Blackberry Butter Spreader

As Blackberry owners enter their fourth day of a serious global service outage, a growing number are now wondering why they are still wasting their time with a phone that has been increasingly abandoned “for something better,” — namely smartphones running Apple’s iOS or Android-powered handsets that now have the largest share of the smartphone market.

Only Nokia is facing market share challenges greater than Waterloo, Ontario-based Research in Motion, the maker of the formerly popular device.  After days of service disruptions, RIM may be getting a lot more acquainted with their town’s namesake than they’d like.

The trouble started Monday with a switch problem at the company’s offices in Slough, Great Britain.  Yes, the same Slough that is home to the workers of British television’s original rendition of “The Office.”

The switch failure soon began impacting customers in Europe, Africa, and the Middle East — the remaining places where RIM still commands a respectable position in the handset market.  On Tuesday, problems spread across South America and India.  Yesterday, North Americans joined the growing crowd of users who found e-mail service and instant messaging spotty, when it worked at all.

Company officials suggest the spreading outages were caused by a cascading series of failures.  When the switch failed, backup systems proved inadequate, and the inevitable sea of “is your Blackberry working?” and “test… test… test” messages started piling up, arriving faster than RIM’s backup systems could handle.  The more frustrated users became trying to send and receive messages, the worse the problems got.

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The Blackberry outage caused a sensation in the United Kingdom, where the phone still maintains a significant market share.  British reporters and analysts had no time to throw softball questions at Blackberry officials.  Watch as Sky News and the BBC report the service failure as a veritable crisis for the company, followed by an increasingly uncomfortable managing director for Research in Motion’s UK operations who faced sharp questioning from a reporter intent on getting beyond the pre-written damage control statement.  In the United States, the declining market share for the Blackberry gave ABC News license to have some fun with the service outage, poking fun at the phone that is increasingly irrelevant to Americans.  (11 minutes)

RIM Founder and co-CEO Mike Lazaridis Apologizes

Blackberry users are dependent on RIM’s networking infrastructure because the company distributes messages through its own servers.  That can deliver more control to RIM’s network engineers, but also exposes the company to spectacular service failures when things go wrong.  And they have gone wrong repeatedly, as customers worldwide report regular sporadic service outages.

Wireless phone companies faced the wrath of angry customers, who initially blamed them for the service outages, but in fact the problems reside with RIM’s own network.

Loyal Blackberry customers have been forced, much to the amusement of other handset owners, into desperate measures.

“My God, I actually had to walk down the hall to my co-worker’s cubicle to ask him a question,” wrote one angry customer.  “Damn you, Blackberry!”

“So much for today’s lunch meeting,” shared another. “Nobody knew what to do or where to meet until someone suggested we call everyone on the phone.  The phone??? Are you kidding me?”

The New York Times shared other serious side effects of the outage:

By Wednesday morning, Wall Street was alight with e-mails from technology departments notifying employees of the problem. Bankers’ meetings fell through when attendees couldn’t look up the locations. Employees were reduced to leaving voice-mail messages.

Perhaps more concerning is the ultimate future of Research in Motion, which has seen better days.  Just three years ago, Blackberry enjoyed a 46 percent market share for mobile devices around the world, according to data from IDC, a research firm. This year, it’s 12 percent and dropping (and is already much lower in North America.)

The Blackberry toe spreader

Wall Street is furious, of course.

“[The outage] is symbolic of what’s going on at the company,” Colin Gillis, an analyst at BGC partners who follows the telecom industry told the Times. “It’s a bloodbath.”

The same can be said for the company’s stock price, which one analyst compared to a train wreck in slow motion.

This morning, Research in Motion made the riskiest move of all — trotting out the historically idiosyncratic and impatient RIM Founder and co-CEO Mike Lazaridis to apologize.  He appeared more contrite than an earlier appearance with the BBC’s Rory Cellan-Jones.  Lazaridis turned up to that earlier interview with his press handler and a lot of attitude.  He soon found himself being questioned by the reporter about the company’s user privacy policies in the Middle East.  After slamming the reporter for the question, Lazaridis ended the interview.

Today, the founder of the company still couldn’t answer the all-important, “when will service be fully restored?”  But as of late this morning, RIM’s co-Chief Executive Officer Jim Balsillie claimed all is well again with the Blackberry, but wouldn’t answer questions about whether customers were entitled to refunds for lost service.

That’s a question mobile carriers are starting to ask RIM as well, particularly as customers look for service credit for the outages cell companies were not responsible for causing.

“This is it. This is the boiling point. Someone has to go over to Waterloo and slap those in charge at RIM,” wrote Crackberry.com forum user BlackLion15.

With tomorrow’s release of Apple’s latest iPhone, RIM officials may prefer a good customer spanking over the alternative — customers throwing their Blackberries in the trash and switching to a new handset.

[flv width=”512″ height=”308″]http://www.phillipdampier.com/video/Lazaridis Before After.flv[/flv]

Before and After.  During better days for Research in Motion, RIM Founder and co-CEO Mike Lazaridis had no time for ‘impertinent’ questions from British reporters and called an early end to one interview.  Earlier today, he checked his attitude at the door to issue an apology to upset customers.  (3 minutes)

Cable company-owned power backup batteries

For the last several years, telephone companies have faced millions in losses from stolen telephone cables often ripped right off of phone poles — sold to copper scrap yards, usually to fuel drug habits.  Now cable companies like Time Warner Cable are facing a theft problem of their own — stolen battery backup equipment.

In California and Texas, the problem has grown significant enough to cost the company nearly $1 million replacing lost equipment.  Time Warner is now offering up to $10,000 in some areas for information leading to the arrest of those responsible.

Thieves break into metal cabinets usually located on street corners, phone poles, or in backyards looking to harvest the power backup batteries inside.  Thieves resell the lead batteries at scrap yards, and often take the power backup controllers as well.  Most break-ins occur at night, and in many areas, the thieves dress up to resemble utility workers and drive panel vans or bucket trucks that passersby might mistake as utility-owned vehicles.

The batteries appear similar to a traditional car battery, but larger.  They weigh about 67 pounds each and typically sell for $17-20 apiece at scrap yards.  In some areas, repeated break-ins have caused the loss of dozens of batteries, and major headaches for customers who can find their phone and Internet service interrupted until technicians can replace the equipment.  In Beaumont, Tex., two men driving a bucket truck netted $3,000 worth of batteries in one evening.  They were caught by law enforcement officials who suspected them of breaking into numerous boxes attached to area telephone poles.

In January, two Huntington Beach, Calif. police officers stopped a suspicious vehicle and found 13 stolen batteries owned by the cable company removed from boxes in Huntington Beach, Fountain Valley and Costa Mesa. The vehicles’ occupants were arrested for a variety of charges including the possession of stolen property.  They have since been convicted of the crimes and sentenced to time in jail.

Grand Prairie, Tex. Det. Lyle Gensler told a Dallas TV station it’s not just the loss of service Time Warner is worried about, it’s the replacement cost of the stolen property that may trickle-down to customers.

“If Time Warner loses a battery, it’s going to cost them to replace it. If they lose money, they’re going to pass that onto the consumer,” said Gensler. “Over the last six months [Grand Prairie] has lost over $100,000 in property.”

Time Warner has been installing new theft prevention equipment on some utility cabinets in problem areas that deter unauthorized entry into the cabinets.

The cable company has already paid at least one tipster $10,000 for turning in cable equipment thieves.  Concerned citizens can report suspicious activity to their local law enforcement office or call Time Warner’s security tip line at 1-877-TWC-TIPS.

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KXAS in Dallas reports on a rash of battery thefts affecting Time Warner Cable and their subscribers in the Metroplex.  (1 minute)

Sprint CEO Dan Hesse is now at risk of losing his job over decisions to increase spending to upgrade network performance and capacity.  In the last week, Sprint announced it will likely seek outside financing to accelerate the launch of its new 4G LTE network, while concurrently deciding to stop selling 4G WiMax smartphones that work on the troubled Clearwire network by the end of this year.

Wall Street hates companies spending money to upgrade their networks, particularly when there is little evidence Sprint will enhance profits with price increases or cut costs by limiting customers’ data usage.

For several major investment firms and banks, the last straw was Hesse’s revelation that the company will likely need to borrow money to complete its Network Vision plan, which calls for major upgrades of Sprint’s wireless network to support much faster data speeds for customers.  His earlier commitment to spend up to $20 billion on Sprint’s version of the Apple iPhone did not help matters.

Sprint’s stock price took a beating last week, sliding 26 percent to the lowest level since February 2009 as investors fled.

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KSHB in Kansas City reports Sprint intends to stop selling devices that work on the company’s existing 4G/Clearwire WiMax service by the end of this year in favor of Sprint’s forthcoming launch of a new 4G LTE network.  (1 minute)

The Detroit News reports an investor meeting with Sprint executives “grew ugly” after Hesse announced the company needed to spend money to upgrade and refused to show a clear pathway to enhanced profits earned from those upgrades.

Wall Street to Hesse: Don't Get Comfortable

“Hesse is on thin ice now,” Ed Snyder, an analyst with Charter Equity Research, told the newspaper. “One, perhaps two, more big mistakes and he’s probably gone.”

More than a half-dozen Wall Street analysts have slashed their ratings on the wireless company because they believe Sprint’s spending plans will hurt liquidity.

While customers are increasingly rewarding Hesse and Sprint for making customer service improvements and retaining customer friendly unlimited service plans, Wall Street shows no signs of being charitable to Hesse’s management of the Overland Park, Kansas company.

Ben Abramowitz, an analyst with Kaufman Bros., downgraded the stock to “hold” from “buy,” excoriating the company for expensive strategic shifts, including network upgrades and the company’s recent commitment to Apple to sell millions of Apple iPhones on Sprint’s network.

“Management credibility is lost with investors,” Abramowitz wrote.

Jonathan Schildkraut from Evercore Partners told CNBC the spending at Sprint may just be getting started.  Millions of customers remain connected to Nextel’s legacy iDEN network, which Sprint intends to decommission.  Schildkraut believes Sprint will have to provide deep discounts or free phones for displaced customers who will need to move to Sprint’s primary network.  He also notes that despite Sprint’s plans to abandon Clearwire’s WiMax network for 4G, the company will likely make further investments to maintain the partnership, and Clearwire’s network, for other purposes.

Sprint’s decision to adopt Apple’s iPhone and upgrade their network may make competitive sense against larger players AT&T and Verizon Wireless, but Schildkraut notes Apple commands top dollar for the popular phone — upwards of $600 on the wholesale level, which carriers in turn subsidize to lure customers to sign two-year contracts.  But Sprint would do well to consider Verizon’s experience with the iPhone, he says.  Most of Verizon’s iPhones were sold to customers who already owned smartphones.  That forced Verizon to subsidize up to $400 for each iPhone with no chance of increasing the average revenue collected from customers.  Investors were hoping the iPhone would instead attract budget handset customers who would upgrade to more expensive smartphone service plans.

Because the iPhone still does not support 4G technology, it seems less likely existing Sprint 4G WiMax smartphone owners would consider the Apple 4S an upgrade, and may hold off waiting for the anticipated iPhone 5.  But as Sprint begins to promote its forthcoming 4G LTE network, those Sprint customers using WiMax phones will be tempted to move to something else.  Either way, phone subsidies could create a significant drag on Sprint’s cash on hand at a time when the company is spending heavily on upgrading its network.

In the telecommunications business, upgraded service helps customers and spurs competition.  But it is nearly always the enemy of Wall Street unless a clear pathway to enhanced profits can be shown.  Investors may ultimately have the last word on those upgrades, and the person responsible for green-lighting them.  Hesse may learn that lesson first hand if the company can’t find a way to boost its stock price, and soon.

[flv]http://www.phillipdampier.com/video/Sprint CEO in Trouble 10-12-11.flv[/flv]

Wall Street goes on the attack, unhappy that Sprint is spending their money to upgrade its networks for the benefit of Sprint customers.  CNBC covers all the business angles.  (6 minutes)

Irony: Chesonis' 2007 book has this description on Amazon.com -- "When you put people first, you win. When you operate by the highest principles, you'll see the results in the bottom line. When you put a caring heart into how you operate, in your organization and your community, you build the only true foundation of long-term success."

Eight acres of rubble and a big hole in the ground.

That’s what residents of Rochester, N.Y., are calling the former site of Midtown Plaza, America’s first indoor shopping mall, torn down to make room for the new headquarters of PAETEC Corporation — headquarters that may never be built.

Now the city of Rochester has declared war on the proposed acquisition of PAETEC by Little Rock, Ark.,-based Windstream, suggesting the combined company may renege on its commitment to construct new headquarters in downtown Rochester after New York State and Rochester city taxpayers spent $60 million on an economic development package for the company.

In a letter to the Federal Communications Commission, the mayor’s office declared its official opposition to the merger proposal, citing the economic impact of wasted tax dollars and the deal’s impact on local jobs:

The Commission will note from the body of this correspondence that the City may be negatively affected if the transfer of PAETEC to Windstream takes place. The federal, state and local governments have worked to develop the site for the purpose of establishing a PAETEC headquarters in Downtown Rochester; tailoring a development package and investing millions to make this location shovel ready for development. New York State provided the Project’s most significant monetary investment, proceeding with the understanding that the Project would retain and grow employment in the Rochester region. It is in the public interest to examine, not just the financial and planning impact that this will have on the City, but to also study the effect this will have on employment, the communities surrounding the City and the lives of the individuals who may be affected.

[…] In anticipation of the PAETEC Project, New York State and the City invested $60 million to demolish the former improvements on the Midtown Site and create a shovel ready building site. To insure the success of the PAETEC Project, the City produced a development package (“Development Package”) which expedited and customized the demolition of the existing buildings at the Midtown Site to accommodate PAETEC’s construction schedule and provide a foundation for PAETEC’s corporate headquarters.

[…] The Development Package was intended to benefit a New York State employer and help that employer retain its current employees and hire additional employees to grow its business. Despite all the efforts of the City to facilitate and provide the positive economic environment for the PAETEC Project, Windstream has indicated that it intends to reduce PAETEC’s current 850-employee Monroe County workforce.

The two companies filed a joint response with the Commission essentially telling the city to stay out of the merger deal, and their concerns about PAETEC’s headquarters and how many jobs will ultimately be lost are not within the Commission’s power to review anyway.

PAETEC CEO Arunas Chesonis, who earlier put the highest praise for his company’s success on the employees who helped build it into what it is today, told a group of fellow business leaders a different story than he told readers of his 2007 book.

“For people who feel let down, we in Rochester should want to be let down like this 50 times a year,” Chesonis said. “Rochester will be a major operating center for the company. So along those lines, we have to figure out how many jobs will be in Rochester. We should be talking about the people that are going to lose their jobs. What are those people going to do next?”

Presumably collect unemployment, critics charge.  Among them is former Mayor William Johnson, who has criticized the city for bending over backwards for the ever-evolving plans for new PAETEC headquarters, which have been downsized repeatedly since they were originally announced.  Johnson thinks Windstream may have effectively put a knife in the back of taxpayers and the mayor’s office, and could ultimately exit the city of Rochester leaving countless local employees out of work.

Windstream seems resolute in its plans to cut what it calls “duplicative staffing positions.”  It reminded the FCC the agency “has routinely approved transactions in which—as will be the case in this transaction—increased efficiencies and economies of scale and scope are expected.”

That is code language for PAETEC employees: Update your resume.  You may need it.

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Finger-pointing over a messy, uncompleted downtown construction project. PAETEC may be planning to renege on a $60 million taxpayer-financed economic development package after it announced plans to merge with Windstream.  Reports from WHEC and WHAM-TV.  (6 minutes)

Before the billing problems, apartment and building numbers appeared on customer bills.

Cox Communications’ third-party billing vendor decided a billing system upgrade was required to comply with post office regulations governing the bulk mail discounts the company receives when sending millions of subscriber bills.  But that upgrade caused some renters serious headaches this summer when apartment and building numbers were omitted from the envelopes, resulting in bills being returned to Cox undelivered.

Despite the billing snafus which began in June, customers were still expected to pay their bills on time to avoid late fees.  In Lincoln, R.I., one apartment complex is up in arms as residents in their 80s have been forced to drive to Cox offices just to find out how much they owe and pay their bills in person.

“At first they blamed the post office when I called,” said Cox subscriber Anita Messier.  “I’m 81 years old and I can’t see myself driving [to the cable company] this winter to pay my Cox bill.”

The problem: Cox deleted the apartment and building numbers from the billing addresses of many of their customers.  Now, only a generic street address is listed, and that is a problem for the affected Lincoln residents, many of whom live in apartment complexes with well over 100 individual families.  Mail carriers have not been equipped to guess what bill belongs in which mailbox, so Cox’s monthly statements stopped arriving.

Now they don't, and the post office won't deliver them.

The Messier family’s bill ceased arriving in June, and despite repeated calls and promises the issue would be corrected, they still haven’t received a Cox bill, and it is now October.

In frustration, Messier threw her hands up and called Providence TV station WPRI for help.

“I don’t usually ask for help,” Messier confesses.  “I usually come out of this by myself, but right now I’m frustrated with Cox.”

When the station called Cox, it appears to have lit a fire under the cable company to help finally resolve the issue.  Cox officials profusely apologized for the billing blunder, claim they will refund any late charges that result, and now Lincoln residents are wondering whether they will finally see their Cox bills return to their mailboxes before Halloween.

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WPRI in Providence intervenes on behalf of elderly Lincoln residents who have been forced to drive to local Cox offices to pay the cable bills they haven’t seen since June.  (3 minutes)