Channel Surfing Blog 

Kelly Teal

We now know why Frontline Wireless suddenly closed shop and why the D Block didn’t sell in the FCC’s 700MHz spectrum auction. Turns out, the Public Safety Spectrum Trust (PSST) – the non-profit that holds the D Block licenses but that can’t make any money until there’s a commercial provider operating the bandwidth – attached some pretty incredible conditions to the spectrum.

For starters, the PSST was talking about “negotiable” annual lease payments of $50 million-$55 million. For 10 years. And with no guarantees that public safety or commercial users would ever sign up if Frontline Wireless won the auction, it’s no wonder investors jumped ship.

There were other requirements, too, that made the D Block less and less attractive to equity firms.

The obvious question now is what is the FCC going to do about it? There’s talk of a re-auction of the D Block and something will have to be different the next time around.

But there are better questions the FCC, Congress and the industry should ask themselves. How did this debacle come about? How can it be prevented from recurring? Why are so few companies interested in the D Block? It’s curious to me that a non-profit selected by the FCC also happens to have as its advisor the for-profit company that hoped to serve as the D Block’s MVNO. Frontline Wireless would have been the underlying carrier while Cyren Call – founded by Nextel’s Morgan O’Brien – intended to serve as the reseller whose end users would have been the public safety community.

I know the Inspector General cleared Cyren Call and the PSST of any collusion. But I still am left to wonder why so few entities hold so much power over a critical piece of government – read, the peoples’ – property.

Kelly Teal

What are the consequences of going green in telecom? I can’t help thinking of Newton’s third law: for every action, there is an equal and opposite reaction. Let me explain ... Remember a few weeks ago, when reports surfaced that the highly touted CFL light bulbs contain mercury? To gain the benefits from those low-energy bulbs, users have to accept an equally negative consequence.

So I’m wondering – how is this principle manifesting itself in telecom? I’ve received many releases this past week – the week leading up to Earth Day – praising the green benefits of broadband, of wireless mesh, of solar power.

Some of those benefits are obvious, as with broadband. For example, USTelecom sent a note yesterday about a new site that discusses broadband benefits such as telecommuting.

As a telecommuter, I can attest that, yes, I put far fewer carbon emissions into the atmosphere because I don’t drive as much as I once did. But, my energy bills are higher because I work from home. This is especially true in summer. Here in Phoenix, you’re supposed to turn up your thermostat a few degrees when you leave the house for an extended period. Well, since that doesn’t happen on a daily basis, my thermostat stays at a steady 78 degrees. So how do the benefits of telecommuting balance with the extra electricity I use? I don’t have the answer...

I am all in favor of green initiatives. It’s way past time the United States took responsibility for its overwhelming contributions to global warming. I just think it’s too easy for people to jump on a bandwagon, get sucked into a trend, and neglect to evaluate the positives and negatives.

Cara Sievers

Since Lightyear Network Solutions’ headquarters in Louisville, Ky., is not light years away from my home office in Memphis, Tenn., I took a short drive there recently to learn more about the company. The Lightyear team really rolled out the red carpet for me – quite unnecessarily, I might add – but I am still extremely appreciative of the warm, hospitable welcome I received.

As some might know, the notion of Lightyear was concocted on a Denny’s napkin and the company was founded in 1993 as UniDial. The name was changed later to get away from the connotation that everything was “dial”-oriented, i.e. switched long-distance and the like, as agents began to move upstream and data was on the rise. This reseller, which also owns its own facilities for VoIP, boasts a wide service offering and a virtually ubiquitous footprint.

Sam Tucker, senior director of national sales, regaled tales of founder, president and CEO, Sherm Henderson’s involvement in the development and pioneering of the agent channel as it looks today. The Lightyear Authorized Agent Program is known for stellar support, provided by a 24/7 Network Maintenance Center and more than a hundred back-office support team members. Lightyear generates more than $80 million annually through its independent national sales force of Lightyear agents and its independent representatives of Lightyear Alliance, its direct sales organization.

Tucker said it’s all about quality, not quantity, when it comes to onboarding agents. “We have about 210 active agents, and we don’t want 2,000,” said Tucker. “We want the group of agents that are going to produce the majority of our revenue. ... And we’ve always stayed pretty tight with our agents.” Sales operations are supported by Portal Plus, a sophisticated OSS that supports the back office, faces the clients and faces the carriers, and also provides commission-tracking info. LightSource, the online agent portal, provides quoting (including bulk or multilocation quotes) and ties back to Portal Plus.

I would like to thank the Lightyear team for an informative and fun visit! (See pics below!)

Lightyear’s home base is situated in a nice business park in Louisville.

A good looking group gathers in the Lightyear lobby: (L-R) Drew Allgeier, channel partner development; Kevin Shady, vice president, sales and operations; me; Steve Rush, marketing coordinator; Sherm Henderson, founder, president and CEO; and Sam Tucker, senior director of national sales.

Sherm Henderson was hard at work, but took some time to rap with me about the state of the channel. “I think the agent channel should be very aware of the educational stress they’re getting ready to go through,” he said. “I think to be able compete in the next five years, you better be very, very intelligent about a lot of the technology that’s coming out, whether that’s on the wireline or wireless side. You have to consider both, you have to understand where both are going and you have to play into both. So, when I see that and I see what a pioneer we’ve been, and how innovative we’ve been and how long we’ve been in business, there aren’t a lot of people out there who’ve been there.”

These are Lightyear's e-mail and voice mail servers, multiple redundancy Web servers, Unix and Windows operating systems, and backup storage servers.

Lightyear taught me how to “talk derby.” The company was definitely gearing up for the fastest two minutes in sports, with different areas of the building named after parts of the racetrack, i.e. the cashier, starting gate, etc.

Observe the strange penny collection that lurks around Lightyear. I’m told this began with a couple of pennies that were change from a fast food order. And as the order was repeated, so were the pennies, and a tradition was born.

The juice is loose! Lightyear now hawks highs with its new energy drink. Sherm said he wants to see if they can sell anything! Sherm’s son, Josh Henderson, who founded Lightyear Alliance in 2003 to target the residential market, is heading up the energy drink push. They saw the energy drink market taking off by leaps and bounds – hey, why not?

Steve Rush (left), Paul Dorfi (right), agent sales manager, and I grin in front of Fourth Street Live! The three of us, along with Kevin Shady and Drew Allgeier had just enjoyed an excellent dinner at Red Star Tavern on Fourth Street. It was a windy evening ... but we had a great time!

Kelly Teal

Well, it’s official. Platinum Equity, a Beverly Hills-based private investment firm, now owns Covad. The public-to-private deal has been in the works since October of last year and has some telecom insiders worried because of Platinum’s track record with agents. For example, Platinum bought Trinsic, the former Z-Tel, and, from what I’ve gathered, has yet to make good on a bunch of commissions.(That was a different situation, though, since Trinsic had gone bankrupt.) Platinum also owns providers Startec Global and Matrix Telecom, among others.

It will be interesting to see what comes of Platinum’s ownership of Covad. People speculated there were two reasons why Covad agreed to go private: a continued lack of profitability and difficulty provisioning hosted VoIP. Investors don’t buy struggling companies to let them keep struggling, so what measures will Platinum take to right the ship? Maybe sell the VoIP unit? Install new leaders? At this point, your guess is as good as mine.

Cara Sievers

On April 11, Smoothstone IP Communications kicked off its inaugural Smoothstone Summit, inviting 60 strategic partners from approximately 35 organizations to meet the staff, learn more about the product offerings, tour the Smoothstone facilities, and even enjoy some entertaining events in the company’s home, Louisville, Ky.

Smoothstone, a fully managed nationwide IP provider for medium enterprises, manages everything from the customer premises to their point of presence – and they do this mostly from their Louisville home base, where they recently moved into a fancy new location with plenty of room to grow. From this 10,000-square-foot data center, along with colocation facilities in Atlanta and Chicago, Smoothstone services approximately 400 enterprise customers and is approaching 1,000 as the number of circuits managed.

Partners meet and greet during a light lunch in the Smoothstone lobby.

Christopher Assif, Smoothstone executive vice president, said 75 percent of Smoothstone’s sales are through the indirect channel. “We have made a pretty big investment in the channel in ’07 and into ’08. We have four people dedicated to recruitment, development and education in the channel now,” explained Assif. He said the channel will continue to expand as they add the types of partners that will be able to procure the kinds of deals Smoothstone is targeting, going up-market and getting into the larger customer segment. Smoothstone currently targets enterprises with 100 to 1,000 employees that are multilocation and very often global. Assif additionally explained that agents are, by definition, referring leads to the company and are fully supported from start to finish by the Smoothstone team.

The Smoothstone Summit was designed to allow partners, agents and clients, both new and old, to see the facility, learn more and gain some valuable face time. Assif alluded to the idea that this event could symbolize a shift in focus for the company. The newly hired marketing leader said continual networking communication has not necessarily been a strong suit for the provider, but he aims to change that. “We’ve been very technology-focused and delivering service, but we have to now think outside the box in how to create a very viral way to communicate and market to [partners],” said Assif. He said one of the key pieces of feedback he got from partners is that they didn’t receive enough updates on the company – urging the company to communicate with its constituents more and “stay in front of them” with events like this summit.

Caption: Executive vice president Christopher Assif gives attendees some insight on Smoothstone.

The summit began with introductions, followed by special interest breakout sessions on SmoothstoneSECURE, Intelligent Call Control, ITC, Smoothstone Meeting Center, Smoothstone Messenger, Softphone Client and Outbound FAX. The sessions were followed by Smoothstone data center tours and then cocktails and dinner at the Hyatt Spires. Saturday’s events included an air show, dinner and Thunder over Louisville, which I’m told is North America’s largest fireworks display.

Smoothstone associates answer calls in the NOC, which was part of the tour of the Smoothstone facilities.

Assif said they hope to repeat this event, or one like it, every year, if not more frequently. “It’s just a good way to get our products and what we’re trying to communicate out in front of a bunch of people who have interest in who we are,” he said.

“We’re not your grandfather’s old telephone company,” Assif explained. “We’re kind of half IT, half telecom with a little bit of consulting and professional services built in.” He said that that aspect along with the service relationships the company builds with its partners – perhaps at events like this one – is how Smoothstone aims to differentiate itself. Assif hopes attendees left the event feeling up to speed on Smoothstone’s culture and offerings.

“The Smoothstone seminars and informative meetings at their executive business center on Friday were excellent and the partner forum event was first-rate overall,” said Cary Bush, sales director, Logista Unified Communications Group, a reseller partner that came on board in late 2007. “I believe Smoothstone has done a fantastic job in outlining new products and services that will enable further success for us as a partner.”

Kelly Teal

Agents (subs and masters), I’m working on an article about the FCC removing exclusive contracts in MDUs such as apartments and condos. The agency recently said telcos can’t have exclusive deals; last year it said the same about cable operators.

I followed up with some of you after that decision came out, because it seemed like the perfect opportunity for agents to pursue MDUs deals.

Wow, the responses ... those I received ... were underwhelming. So I need you to tell me more. Do you plan to pursue MDUs? Why or why not? What’s appealing? What’s not?

E-mail me at kteal@vpico.com.

Kelly Teal

New York’s state legislature has approved Internet taxation, a move that does more than set a precedent for other revenue-greedy state lawmakers.

The bill – expected to be signed by new governor David Paterson – requires many online retailers to collect sales tax on purchases shipped to New York.

The law will spur copycat activity and I resent it all on an idealistic level. You see, New York’s bill further erodes the Internet as the last untouchable frontier – the next step in the erosion as companies like Comcast already test the boundaries.

Many of us, for years, have viewed the Web as a bastion for uncensored thought and commerce. For the promise that globally disseminated ideas can free people from tyranny – think China and Cuba. For the ability to operate small businesses, even if just a modest income means owning one’s own life instead of bowing to the Corporate Gods. For the small, irreplaceable thrill of viewing images of places I’ll probably never see, like the Butterfly Valley in Turkey.

But for every action, there is that dreaded equal and opposite reaction. Internet taxation became inevitable as state lawmakers watched the Web flourish and they started estimating the millions of dollars they think they’re owed. Like we don’t pay enough taxes every day for gas, food, real estate, cars, phones, utilities. And hell, States, as the recession kicks in, just nickel and dime us while we’re down, why don’t you? (I’m not bitter.)

State-level attempts to tax the Net also grew unavoidable the more Congress extended its Internet tax moratorium. The current one lasts for seven years. New York’s effort to tax the Internet is sure to go to court, so who knows when, or if, residents will pay additional money on their purchases.

I hope the taxation efforts fail. Most of us already pay our share – fair or not – of taxes across the board. Plus, the more our elected officials try to own our wallets, the less inclined we are to spend. That’s no recipe for digging out of a recession. But more to the point, back to that idealistic level, I am tired of watching money always win. As soon as something proves even the least bit financially promising, someone has to corrupt its potential and prospects with monetary demands.

Maybe it’s time for an Internet Tea Party.