rewrite the nation's telecommunications laws when it revisits the 1996 Telecommunications Act. One Senate panel has already voted to impose what would amount to heavy taxes on VoIP providers." * CNET's News.com: Feds Claim Control Over VoIP, Leave Tax Issue Open
Uncle Sam is hopping on the VoIP bandwagon too. The Defense Department has been running tests to upgrade its networks, including support of 'Net phone calls, on IPv6 , a follow-on effort to expand on the current Internet addressing system, CNET reported. * CNET's News.com: Defense Department Test Net Phone Calls On IPv6
Telecom Capital Rising?
The blurring distinction between cable and phone companies also means more competition for the telecom sector, which has been in need of a revival since the dot-com bust and telecom fall-out of the late 1990s. The Washington Post yesterday reported that the Washington region's telecom sector is getting a boost from an increased appetite in wireless and security. But experts told the paper not to expect another massive telecom boom: "After four years of painful decline, the area's telecommunications business is starting to come back. The newer telecom companies are largely focused on such growth areas as wireless communications and security software. Many are small. And most get by without the dollars that used to flow from venture capital funds or from going public. Washington will continue to be a major center for telecommunications, analysts and investors say. The area is rich in technologists, lawyers, venture capitalists, skilled workers and the federal regulators of the telecommunications industry."
More from The Post: "But the telecommunications industry won't be the local economic driver it was during the 1990s, analysts say. Local employment in the industry hit 50,200 in March 2001, and venture investments in local telecommunications topped $1 billion in 2000. At last report, 33,700 people were working in the local telecommunications sector as of September, according to the Bureau of Labor Statistics. The area's venture investment in telecommunications dropped to $81.7 million last year, according to data from the MoneyTree survey conducted by PricewaterhouseCoopers/Venture Economics/National Venture Capital Association." Charlie Thomas , former chief executive of dot-com fall out Net2000 Communications , told the paper: "I see promising players, but if you're looking for the next Google, I don't know that we know what that is yet for this area." * The Washington Post: Telecom Shows Sparkles of Life (Registration required)
Things are looking good for the wireless telecom segment up north: "The industry that provides your cellphone and wired-phone links had its most profitable quarter of the last five years between April and June, says Statistics Canada," the Canadian Press reported. The "wireless segment outperformed the wireline segment by a wide margin," the agency told the CP. "Total operating profits for the quarter amounted to $1.8 billion, a 26.1 per cent gain from the second quarter of 2003." * Canadian Press via CANOE: Telecom Industry Profits Best In 5 years in Q2: StatsCan
The Microsoft of the Wireless Industry?
The Wall Street Journal recently reported on British wireless firm Vodafone 's efforts to strong arm handset manufacturers. According to the Journal, Vodafone has said: "Comply with thousands of technical and design requirements or forget about supplying next-generation phones to Vodafone, the world's largest cellphone-services company. Phone makers including Motorola Inc. , Samsung Electronics Co. and Sony-Ericsson Mobile Communications Ltd. , quickly agreed to Vodafone's demands. Even though they risked turning their phones into anonymous carriers for Vodafone's services, the companies couldn't turn away Vodafone's bulk orders. Even Nokia Corp. , the world's largest cellphone maker, acceded to most of Vodafone's demands after a long period of resistance."
According to the newspaper, "Vodafone's strategy is altering the balance of power in the $500 billion cellphone business. For years, service operators and phone manufacturers coexisted peacefully, bonded by a mutual dependency. Companies such as Vodafone didn't want to miss out on hot new phones and phone makers relied on service providers' huge orders. But as the cellphone market slowed, their goals diverged. Now Vodafone wants to control the look and feel of a cellphone rather than leave those choices to phone makers. ... At stake is control of an everyday device owned by more than a billion people. The winner will be in a position to shape the future of the cellphone business and cream off the profits that come from being a premium brand. The losers, by contrast, could be stuck with a low-margin commodity business, one that's subservient to its former partner. That was the fate of the U.S.'s personal-computer makers that allowed Microsoft Corp. to elevate its own brand over theirs and dominate the discussion about how PCs should operate." * The Wall Street Journal: After Long Peace, Wireless Operator Stirs Up Industry (Subscription required)
Vodafone's strategy certainly isn't hurting the bottom line. The company yesterday "reported a narrower net loss for its fiscal first half, as the mobile telecommunications company increased its share-buyback program, doubled its dividend payment and provided guidance for fiscal 2006," the Wall Street Journal reported. * The Wall Street Journal: Vodafone Posts Narrower Loss, Doubles Dividend for Half (Subscription required)
Is the Google stock bubble about to burst? Probably not, but the shares -- currently trading in the $170s and $180s -- could be in for a fall, given that company insiders will be free to unload up to 39.1 million shares on the market today, Bloomberg reported. The sell-off can potentially double "the amount of stock on the market and putting pressure on the price. The possible increase of shares in circulation may ease a shortage of stock that helped fuel a rally since the company's initial public offering in August. Shares of Google, the most-used Internet search engine, closed yesterday at $184.87, more than twice the IPO price of $85. Before today, 27.2 million of Google's 273.4 million shares were free for trading. The number of shares available will rise tenfold by mid-February with the expiration of more so-called lockup periods that restrict insider sales! after an initial public offering." * Bloomberg: Google May Decline As Restrictions End On Selling IPO Shares
The New York Times said "investors may find out this week whether there really can be too much of a good thing. To the surprise of some investors and industry analysts, Google's stock price has more than doubled in the three months since its public offering, closing at $182 on Friday. One possible reason for the surge is that relatively few shares of Google have been available to trade." Most companies sell 15 to 20 percent of their shares to the public in an IPO, but Google only sold 7 percent of its stock when it IPO'd in August, the Times said. * The New York Times: Google Investors Await The Dropping of 39 Million Shares (Registration required)
Reuters last night said shares of Google "inched higher a day before the expiration of a restriction period that will allow employees and early investors to sell 39 million shares. Investors appeared to shrug off the prospect of more shares coming to market on Tuesday and sent Google shares up almost 3 percent to around $185. " * Reuters: Google Edges Up As Shares Set To Come To Market
Filter is designed for hard-core techies, news junkies and technology professionals alike. Have suggestions, cool links or interesting tales to share? Send your tips and feedback to cindyDOTwebbATwashingtonpost.com .
But SBC's move also amounts to "the latest salvo in what's fast becoming a high-stakes race between phone and cable-TV companies. Both are hoping to woo customers with a full menu of phone, data and video services," USA Today reported.
"None of the Bells have a choice," telecom consultant Raul Katz told USA Today. SBC senior VP Scott Helbing put it more directly: "It's a game of chicken, to a certain extent," he told the newspaper. "Cable operators have been pushing to get into our bread-and-butter business, and now we're going to get into theirs." * USA Today: SBC To Offer Net TV, Phone Service
SBC officially announced its voice-over-Internet-protocol (VoIP) service today. The San Antonio, Tex.-based company already has a trial run of the service in Los Angeles, Dallas, Chicago and San Antonio. "The long-awaited move comes nearly a year after Qwest Communications International Inc. launched its Internet calling service, or voice over Internet protocol, in its territory. Verizon Communications Inc. , the nation's largest phone company, launched an Internet calling service earlier this year," the Wall Street Journal noted. "Phone companies are rolling out Internet calling to respond to startup rivals like Vonage Holding's Corp. and Skype Technologies SA , which have been offering cut-rate and even free phone calls for consumers using Internet technology. The startup companies have been successful so far, signing up hundreds of thousands of customers," the paper reported. * The Wall Street Journal: SBC Test VOIP Service Aimed AT Consumers (Subscription required)
USA Today noted, however, that SBC still relies on traditional phone service for its bottom line. That is the case for long-distance firms like AT&T and local phone monopolies (the Baby Bells) that are trying their own hands at Internet calling: "For all the buzz around Internet-based services, basic phone service -- delivered over old-fashioned copper phone lines -- still accounts for the bulk of the company's profit. Most of the big phone carriers probably would prefer not to sell Internet-based phone service, because it competes with their own higher-profit basic service. But SBC, Verizon and the other big carriers really don't have a choice. Cable companies are rapidly rolling out Internet phone service. ... At the same time, cell phones are gaining favor as a substitute for traditional 'wired' phones. The two developments, driven by advances in technology, are forcing SBC and the others to respond. Verizon, based in New York, already offers VoIP for consumers."
The Ann Arbor News of Michigan on Sunday reported that consumers are set to be the big winners in the VoIP wars: " Comcast Corp. and SBC Communications Inc. have already revved up their broadband engines to attract the coveted high-speed Internet customer. But the next two years could bring nothing short of an broadband arms race, as cable TV and Baby Bell phone companies joust to furnish your home's every communication and entertainment need. Phone companies say they're committed to spending billions to build fiber-optic networks capable of bringing high-definition TV, Internet services and phone systems directly to homes. Meanwhile, cable firms hope to cut into the phone market by rolling out Internet-based calling, possibly next year," the paper said. "For consumers, the rivalry could yield a cornucopia of new features -- and possibly lower prices - as the nation's seemingly insatiable thirst for a flash-like Web pace persists. But some observers wonder whether broadband proliferation will result in real competition -- or merely create cable-only or fiber-only territories. One thing is certain: The lines traditionally separating cable and telephone companies are blurring." * Ann Arbor News: Race Is On To Plug In High Speed Net Links
Meanwhile, back in Washington, VoIP providers must be celebrating the feds' decision to take the lead in regulating Internet phone services. In a ruling issued late Friday , the FCC "asserted their control of Internet phone service but have not yet fleshed out important details, including potential taxes and fees," CNET's News.com reported. More: "FCC Chairman Michael Powell has said he favors a light regulatory touch for VoIP. But complicating an already complex situation is how Congress might rewrite the nation's telecommunications laws when it revisits the 1996 Telecommunications Act. One Senate panel has already voted to impose what would amount to heavy taxes on VoIP providers." * CNET's News.com: Feds Claim Control Over VoIP, Leave Tax Issue Open
Uncle Sam is hopping on the VoIP bandwagon too. The Defense Department has been running tests to upgrade its networks, including support of 'Net phone calls, on IPv6 , a follow-on effort to expand on the current Internet addressing system, CNET reported. * CNET's News.com: Defense Department Test Net Phone Calls On IPv6
Telecom Capital Rising?
The blurring distinction between cable and phone companies also means more competition for the telecom sector, which has been in need of a revival since the dot-com bust and telecom fall-out of the late 1990s. The Washington Post yesterday reported that the Washington region's telecom sector is getting a boost from an increased appetite in wireless and security. But experts told the paper not to expect another massive telecom boom: "After four years of painful decline, the area's telecommunications business is starting to come back. The newer telecom companies are largely focused on such growth areas as wireless communications and security software. Many are small. And most get by without the dollars that used to flow from venture capital funds or from going public. Washington will continue to be a major center for telecommunications, analysts and investors say. The area is rich in technologists, lawyers, venture capitalists, skilled workers and the federal regulators of the telecommunications industry."
More from The Post: "But the telecommunications industry won't be the local economic driver it was during the 1990s, analysts say. Local employment in the industry hit 50,200 in March 2001, and venture investments in local telecommunications topped $1 billion in 2000. At last report, 33,700 people were working in the local telecommunications sector as of September, according to the Bureau of Labor Statistics. The area's venture investment in telecommunications dropped to $81.7 million last year, according to data from the MoneyTree survey conducted by PricewaterhouseCoopers/Venture Economics/National Venture Capital Association." Charlie Thomas , former chief executive of dot-com fall out Net2000 Communications , told the paper: "I see promising players, but if you're looking for the next Google, I don't know that we know what that is yet for this area." * The Washington Post: Telecom Shows Sparkles of Life (Registration required)
Things are looking good for the wireless telecom segment up north: "The industry that provides your cellphone and wired-phone links had its most profitable quarter of the last five years between April and June, says Statistics Canada," the Canadian Press reported. The "wireless segment outperformed the wireline segment by a wide margin," the agency told the CP. "Total operating profits for the quarter amounted to $1.8 billion, a 26.1 per cent gain from the second quarter of 2003." * Canadian Press via CANOE: Telecom Industry Profits Best In 5 years in Q2: StatsCan
The Microsoft of the Wireless Industry?
The Wall Street Journal recently reported on British wireless firm Vodafone 's efforts to strong arm handset manufacturers. According to the Journal, Vodafone has said: "Comply with thousands of technical and design requirements or forget about supplying next-generation phones to Vodafone, the world's largest cellphone-services company. Phone makers including Motorola Inc. , Samsung Electronics Co. and Sony-Ericsson Mobile Communications Ltd. , quickly agreed to Vodafone's demands. Even though they risked turning their phones into anonymous carriers for Vodafone's services, the companies couldn't turn away Vodafone's bulk orders. Even Nokia Corp. , the world's largest cellphone maker, acceded to most of Vodafone's demands after a long period of resistance."
According to the newspaper, "Vodafone's strategy is altering the balance of power in the $500 billion cellphone business. For years, service operators and phone manufacturers coexisted peacefully, bonded by a mutual dependency. Companies such as Vodafone didn't want to miss out on hot new phones and phone makers relied on service providers' huge orders. But as the cellphone market slowed, their goals diverged. Now Vodafone wants to control the look and feel of a cellphone rather than leave those choices to phone makers. ... At stake is control of an everyday device owned by more than a billion people. The winner will be in a position to shape the future of the cellphone business and cream off the profits that come from being a premium brand. The losers, by contrast, could be stuck with a low-margin commodity business, one that's subservient to its former partner. That was the fate of the U.S.'s personal-computer makers that allowed Microsoft Corp. to elevate its own brand over theirs and dominate the discussion about how PCs should operate." * The Wall Street Journal: After Long Peace, Wireless Operator Stirs Up Industry (Subscription required)
Vodafone's strategy certainly isn't hurting the bottom line. The company yesterday "reported a narrower net loss for its fiscal first half, as the mobile telecommunications company increased its share-buyback program, doubled its dividend payment and provided guidance for fiscal 2006," the Wall Street Journal reported. * The Wall Street Journal: Vodafone Posts Narrower Loss, Doubles Dividend for Half (Subscription required)
Is the Google stock bubble about to burst? Probably not, but the shares -- currently trading in the $170s and $180s -- could be in for a fall, given that company insiders will be free to unload up to 39.1 million shares on the market today, Bloomberg reported. The sell-off can potentially double "the amount of stock on the market and putting pressure on the price. The possible increase of shares in circulation may ease a shortage of stock that helped fuel a rally since the company's initial public offering in August. Shares of Google, the most-used Internet search engine, closed yesterday at $184.87, more than twice the IPO price of $85. Before today, 27.2 million of Google's 273.4 million shares were free for trading. The number of shares available will rise tenfold by mid-February with the expiration of more so-called lockup periods that restrict insider sales! after an initial public offering." * Bloomberg: Google May Decline As Restrictions End On Selling IPO Shares
The New York Times said "investors may find out this week whether there really can be too much of a good thing. To the surprise of some investors and industry analysts, Google's stock price has more than doubled in the three months since its public offering, closing at $182 on Friday. One possible reason for the surge is that relatively few shares of Google have been available to trade." Most companies sell 15 to 20 percent of their shares to the public in an IPO, but Google only sold 7 percent of its stock when it IPO'd in August, the Times said. * The New York Times: Google Investors Await The Dropping of 39 Million Shares (Registration required)
Reuters last night said shares of Google "inched higher a day before the expiration of a restriction period that will allow employees and early investors to sell 39 million shares. Investors appeared to shrug off the prospect of more shares coming to market on Tuesday and sent Google shares up almost 3 percent to around $185. " * Reuters: Google Edges Up As Shares Set To Come To Market
Filter is designed for hard-core techies, news junkies and technology professionals alike. Have suggestions, cool links or interesting tales to share? Send your tips and feedback to cindyDOTwebbATwashingtonpost.com .
