Small Business Demand Remains Stable

Small businesses (zero to 500 employees) represent 99.7 percent of all firms, employ about half of all private sector employees, pay nearly 45 percent of total U.S. private payrolls and have generated 60 to 80 percent of net new jobs annually over the last decade, according to the U.S. Department of Commerce.

It's no surprise that smaller businesses therefore represent much of the underlying demand for communications and information technology purchases as well.

It's a darn-near sure thing that such businesses will represent the only new net private sector jobs for the balance of the year. So it is noteworthy that small businesses were able to add new employees in January 2009, according to actual payroll processed by Surepayroll, which handles payroll data for more than 20,000 small businesses.

There was a 0.3 percent increase in the average small business size between the December 2008 and January 2009 periods, meaning that the average small business grew in size in January.

Hiring growth has been relatively flat of late, with the last five months all being in the 0.2% to 0.3% range. But small businesses added employees every month of 2008, the SurePayroll data shows.

Of course, other data is not so comforting, if lethargic job growth can be called "comforting." A Gallup Poll survey suggests that small-business owners are cutting jobs. About 11 percent of respondents say they have increased the number of jobs at their companies over the past 12 months while 27 percent say they have decreased them.

On average small businesses are still creating more jobs than they are destroying, SurePayroll says. And some of the resilence can be explained by greater reliance on outsourced contractors. In fact, January saw contractors representing 3.78 percent of total payrolls, the highest level SurePayroll ever has seen.

But there are warning signs on the small company start-up front, however, which logically is a result of tight credit conditions.

"In prior recessions, small businesses have ended up being net job creators," SurePayroll says. "This is not likely to happen in this recession because fewer companies are being formed."

Perhaps the only good news here for providers of communication services is that potential small business demand remains a bit of a bright spot.

Charter to Declare Chapter 11 Bankruptcy

Charter Communications will file for Chapter 11 bankruptcy as part of a financial restructuring on or before April 1. Charter says it has reached an agreement with a committee of some debt holders to reduce its obligations by about $8 billion. 

The company had net debt of slightly more than $21 billion as of Sept. 30, 2008, so despite wiping out what remains of the equity value, and paring debt by $8 billion, Charter will still have to contend with as much as $13 billion of remaining debt. 

Controlled by Microsoft Corp. co-founder Paul Allen and based in St. Louis, Charter has about 5.6 million customers in 28 states.

The cable company has sold the most U.S. high-yield bonds of any company in the past decade, according to data compiled by Bloomberg. Allen bought Charter in 1998, amassed the company’s debt burden while building it into the fourth-largest U.S. cable provider. 

Charter has reported losses every year since going public in 1999. In some ways, Charter is less a victim of the current credit tightness and more a victim of the 2001 Internet and telecom crash, though, as the company has been struggling with high debt loads since that time. 

Carriers Move to More "Open" App Environments

The parlay initiative (www.parlay.org), which aims to create APIs enabling telecom service providers to work with developers and industry technology suppliers, seems to be bearing fruit. 

TDC A/S, the Danish service provider, is using open application programming interfaces and making those APIs available to third-party application developers.

TDC is using the service delivery platform marketed by Aepona Ltd., which has experience with this sort with Canadian carrier Telus Corp. TDC expects to be up and running by late summer of 2009.

Aepona also provides similar capabilities for France Telecom, KPN Telecom, Sprint Nextel Corp. and TeliaSonera.

The GSM Association is working with Aepona on a new initiative called Open Network Enablers API (OneAPI), as well.

Vodafone Group, Telenor, Telecom Italia and France Telecom's Orange France are part of the OneAPI initiative. 

Iridium Losts Satellite, Globalstar Also Has Issues

It had to happen some time, and now it has. Two satellites, an operating Iridium communications satellite, and a defunct Russian satellite, collided in orbit on Feb. 10, 2009, destroying both objects and creating 500 to 600 new pieces of orbital debris, adding to about 18,000 other orbiting pieces of "space junk" softball-sized or larger that routinely are tracked. 

Iridium, which owns a fleet of 66 low-earth orbit satellites, expects minor outages, and will move an in-orbit spare into position within 30 days. 

Iridium isn't the only satellite communications provider facing at least some issues. Frost & Sullivan compared performance of more than 1,000 calls on Iridium and Globalstar networks, from Northern California and Central Texas.

In initial testing, analysts found that more than 99 percent of calls placed through the

Iridium handset were successfully connected, compared to 51.3 percent of calls from the

Globalstar handset. 

Tests also indicate that 98.1 percent of calls on the Iridium handset and 36.2 percent of calls on the Globalstar handset were successfully connected and completed without being dropped during a three-minute period.

Globalstar admits it has  a problem with duplex communications (not simplex). "As previously announced, many Globalstar satellites are experiencing an anomaly resulting in degraded performance of the amplifiers for the S-band satellite communications antenna," Globalstar says.

"The anomaly is adversely affecting two-way voice and data services," the company says. "Customer service continues to be available, but at certain times at any given location it may take substantially longer to establish calls and the duration of calls may be limited."

Until the new second-generation Globalstar satellite constellation is operational, Globalstar is offering its Optimum Satellite Availability T-tool (OSAT) on its Internet site, which subscribers may use to predict when one or more unaffected satellites will be overhead at any specific geographic location.

Globalstar has launched eight spare satellites for its existing constellation with a view to reducing the gaps in its two-way voice and data services pending commercial availability of its second-generation satellite constellation, scheduled for initial launch in the second half of 2009.

Telecom in Uncertain Times, Multi-Part Video

Click the "related article " link below to get the video, in 7 parts on YouTube.

Today's telecom and cable companies face an increasingly complex and uncertain world in which continual and rapid change is the norm. But different providers face distinctly unique challenges. This panel will evaluate the ways contestants operating in different geographies and customer segments; with distinct business models and products; diverse regulatory and technology environments, evaluate where they are, and where they want to go.

We'll take a look at:

Which challenges contestants believe are most crucial
Which opportunities are most relevant
Which customer behaviors and desires offer the greatest upside
How contestants respond to the competitive environment
Where unique value can be created in their chosen markets
How core competencies can be leveraged to create more growth

Recorded at Voice Peering Forum (c) 2008 Stealth Communications

Huge Shift in Telecom Industry Supply Chains

Continuous Computing, a suppler of protocol-centric hardware, software and systems to telecom industry original equipment manufacturers, is introducing a solutions and services practice in response to demand for more prepackaged platforms from global customers.

The new practice will deliver customized, fully-integrated, application-level solutions to network equipment providers, especially in the wireless space, and including deep packet inspection capabilities.

The move reflects a change in global telecom operations and technology development, which require faster development at lower cost, at a time when virtually all service providers and equipment suppliers have fewer in-house resources to do so, says Brian Wood, Continuous Computing VP.

The new capabilities will accelerate the creation and delivery of carrier-class systems to service providers much faster, in many cases as much as 12 to 24 months faster, says Wood.

The demand for more prepackaged platforms also is part of a broader industry trend to focus on core competencies, while outsourcing lower-level or less-essential functions to business partners.

In part, that is a simple response to the fact that virtually all communications entities now operate with fewer in-house resources. But it also reflects a drive, across the ecosystem to add more value and differentiation.

“At all levels of the value chain, everybody is trying to add more value,” says Wood. “over the last two years we had been at platform level but now we are moving to the systems level.”

“OEMs are moving to software features while operators are moving to the marketing level,” he says.

“Everyone is moving,” Wood says, and the transformational change arguably is greatest for the equipment providers, who have to change the most as headcounts are orders of magnitude lower than in decades past.

There also is an industry-wide narrowing of the gap between enterprise solutions and carrier-grade solutions. Traditionally, enterprise products had a lifespan of two to three years, so costs had to be lower.

Telecom products had lifecycles more in the seven to 10 year range, and were hardened. So development cycles were longer and cost was higher.

These days, the gap is narrowing. Telecom equipment cycles are moving closer to the enterprise lifecycle as everything becomes IP based.

So there is less distinction between enterprise class and carrier class products. Obviously carrier class products require more redundancy, more cooling and other modifications of basic platforms to harden them.

But that is a truly big shift. Differentiation now occurs at the level of software, not hardware or protocols. And enterprise and carrier systems increasingly are produced on a common foundation.

Broadband Mapping: Studying Non-Problems

About $350 million of the version of the broadband stimulus package passed by the Senate will go toward mapping broadband coverage. Some will argue that it doesn't matter what "stimulus" spending goes toward, as long as the money goes to work immediately, is targeted and terminates once the recession is over, and there is sound logic there.

The issue, though, is whether there is a terrible problem requiring that we "study" this matter some more. If one looks at where the United States ranks in telephone penetration, for example, the United States ranks about 16th, as measured by the Organization for Economic Development and Cooperation.

One can quarrel with the methodology OCED uses, but for the moment consider simply the well-developed state of landline voice service. Does anybody really think the United States has a problem with wired voice penetration?

And if not, why is a "15th in the world" ranking for broadband access a problem?

A "back-of-the-envelope" forecast by economists at the Phoenix Center suggests that U.S. broadband subscription rates (keep in mind that we are talking about demand for the service, not its availability) will be about 75 percent of the telephone rate in 4.4 years, and broadband will equal the telephone subscription rate in 9.6 years.

There is a difference between "lack of supply" and "lack of demand." The OECD statistics for broadband penetration are a "demand" metric, not a "supply" metric. And yet even on that score the United States demand for broadband already is equivalent to wired voice.

Some things do need to be studied because there are problems of supply. But supply isn't really the issue for broadband. The problem is demand.

In fact, as wired voice demand continues to decline, at least in the consumer market, why would we not see calls for studies of why wired voice penetration is so "low"? The reason we don't hear such calls is because demand is shifting. There is no problem with "supply."

Mapping broadband might be a useful exercise for some. But mapping doesn't change the demand equation, which is the only problem broadband currently faces. One might argue that prices are too high, or speeds too low. But that is a problem only if supply is not being upgraded. And it is hard to argue that is not occurring at a rapid pace. In fact, broadband already has been adopted at rates that surpass nearly all key consumer products of the last 100 years. Only use of the Internet itself is a reasonable candidate for "fastest-adopted" innovation.

There are lots of problems to be solved. Mapping broadband, to pinpoint supply constraints, doesn't strike me as being one of them.