Transcript PowerPoint - Crosslake Communications

The
Chaos
of
Telecom
Tim Owens
Cronin Communications
[email protected]
202-232-1107
© 2007 Cronin Communications
The Deals and Developments
That Defined the Last Year
• Midwest Wireless sold to AllTel for $1.1 billion.
• Rural Cellular Corporation sold to Verizon for $2.7
billion, or $3,700 per subscriber.
• Sprint spun off its wireless service and redubbed its
local exchange service “Embarq.”
• Verizon failed to find a buyer for its rural New York
exchanges.
• BUT, FairPoint is buying all Verizon lines in Maine, New
Hampshire and Vermont.
• The Rural Utility Service has awarded 70 loans in 40
states for $1.2 billion to serve 582,000 customers. Cost
= $2,100 per home.
© 2007 Cronin Communications
The Deals and Developments
That Defined the Last Year
• The FCC passed new CPNI rules to protect customer
privacy, creating huge headaches for carriers.
• More than a dozen rural ILECs announced their sale in
2007.
• Adelphia sold to Comcast and Time Warner – both are
now offering VoIP service to compete with telcos.
• The FCC is auctioning more spectrum, but ignoring the
needs of rural telcos.
Consultants are very busy!
© 2007 Cronin Communications
Telcos have lost
approximately 20% of their
access lines in just 5 years.
© 2007 Cronin Communications
In areas where voice service
has been rolled out, Time
Warner already claims 11%
of the market share.
Midco claims 40% in some
areas it serves.
© 2007 Cronin Communications
Digital Phone from Time Warner Cable
It's time for a better residential telephone service
that understands how important your time is. Don't
be bound by traditional rate plans that charge you
different rates depending on when you call. With
Digital Phone service from Time Warner Cable, you
can call anyone in the United States and Canada, as
often and as long as you want, for as low as $39.95
a month. Plus, get the most popular and convenient
calling features like Call Waiting, Caller ID, Call
Forwarding, Speed Dial and more at no extra cost.
Vonage
offers
unlimited
long
distance
plans
starting at
$24.95 per
month.
© 2007 Cronin Communications
An estimated 12% of homes
have eliminated landline
service and are Wireless Only!
80% of the population has a
wireless phone.
© 2007 Cronin Communications
There are now about
200,000 cell towers across
the United States.
© 2007 Cronin Communications
Why Telcos Hate
Selling Cellular
•
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Retail intensive.
Inventory management.
High churn rates.
High non-pay rates.
Programming phones.
Little or no profit.
CSRs are not sales driven.
Inferior product.
Damages the telco’s reputation.
No billing integration.
© 2007 Cronin Communications
High-definition televisions
are already in 18% of
homes, many of which do
not subscribe to high-def.
© 2007 Cronin Communications
Triple Play Rate
99.95
Set Top Box #1
7.95
Set Top Box #2
5.95
Set Top Box #3
5.95
One Premium Channel
High Definition
Digital Video Recording
Video on Demand (2x per month)
Plus Up-front Costs!
Cable Modem
Wireless Router (estimate)
50.00
Inside Wiring (estimate)
Installation
* Plus taxes and surcharges.
$
11.95
7.95
7.95
10.00
$157.65 *
Digital services
really add up!
$ 39.00
50.00
4.95
$143.95
© 2007 Cronin Communications
How’s Your Telco Doing?
Voice
Wireless
Video
Data
Networks
CLEC
© 2007 Cronin Communications
Life of the Account
Service
Monthly
Rate
Months of
Service
Years of
Service
Local Voice
1%
100
8.3 years
Long Distance
1%
100
8.3 years
Cellular
2%
50
4.2 years
Broadband
1.5%
66
5.5 years
Video
2%
50
4.2 years
Triple Play
.5%
200
16.6 years
© 2007 Cronin Communications
How’s Your Telco Doing?
• Voice.
– Decline of 3% of access lines per year, due to DSL,
wireless and competition. Compounds very quickly.
• Data.
– A profitable line-of-business. Telcos usually have
about 50% of the market share.
• Video.
– You break even in Year 18.
• Wireless.
– Lots of equity. No annual profits.
• Networks.
– Can be very profitable, depending on customer base.
• CLECs.
– All over the map.
© 2007 Cronin Communications
Flavors
• Voice
– Local
– Long distance
– VoIP
• Managed
• Unmanaged
© 2007 Cronin Communications
Flavors
• Video
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Cable
IP Video
MPEG-2
MPEG-4
Satellite
Fixed wireless
Wi-fi
© 2007 Cronin Communications
Flavors
• Wireless
–
–
–
–
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Cellular
PCS
Satellite
Wireless VoIP
Wi-fi
Fixed wireless
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•
•
MMDS
LMDS
700 MHz
900 MHz
2.6 GHz
© 2007 Cronin Communications
Flavors
• Data
–
–
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–
–
DSL
Cable
Fiber
Fixed Wireless
Satellite
© 2007 Cronin Communications
Flavors
• CLEC
– Resale
– Overbuild
• Fiber
• Cooper (DSL)
• Fixed wireless
© 2007 Cronin Communications
What About Fiber
• National obsession.
– Verizon FiOS
– SBC Build-out
• Superior technology.
–
–
–
–
Unlimited bandwidth
Redundant plat
Fewer outages
IP platform
© 2007 Cronin Communications
What About Fiber?
• Getting cheaper, but:
–
–
–
–
–
Trenching from the pedestal
Boring under sidewalks and driveways
Splicing to the network
Internal wiring of the home
Optical Network Terminal (ONT)
=
$600 Per Premise
© 2007 Cronin Communications
Revenue
35%
50%
15%
Access
USF
Other Income
© 2007 Cronin Communications
Consolidated Revenue Over the
Past 10 Years
• Increased by 10% or more.
– ARPU goes from $30 for telco revenue to
$90 for the triple play.
• Profitability decreased by 10% or more.
• Access and USF decreased by 10% or
more.
© 2007 Cronin Communications
Which Telcos Are Doing Well?
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Own a cable network.
Delayed fiber to the home.
Cashed out on wireless.
Member of a state or regional network.
Poor wireless coverage in the area.
High cost.
Maximizing settlements, interconnection
and other revenues.
© 2007 Cronin Communications
Which Telcos Might Not Be
Doing Well?
• Not collecting full revenues from
interconnection, settlements, USF,
access etc.
• Fiber to the home.
• IP video deployments.
• Wireless agents.
• Overextending on new initiatives, such
as CLECs, wireless and acquisitions.
© 2007 Cronin Communications
What’s New in Customer Service?
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No more DSL tiers.
Bailing on wireless.
Heavy on video.
30 minute provisioning interval.
Technical CSRs
Integrated billing systems.
On-line everything.
© 2007 Cronin Communications
Your Job As a Manager –
“Take Nine”
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Manage by the numbers.
Establish protocols.
Contain losses.
Grow subscribers and revenues.
Cross train.
Hire and recruit strategically.
Allocate resources effectively.
Operate efficiently.
Automate.
Obtain management support.
© 2007 Cronin Communications
Discussion
Q&A
© 2007 Cronin Communications