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Alan Weissberger

More telco woes: WiMAX spending drops + Broadband growth slows as RBOCs add fewer xDSL lines!

FierceBroadbandWireless wonders if the recent reported financial results of WiMAX companies is the beginning of a shakeout in the industry between winners (few) and losers (many).
 
http://fiercebroadbandwireless.com/story/wimax/2008-08-10
 
Key WiMAX vendors including Alvarion, Redline, Airspan and NextWave posted quarterly results recently as did WiMAX bellwethers Sprint-Nextel and Clearwire: The general takeaway is that WiMAX spending is way down and the economic downturn alone may not explain the decrease.
 
NextWave is in big trouble: "We are feeling the effects of a slowing global economy on our business. This has resulted in lower than anticipated sales of our 3GPP and WiFi-based network products and a delay in WiMAX network deployments that will continue to impact projected sales of our WiMAX semiconductor products," CEO Allen Salmasi stated in a release.  NextWave needs new funding to stay in business.
Redline also indicated a delay in WiMAX spending was coming during its preliminary second-quarter results announcement last month. The Canadian WiMAX vendor adjusted its revenue outlook, cutting $6 million off forecasts for the second quarter.
 
Airspan reported a slight three percent decrease in Q2 revenues to $21.4 million.
 
Alvarion is doing OK: "Current customers are expanding their networks, bookings are strong, and the pipeline of potential new business is large and growing. This further increases our confidence in our ability to achieve the upper end of our target revenue range of $275 to $300 million for 2008," CEO and President Tzvika Friedman stated.
 
In the meantime, Clearwire is bearing the brunt of merger expenses: The service provider reported a net loss of $199.1 million, compared with a net loss of $118.1 million this time last year. The results included $27.9 million in impairment losses on investments and expenses of $10.2 million related to the JV process.
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CNET:  Broadband growth plummets in Q2 for both telcos and cablecos
 
Cable operators and phone companies signed up about half the number of subscribers in the second quarter of 2008 that they signed up during the same quarter in 2007.  Twenty of the largest cable operators and phone companies in the U.S. only signed up about 887,000 new subscribers during the quarter, the Leichtman Research Group reported Monday. This was the lowest level of new subscribers the research group has seen in the seven years it’s been reporting on the broadband market.
 
Phone companies appeared to be the hardest hit by the slowdown, only adding about 23 percent of the customers they added during the same quarter a year ago.  Fewer than 890,000 new subscribers signed up with the 20 largest telcos and cable companies in the quarter, the smallest number of new customers in at least seven years, said the Leichtman Research Group.
 
Cable companies signed up about 85 percent as many customers as they did in the same quarter last year. "While the relative number of quarterly broadband adds has certainly peaked, the decline in additions this quarter compared to the same period last year was exacerbated by Verizon and AT&T’s emphasis on selling higher speed FiOS and U-verse bundled services, often at the expense of the traditional DSL service," he said in a press release.
 
http://news.cnet.com/8301-1023_3-10015275-93.html
 
Fierce Telecom finds that Q2 finds telcos under pressure August 11, 2008

"Telcos are now under pressure not only in their legacy businesses (landline voice), but also in the next-generation business (broadband) that is supposed to be off-setting legacy market pressure.   Most U.S. telcos continued to lose landlines at rates ranging, for the most part, from 5 percent (Windstream) to 7.8 percent (Embarq) and on up to 10.2 percent (Qwest), but telcos have had a few years to get used to these numbers. They are no longer surprising, even though their ongoing uptick is extremely disconcerting. What they have not yet gotten used to, but have been warned about by market researchers within the last year or so, is a slowing in broadband subscriber growth. The second quarter of 2008 was perhaps the first time we have seen evidence of that pressure on an industry-wide basis, with AT&T, Verizon and other telcos adding broadband subscribers at slower rates."
http://www.fiercetelecom.com/story/q2-finds-telcos-under-pressure/2008-08-11?utm_medium=nl&utm_source=internal&cmp-id=EMC-NL-FT&dest=FT
 
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Meanwhile, IGI Group’s 2nd Quarter High Speed Access Line report claims that the RBOCs are adding much fewer xDSL lines then forecast:
 
http://www.igigroup.com/mmail/08.11.08/chart1_large.gif
 
http://igigroup.com/nl/pages/highspeed.html
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Garnter Group:  Carriers need new game plan to survive in digital age, Aug 13th
 
Fixed and mobile carriers in mature markets must transform themselves into "IT and network factories" and support new services all but unrelated to telecoms in order to survive in the digital age.

The warning comes from industry analyst Gartner, which said this week that by 2012, it expects around half of the 20 largest carriers worldwide to be offering new services only minimally related to telecommunications.

Furthermore, leading carriers in developed markets are forecast to be deriving at least 15 per cent of their revenue from non traditional sources as they seek to combat declining voice revenues.

In order to find new growth, carriers will need to develop a wide range of new digital services and will increasingly find themselves competing on a broader playing field and going up against internet companies, such as Google, as well as equipment providers, such as Nokia.

http://www.telecoms.com/itmgcontent/tcoms/news/articles/20017561239.html

Author Alan Weissberger

By Alan Weissberger

Alan Weissberger is a renowned researcher in the telecommunications field. Having consulted for telcos, equipment manufacturers, semiconductor companies, large end users, venture capitalists and market research firms, we are fortunate to have his critical eye examining new technologies.

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