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Verizon Says Goodbye to 10,400 Workers; Company Will Slash $10 Billion in Costs

Phillip Dampier December 10, 2018 Verizon, Wireless Broadband 1 Comment

Despite a strong economy, Verizon Communications will shed 10,400 employees and cut $10 billion in costs as part of a transformation initiative promoted by the company’s newest top executive.

“These changes are well-planned and anticipated, and they will be seamless to our customers,” said Verizon CEO Hans Vestberg. “This is a moment in time, given our financial and operational strength, to begin to better serve customers with more agility, speed and flexibility.”

For Andrew Challenger, vice president of Challenger, Gray & Christmas, an outplacement firm that closely monitors corporate layoffs, Verizon’s willingness to let go of 7% of their workforce is an ominous sign of possible additional job reductions in the future.

Vestberg has advocated reorienting Verizon towards a potentially lucrative 5G wireless future. The estimated $10 billion in cost savings could placate investors on Wall Street alarmed about increased spending Verizon is likely to undertake to deploy 5G infrastructure over the next five years.

In October, Verizon offered more than 44,000 employees a voluntary buyout package and announced it would transfer thousands of current employees to Infosys, an outsourcing company headquartered in India. The voluntary separation package included up to 60 weeks’ salary, bonus and benefits, depending on length of service. This morning, accepted participants received word of their last day of employment, which will be the last day of this year or at the end of March or June, 2019. Verizon currently has 152,300 employees.

Challenger believes Verizon is likely to continue letting employees go as the company faces ongoing pressures on its landline and business service units and endures cord-cutting for its FiOS fiber to the home service. Challenger told CNBC the 44,000 workers who took Verizon’s offer likely made a smart decision. Companies that offer voluntary buyouts in good times can be a sign of likely layoffs when the economy slows down. With record low unemployment, the Verizon workers leaving the telecom company are likely to find new jobs much easier than those forced to look during a recession.

Verizon employees transferred to Infosys may be among the next to be targeted in future layoffs, according to Challenger. Verizon workers will be working closely with low-paid Indian staffers who may eventually replace them.

Workers who are assigned to train cheaper workers should keep their eyes open and resumes ready, Challenger warned.

AT&T Still “Meh” on Fixed 5G Wireless; “We’re Focused on Mobility”

AT&T continues to gently discourage the media and investors from comparing its 5G strategy with that of its biggest competitor, Verizon, suggesting the two companies have different visions about where and how 5G and small cells will be deployed.

“We’ve done fixed wireless in our network on LTE as part of our Connect America Fund commitment from the government. We’ve been doing that for two years. And so we know the technology. We know it works, and it works for the purposes intended, which is real broadband,” said Scott Mair, president of operations at AT&T. “The challenge is the use case and the economics, right? So where does fixed wireless work? We’re focused on mobility.”

Mair echoes earlier sentiments from AT&T’s chief financial officer who has repeatedly told investors that AT&T sees fiber to the home service as a superior offering, and one economically within reach for the company in its urban and suburban service areas.

Speaking on Barclays Global Technology, Media and Telecommunications Broker Conference Call, Mair did not rule out 5G residential fixed wireless service in certain expensive-to-reach areas, but it is clear AT&T’s priority will be to bolster its mobile network, not invade the home internet access marketplace. Mair noted AT&T will deploy small cells to power its 5G services, but primarily to resolve congestion issues in high wireless traffic areas.

“If we’re there, we build small cells primarily for capacity,” noted Mair, adding the company believes “the mobility use case is probably the right place to be spending our time and effort.”

AT&T plans to target its first fixed or short-range 5G services on its business customers.

“We see initially enterprise businesses as being the area where the entry will be first,” Mair said. “We’ve thought about partnering with a manufacturing firm, and I really believe that manufacturing is going to be a key capability. When you look at a factory floor, it’s real-time telemetry, real-time analytics. You have factories that now need to be more nimble than ever in terms of being able to reconfigure for product changes very quickly.”

AT&T is also continuing to aggressively expand its fiber footprint, including the prospect of constructing fiber networks outside of AT&T’s traditional landline service area. But the company stressed it is building fiber networks in new ways that will maximize the company’s Return On Investment.

Mair

“So with our fiber build-out, fiber underlies everything we do, whether it’s wireline or wireless. And so fiber matters,” Mair said. “By middle of next year, we’ll be at 14 million homes passed and because we also have a deep fiber footprint, we’ll have another eight million businesses that we pass. That gives us 22 million locations that we can sell fiber-based services.”

AT&T’s fiber network planning has become very sophisticated these days. The more customers sharing a fiber connection, the faster construction expenses will be paid off.

When a business client contacts AT&T to arrange for fiber service, the company used to run a dedicated fiber cable directly to the business. These days, AT&T attempts to maximize the potential use of that fiber cable by routing it through areas that have a high potential of generating additional business for the company or traffic on its network. For example, a fiber connection furnished for a business might also be used to serve multiple dwelling units, like apartment buildings or condos, or rerouted to also reach other businesses that can be sold fiber services.

“I’m passing two [AT&T] cell sites that I’m paying someone else transport and backhaul for, where I can now put it on my own network,” Mair offered as an example. “I know where I’m going to be building small cells in the future. We can plan out that. We know where we’re going to be. I can route that fiber. So now I’ve optimized the route.”

Verizon, Samsung Will Release 5G Smartphones in 2019

Verizon and Samsung on Monday confirmed long-held industry expectations they would seek to steal a march on Apple by launching U.S. 5G smartphones in the first half of 2019.

The two companies said in a statement they would unveil a prototype, using Qualcomm modem chips, at the chipmaker’s annual Snapdragon Technology Summit in Maui, Hawaii this week.

While Verizon is leading the charge to trial 5G in some cities next year, industry analysts say the higher-speed networks are unlikely to be widely available until the middle of the next decade.

Apple is engaged in a legal battle with Qualcomm that has led it to stop using its modem chips, and the Cupertino, California company is widely expected instead to use Intel modems, which will not be ready for production until late 2019.

Citing sources familiar with the matter, Bloomberg reported on Monday that Apple would wait until at least 2020 to release its first 5G iPhones.

The delay could make it easier for Samsung and Verizon to win customers who are eager to connect to 5G networks, which will provide a leap forward in mobile data speeds, up to 50 or 100 times faster than current 4G networks.

Qualcomm has also partnered with other smartphone makers who have committed to 5G phones for next year.

U.S. wireless carrier Sprint is also working with LG Electronics USA to launch a 5G smartphone in the U.S. in the first half of 2019.

Verizon launched its first commercial 5G service in October when its 5G Home offering went live in Houston, Indianapolis, Los Angeles and Sacramento.

Verizon Chief Financial Officer Matthew Ellis said last month that the company plans to target a broader audience for its 5G home broadband product following the adoption of global standards for the technology.

(Reuters) Reporting by Sayanti Chakraborty in Bengaluru; Editing by Shounak Dasgupta

Wireless Companies Bid $336 Million and Counting for 28 GHz 5G/Small Cell Spectrum

Forty companies, including hedge funds, phone companies, and wireless carriers have collectively bid $336,265,480 so far for about 2,500 28 GHz licenses (out of 3,072 available) that will be a part of the buildout of 5G millimeter wave wireless service.

The FCC is currently auctioning off spectrum in the 27.5–28.35 GHz (28 GHz) band — a very large chunk of frequencies which can offer bidders the opportunity to launch a wide bandwidth cellular data service capable of very fast internet speed. But because the frequencies involved are line-of-sight, the winning bidders will have to invest in large networks of small cell antennas that will be required to reach customers.

Citigroup analysts reviewing the auction results so far told clients they suspect there are “two outsized bidders” winning many of the available licenses, including Verizon. This is not a surprise, considering Verizon already has significant spectrum holdings in the 28 GHz band. Verizon’s current 5G service relies on this millimeter wave spectrum, but is available so far only in a handful of markets. The identity of the second major bidder remains a mystery. The spectrum licenses getting no bids are mostly in rural areas with low population density.

All the other major wireless operators — AT&T, T-Mobile, and U.S. Cellular — are also bidders. Only Sprint, currently in a merger deal with T-Mobile, is missing. AT&T has not shown much interest in offering its customers millimeter wave 5G service, and T-Mobile is planning to use 5G’s technology upgrade to bolster its existing network with more capacity and speed. Dish Network, which already controls a substantial portfolio of unused spectrum, is also a bidder and could be seeking to stockpile 5G spectrum for a future venture or sales deal with one of the other wireless companies.

The qualified bidders:

8538 Green Street LLC MetaLINK Technologies, Inc.
Arctic Slope Telephone Association Cooperative NEIT Services, LLC
Aries Wireless LLC Nemont Communications, Inc.
AT&T Spectrum Frontiers LLC Northern Valley Communications, LLC
BDCIH Wireless, LLC Nsight Spectrum, LLC
Beyerle, David E Nuvera Communications, Inc.
BroadBand One of the Midwest, Inc Panhandle Telephone Cooperative, Inc.
Cellco Partnership d/b/a Verizon Wireless Pine Belt Cellular, Inc.
Central Broadband 24/28 GHz Consortium Rock Port Telephone Company
Cityfront Wireless LLC SANN Consortium
Cordova Telephone Cooperative, Inc. T-Mobile License LLC
Crestone Wireless L.L.C. TelAlaska Cellular, Inc.
Day Management Corporation Townes 5G, LLC
Frontier Communications Corporation Trace Fiber Networks, LLC
FTC Management Group, Inc. Tradewinds Wireless Holdings, LLC
High Band License Co LLC Union Telephone Company
Horry Telephone Cooperative, Inc. United States Cellular Corporation
Inland Cellular LLC Universal Electrical Contractors
LICT Wireless Broadband Company, LLC Western Independent Networks, Inc
Mark Twain Communications Company Windstream Services, LLC

Bidding starts at $200 per available county, and many rural licenses could be won for precisely that amount, with only one interested bidder offering the minimum bid.

The highest bids are just over $10,000,000 each for two licenses in the Honolulu, Hawaii market. Bids in excess of $2 million are currently on the table in these counties:

California: Kern
Colorado: El Paso
Florida: Volusia
Illinois: Winnebago
Iowa: Linn
Louisiana: East Baton Rouge
Maine: Cumberland
Missouri: Greene
Nebraska: Lancaster
Nevada: Washoe
Oregon: Jackson
Pennsylvania: Lancaster, Berks, York, Lehigh, Luzerne, Northampton, Dauphin
Texas: Cameron, Hidalgo
Wisconsin: Dane

Several States Rubber-Stamping Approval of T-Mobile/Sprint Merger; N.Y. Isn’t One of Them

A dispute is emerging in New York between Sprint and T-Mobile and the Communications Workers of America (CWA) and pro-consumer group the Public Utility Law Project (PULP) over the wireless companies’ attempt to argue for their merger deal in a partly secretive filing not open to review by the public.

In a joint letter signed by Richard Brodsky, on behalf of the CWA and Richard Berkley, on behalf of PULP, the two groups argue Sprint’s initial summer filing promoting its merger did not come close to meeting the state’s burden of proof that allowing the two companies to join forces would be good for New York consumers. But even worse, the two wireless companies are now trying to introduce new arguments in favor of their merger, while redacting them from public view and comment.

“The use of the public comment process to recast the Petition, to attempt to repair the fatal defects in the Petition, and to insulate this new information from public comment is fundamentally unfair,” the two men wrote. “This maneuver deprives Parties of the opportunity to respond to the full set of arguments and assertions made by the Joint Applicants; it undermines the usefulness and value of the public comment policies so fundamental to the Commissions’ history and values and the proper conduct of a rulemaking proceeding; it is not contemplated by Commission rules; and it sets a precedent for future misuse of comments to short-circuit full public analysis.”

The companies filed what they called “comments” on Nov. 16. Detailed information about how the merger will impact on New York consumers was left redacted:

Sprint and T-Mobile’s arguments regarding the consumer benefits of its merger for New Yorkers remain a public mystery. The companies redacted this submission to keep the prying eyes of average consumers from reading it.

The CWA and PULP are asking the Commission for an order that:

1) Requires the Joint Applicants to provide unredacted submissions or to withdraw any document relying on redactions; and/or
2) Convenes an evidentiary hearing permitting examination and testimony relating to the Petition and the submission; and/or
3) Grants our previous request for a formal Public Hearing on the Petition and the submission; and/or
4) Removes from the record the Joint Applicants’ November 16 submission from the record; and/or
5) Extends the deadline for Notice and Comment in the October 19 Order to December 15, 2018; and/or such other relief as the Commission may order.

The merger of the two wireless companies requires state and federal approval. Alaska, Colorado, Delaware, Georgia, Louisiana, Maryland, Minnesota, Nevada, Texas, Utah, West Virginia and the District of Columbia have already essentially “rubber-stamped” approval of the merger deal with little comment. Pennsylvania regulators submitted a series of questions that the two companies answered earlier this week.

Sprint and T-Mobile are having a tougher time dealing with regulators in New York and New Jersey, however — the two most likely to either deny approval or impose significant deal conditions in approving the transaction. A review is pending in California, which routinely asks a lot of questions but rarely opposes telecommunications company mergers. Hawaii and Mississippi will also examine the merger in the near future, but neither are expected to oppose it.

New York regulators are likely to consider the impact of the merger on the availability of affordable cellphone plans, the Lifeline program that offers discounted phone service for the poor, and how the transaction will affect rural wireless service in upstate New York.

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