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Telco-Backed Research Group Hands Out Award to Verizon for “Market Leadership”

Phillip Dampier September 30, 2010 Astroturf, AT&T, Editorial & Site News, Verizon 3 Comments

The searchlight is looking for cash.

A phone company-backed research group has awarded Verizon the “Top Provider among Market Leaders for multi-protocol label switching and Carrier Ethernet services,” with two 2010 Nemertes PilotHouse Awards. This is the second time Verizon Business has received top honors for Market Leaders in both of these categories since the awards program debuted in 2008.

Nemertes Research, which depends on industry money to conduct research, is behind the awards.  Nemertes, backed by the phone industry-funded Internet Innovation Alliance, is the same group that regularly issues research reports predicting an imminent global “brown-out” of the Internet because of excessive broadband traffic.  In turn, those reports are used to lobby for network management policies that violate Net Neutrality and fuel calls for Internet Overcharging schemes.

Verizon’s press release spends several paragraphs on the defensive, going out of its way to suggest this particular award was not another phoneybaloney recognition created out of thin air with telco money:

“This recognition is particularly meaningful because the rankings are based 100 percent on the views and experiences of actual users, making PilotHouse a truly unique industry award,” said Anthony Recine, vice president of networking and communications solutions for Verizon Business.

[…]PilotHouse Awards are based 100% on the experiences of IT-decision makers. No vendors sponsor this research.

Nemertes itself spends plenty of time trying to cope with skepticism on its own website, but manages to expose another money trail along the way (underlining ours):

6) Is this a “pay-to-play” awards program?

No. Nemertes publishes aggregate and comparative data for all vendors for which we receive a total number of ratings equal to at least 10% of the total pool of ratings. As part of the survey, Nemertes provides a list of vendors derived from extensive research and analysis. There is also another category to allow participants to write in any provider in any category.

9) Can vendors promote the awards?

Yes. After completion of the award reports, Nemertes will notify winners and offer the option of buying award packages that include reprint rights, logo licensing, webinars, issue papers, and award dinner tickets. Buying award packages have no bearing on the results of the PilotHouse awards.

Among the big winners are AT&T, Cisco (the biggest driver of the “exaflood” theory around), Verizon, and Qwest.

What remains unsaid is who pays Nemertes to run an awards program and where the research firm would be without large telecommunications companies purchasing “research” they can safely assume will always find in their favor.

Nemertes’s slogan is “Independence, Integrity, Insight.”  Research groups that truly represent those ideals need not emphasize them because they are embodied in the quality of the research, the firewall that keeps industry money from tainting the findings, and full disclosure of who is paying for what.

Currently there are 3 comments on this Article:

  1. Andreas M. Antonopoulos says:

    While there are few facts sprinkled among the sea of innuendo and speculation in this article, we would like to address the issue as directly and honestly as we can. There are several inaccuracies and clarifications required:

    1.) Nemertes is not “backed” by phone companies.
    2.) This is not a pay-for-play program, as evidenced by the fact that Verizon won an award, and did not pay Nemertes a dime for it.
    3.) The Internet Innovation Alliance is not a client of Nemertes. Please correct this inaccuracy.
    4.) Nemertes’ clients represent a wide range of global enterprises, midsize businesses, as well as large, small, and startup equipment vendors, software providers, and service providers.
    5.) Our awards program is funded 100% out of our operating budget and not sponsored by any company.
    6.) You selectively call out “big winners,” (though we are not sure how you are defining “big winners”), but you fail to mention several others, including Google, ShoreTel, Aspect, Toshiba, and Mitel, that may not fit the fabrication you’re trying to create. In previous years, (gasp!) IT decision-makers also voted providers such as Masergy and Time-Warner Telecom as top Ethernet providers.
    7.) These awards represent the highest scores from IT decision-makers who rate their vendors and providers on a 1-5 scale. Unlike most of the awards in our industry, they are not influenced by analyst opinion or subjective evaluation. The company that gets the highest customer rating, wins. The companies that did receive awards were not involved in the awards process in any way. They were not even aware that we were issuing awards until the final results were compiled. Any company may receive an award, if their own customers, the people using their technology, rate them higher than any other company.
    8.) Indeed, some vendors who earn the highest ratings from their customers understandably want to promote their award by licensing the award logo or the report. And yes, they pay for that, as we fully disclose in our methodology. But unlike other analyst firms (do some homework there), vendors do not have to pay anything in order to win an award. They can issue a press release without paying a dime. Nemertes issues its own press release and Webcast identifying every one of the winners, as well.
    9.) The reason we spend so much time emphasizing the fact that these awards are by customer ratings is because most of the awards in our industry are not. They are based on or influenced by analyst opinion. Analysts employed by other research firms control who is nominated, who gets rated or in some cases simply decide who wins. We do not control who gets rated, nominated or wins – that is all based on actual customers sourced anonymously and randomly.
    10.) Bottom line: we asked a random group of IT professionals to tell us who they used for various categories of technologies and to rate those companies on a scale of 1 to 5. We did not get paid to ask these questions. We accepted ratings for any company mentioned. We calculated the average rating for any company that exceeded the statistical sampling error. We did not influence the results in any way. We announced all the scores of *both* winners and losers, regardless of whether those winners and losers were ever clients of ours, or whether they wanted those scores publicized. We published our methodology openly both before the results and as part of the results. For every “winner” we usually had 4-5 other companies, from the same industry, who did not receive high ratings.

    Bloggers who want to maintain credibility should check their facts and at least attempt to provide a balanced post.

    We invite anyone with questions about our awards, or our methodology to read our public FAQ (http://nemertes.com/pilothouse_awards_frequently_asked_questions) or to call us at 888-241-2685.

    Thank you

    • Nice try Andreas, But we followed the money and your organization’s veneer of independence and integrity run only as deep as your clients’ money allows.

      1) In 2009, I asked Ted Ritter from Nemertes about where the money comes from to produce the studies and the research and the reports. His answer:

      “Our research is funded by our clients: Vendors, service providers and fortune 500 enterprise.”

      No potential conflict of interest there!

      Back in 2007, one of those paid Nemertes for research that proclaimed the Internet would be effectively rendered useless by a giant slowdown by 2010:

      “Users will experience a slow, subtle degradation, so it’s back to the bad old days of dial-up,” says Nemertes President Johna Till Johnson. “The cool stuff that you’ll want to do will be such a pain in the rear that you won’t do it.”

      Right on cue, and not by coincidence, the Internet Innovation Alliance, an AT&T front group, embraced the results and paraded them in their own lobbying:

      “We’re not trying to play Paul Revere and say that the Internet’s going to fall,” says IIA co-Chairman Larry Irving. “If we make the investments we need, then people will have the Internet experience that they want and deserve.”

      And so Nemertes Research was used that year in Washington, by the interests that quietly paid for those ready-made results, to argue for a “hands-off” regulatory regime to “spur investment.” Investment directed to equipment vendors, among others.

      Of course, nobody bothered to disclose Nemertes didn’t produce the laughably wrong original report for free — it was bought and paid for.

      2) More bang for your buck:

      Nemertes earns its existence from the clients who pay it to produce “independent” reports. But it gets even better. Nemertes can “independently” release the results a paying client can then trumpet as amazing new findings from Nemertes (not themselves), without bothering to disclose they paid for the study. Does Nemertes disclose who pays for their “integrity”-based research as part of their reports? Show me.

      Ritter from Nemertes told me that the study results can be “licensed” for use in marketing and other purposes… another classic conflict of interest.

      Year after year, Nemertes gets another dip into the money well with another report proclaiming the imminent brownout of the Internet, and year after year, the reports prove wrong. If a cult group paid Nemertes to predict the date of the end times, we’d get an alarmist report similar what Nemertes coughs up about Internet ‘exafloods.’

      3) Awards

      Let’s not kid ourselves here. Nemertes runs an awards program as a revenue enhancer and marketing effort. Here’s how:

      1) The costs to run some award program are next to nothing, especially when you can earn plenty more for your “operating budget” by asking for money from the winners to promote the results. Who is the biggest winner in this? Nemertes Research.

      2) Gladhanding the winners is also an excellent opportunity to market your other services, which also don’t come for free.

      You spent most of your response defending your awards program from charges we didn’t make. Our accusation is the relative worth of your awards is tempered, enormously, by the fact your organization’s revenue is dependent on the very entities you research, that you do not specifically disclose who pays for what, and that your awards program covers an industry from which you solicit business and with whom you earn money licensing the results.

      That spells one thing:

      CONFLICT OF INTEREST

      Oh, and one last thought. A dollar-a-researched-holler group like Nemertes wins a deluxe suite at the Hypocrisy Hotel for complaining about fact-checking and balanced findings.

      It is to laugh. (And you don’t have to pay me a licensing fee to use that.)

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