Telecosm - Ike Elliott

Blogging Hiatus

Well, I've been back at Level 3 for two weeks, and I have to say I am really enjoying working with the great people at the company, many of whom I had the pleasure to work with before.  In my last blog post, I promised that I would keep you posted on whether I could continue blogging about telecom, and that I'd have to see how the new job went first.

Unfortunately, given my role in corporate strategy, it has become clear to me that not only would it not be appropriate for me to blog about Level 3, but it really wouldn't be appropriate for me to blog about telecom in general.  If I were to blog about telecom, then some of my readers would undoubtedly be wondering if my blog posts were somehow influenced by what I am working on at Level 3, and would be trying to read between the lines to see what they could glean about what is going on inside of Level 3.  And of course, even if I thought I could segregate my thinking and only blog about stuff that I'm not working on at Level 3, I couldn't be sure if I could really pull that trick off.  Sadly, that means I am going to have to put this blog on a telecom hiatus...so no telecom posting from here on out, unless and until something materially changes in my employment situation. 

I want to thank all of my readers...the give and take was really fun and I learned a lot from you.  I still hope to meet many of you face to face at some point. 

I'll leave the blog archives up at least until my TypePad subscription runs out in a couple of months...I can't promise it will continue after that. 

All the best,

Ike 

Back To The Mother Ship

After exactly five years of part-time consulting, I have decided to get back into the full time work force with a return to Level 3 Communications, where I'll be working in Corporate Development, starting tomorrow.

I'm thrilled to be joining the Level 3 team.  In my five-year absence, the company has performed a magic act, growing into their balance sheet by doing a string of acquisitions.  The team, from the rank-and-file all the way up through the management ranks, has perservered through the hard work of acquisition integration and the uncertainty of the inevitable post-acquisition layoffs.  Now, thanks to the efforts of that team, Level 3 may be on the verge of becoming the company it has always believed it could be.  I am humbled to be accepted back into the ranks of such a scrappy, battle-hardened group.

Readers of this blog may be wondering what my return to Level 3 will mean for my blogging, and the short answer is that I don't know, at least not yet.  Clearly, I will be subject to the standard restrictions of working for a public company, so at the very least, I won't be able to blog about Level 3 in any specific way.  I don't know how far those restrictions will extend, though, so I'll let the readers of this blog know what to expect, as soon as I know what to expect. 

Also, the time demands of the new position could limit the amount of time I have for blogging.  Again, once I figure out my new schedule I'll let you know what you can expect in terms of how frequently I will be writing new posts.

Since starting the blog in late October, 2007, the readership here has grown to nearly 400 subscribers. For the loyal readers of this blog, thank you for taking the time to visit this little corner of the Internet.  I hope to continue writing, and will keep you "posted" on whether I can do that.

 

Podcast - September 2, 2008 - Unity Business Networks, Guest: Bob Paulsen

How does one of the earliest hosted IP PBX service providers run their business these days?  Today's podcast interview is with Bob Paulsen, Chief Executive Officer and founder of Unity Business Networks.  Listen in as Bob tells us how the Denver-based business VoIP provider was born and how the company is thriving in challenging economic times. 

  (About 33 minutes)

Download Paulsen_Interview.mp3

Why Ted "Tubes" Stevens Should Step Aside

Ted Stevens, U.S. Senator from Alaska, is running for re-election and won the Alaska Republican Senate primary last night.  That's bad news for his Republican party and even worse news for the country.  It's time for the 84-year-old Senator to call it a career and step aside.

Why?

• He's one of the most notorious pork-barrel spenders in the Senate, having long been a staunch defender of the Universal Service Fund regime that redistributes billions of dollars a year to rural areas in support of basic telephone service for rural Americans.  That Universal Service Fund system has been in need of reform for over a decade, but Stevens, representing a state that receives massive subsidies from the fund, has repeatedly helped block attempts at reform.  Even more notorious was Stevens' vociferous defense of the "Bridge to Nowhere," in which he even threatened to resign from the Senate if funding for the bridge was redirected to rebuilding New Orleans after Hurricane Katrina.
• He's under indictment for receiving roughly $250,000 in gifts from Veco, an oil company.  The case goes to trial next month and will almost certainly cripple his chances for reelection.

For a silly sample of the Senator's style, here's an excerpt from a recent speech by the Senator on 'Net Neutrality, in which he attempts to explain how the Internet can become congested, and describes the Internet as a "series of tubes":

Ryan Kane has a hilarious post on the Semi-Politico blog with a music remix of the Senator's speech. 

Bottom line: it's past time for the Senator to step down.

Can The Rockies Do It Again?

Can the Colorado Rockies make the Major League Baseball playoffs?  Stranger things have happened...and they did, just last year.

Consider this:  exactly one year ago, the Rockies were 6.5 games behind the division-leading Diamondbacks, and 4.5 games behind the wild-card-leading Padres.  The Rox came back and won the wild card, and then swept the playoffs to reach the World Series.

After last night's 7-2 victory of the San Franciso Giants, the Colorado Rockies stood just 6 games behind division-leading Arizona.  The team has been playing great since the All Star Break, winning 24 of their 38 games.  Can the Rox repeat last year's miracle and ride a big second-half surge to the playoffs?

This year, the Rockies are too far out of the wild-card race (15 games behind Milwaukee), but being 6 games back in the division race, the division title looks like it is within reach if the team can keep playing at its current level. 

On the other hand, the pitching rotation doesn't look as strong right now as it did last year.  Tonight, Livan Hernandez pitches again, and he has looked...well, let's just say today's Livan Hernandez is not the same as the one who pitched so well in the World Series a few years ago.

Worthless Guidance? Neutral Tandem's Sandbagging Ways

Neutral Tandem, the wholesale provider of tandem switch interconnection services, exceeded estimates and raised guidance when it announced earnings earlier this month. The company announced revenue of $28.6M in the 2nd quarter, continuing a steady stream of quarter-over-quarter revenue increases.  However, like many public companies, Neutral Tandem's guidance doesn't really tell us much. 

The company raised its prior guidance for the full year 2008 to somewhere between $117M and $121M in revenue, higher than prior guidance of $112M to $116M.  To put this into context, let's look at the company's revenue results by quarter for the past eight quarters:

Neutral Tandem	3Q06	4Q06	1Q07	2Q07	3Q07	4Q07	1Q08	2Q08
Revenue (millions)	$  13.7	$ 15.0	$ 17.6	$ 20.5	$ 22.6	$ 24.8	$ 26.2	$ 28.6
QoQ Change		$   1.3	$   2.6	$   2.9	$   2.1	$   2.2	$   1.4	$   2.4

The company has been adding new revenue in the range of $1.3M to $2.9M per quarter over the past two years, so the new guidance of $117M to $121M in 2008 revenue looks to be in the bag.  The company already had $54.8M in revenue in the first two quarters, so to make the low end of guidance, they need to add an average of $1.5M in new revenue for each of the next two quarters.  To reach the high end of guidance, they need to add an average of $3M in new revenue for each of the next two quarters. 

This range of performance on revenue growth of $1.5M to $3M in new revenue per quarter covers almost the entire range of quarterly revenue growth throughout the company's history.  The company is basically telling us "We won't perform any worse than the worst quarters in our history, and we probably wont' perform any better than the best quarters in our history, but between those two extremes, we can't tell you where we will land." 

So, why raise guidance at all, then?  Well, it was pretty clear by the end of the 2nd quarter that the company was going to blow away their previous revenue guidance, so the company had to revise guidance.  To say nothing would cause the street to assume that the old guidance still stood and that the company was forecasting a revenue slowdown because they didn't raise guidance. 

But the company was sandbagging with that old forecast, anyway, and the street knew it.  The table below shows that at the low end of the previous guidance, $112M for 2008, that at the end of the 2nd quarter all the company needed to do to make guidance was repeat it's 2nd quarter revenue of $28.6M for two more quarters, for zero revenue growth in the second half.  That certainly wouldn't be enough to get anybody excited.

All figures in millions
Forecast 2008 Revenue	$  112	$  116	$  117	$  121
Remaining Revenue	$ 57.2	$ 61.2	$ 62.2	$ 66.2
Average Quarterly Revenue Needed In 2nd Half To Achieve Forecast	$ 28.6	$ 30.6	$ 31.1	$ 33.1
Actual 2nd quarter Revenue	$ 28.6	$ 28.6	$ 28.6	$ 28.6

Neutral Tandem isn't alone in their sandbagging ways, so I don't really mean to pick on them alone.  Their 2nd quarter earnings were actually pretty good.  I'm just pointing out that most public companies bracket their guidance with ranges that they are absolutely certain they will meet, at least at the time they make the forecast.  Yes, now and then we do actually find surprises in guidance, but to be honest, most of the time I find guidance to be of limited value. 

      

Podcast - August 26, 2008 - New Global Telecom. Guest: John Guillaume

How does the largest wholesale hosted IP PBX service provider think about the market?  Today's podcast interview is with John Guillaume, Senior Vice President of Product and Marketing for New Global Telecom.  Listen in as John gives us some insight into NGT, their recent work with Microsoft, and the their perspective on opportunities in wholesale VoIP services. 

  (About 35 minutes)

Download guillaume_ngt_interview.mp3

VoIP on a Plane: Cool, Disruptive, or Dangerous?

The news that Andy Abramson successfully used Phweet to skirt the rules prohibiting the use of VoIP on airplanes has certainly created a stir.  Reaction of commenters has been wide-ranging:

• Some thought it was a cool demonstration of how hard it is to control what happens on an IP network.
• Some reacted with revulsion at the thought they would have to sit next to loud talkers for the duration of the flight.  Some called for the creation of "talking" and "no talking" seating sections on the plane.
• Some even thought that the use of VoIP from a plane would make it easier for terrorists to coordinate plane-based attacks. 

I'm not sure about that last one...Internet chat should certainly work about as well as VoIP for a terrorist's purposes. 

The more interesting question is whether it is rude to talk on a phone (or PC or PDA) while sitting next to somebody on an airplane.  I don't know.  Suppose you are in a middle seat and you strike up a conversation with the person to your right.  Is that rude to the person you are talking with?  It would be pretty easy for the person on your right to give clues to you that they would like to end the conversation, though. 

The bigger question is the impact to the person on your left.  Suppose you are happily chatting with the person on your right for an hour or more.  How does the person on your left feel about that?  Should you ask them or just assume that you should limit your conversation, assuming the person on your left would be annoyed with an extended conversation? 

These questions of airplane courtesy are important because they bear a similarity to the question of VoIP on planes.  My take:  you should get a pretty solid read on what your seatmates are willing to put up with before doing any extended VoIP calls. 

What do you think?