Mexican Regulator instructs Telmex to Interconnect

By Meenakshi Shanks
TMCnet Contributing Editor

In the process of encouraging converged services, the Comision Federal de Comunicaciones (COFETAL), Mexico's telecoms regulator, has agreed to the guidelines of interconnection and has instructed Telmex, the leading fixed-line telephone company of Mexico, to allow other operators access to its network.

Established in 1997, Telmex, is one of the leading telecommunication service provider in Latin America with services in Mexico, Brazil, Colombia, Chile, Peru and the United States. The company is committed to offer advanced and comprehensive telecom solutions. With this regulation from COFETAL, Telmex is asked to allow smaller competitors to connect to its network of 18.2 million lines.

"Any telecommunications company ... must interconnect its network with another company that requests a connection," COFETAL said in a statement.

COFTETAL seeks to reform and regulate the development of telecommunication services in Mexico. The move is also aimed at bringing down costs for businesses and households in Mexico.

Interconnectivity is the facility which encourages one network operator to connect with the other which guarantees free competition. Under this, the subscribers of one commercial network are allowed to access the other and they are completely protected from monopoly.

COFETAL is yet to reveal its plan of action, in case Telmex refuses to open up its network.

Mexican telephone and cable television companies will soon be offering "triple play" services, including telephone, television and Internet access via the same connection.

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CAT may stop paying charges after lawsuit

KOMSAN TORTERMVASANA

CAT Telecom may suspend payment of access charges to TOT Plc after the latter sued CAT and its two mobile concessionaires, DTAC and True Move, in a long-running dispute over the charges.

A CAT director said the state telecom enterprise would consider the suspension when it meets tomorrow to discuss the 15-billion baht lawsuit brought against it and the two private operators by TOT.

DTAC and True Move suspended access charge payments to TOT in November of last year, while CAT continued to pay access charges for its CDMA mobile phone service.

The two mobile operators instead have adopted an interconnection charge system set up by the National Telecommunications Commission.

CAT has paid seven billion baht in access charges to TOT since the operation of its CDMA services began in 1994. It also had been collecting access charges from he mobile operators for use of the TOT network, and was responsible for forwarding the payments to TOT.

Access charge payments by CAT to TOT were small because of its insignificant customer base of only 10,000 users since 1994, and inconvenient dialling since users have to use a seven-digit number, followed by a five digit number to access the TOT network.

The director said an assessment by CAT's financial officers and securities brokers had shown that if all operators turned to an interconnection charge system and scrapped the access charges next year, CAT would earn eight billion baht more every year from revenue sharing paid by its private concessionaires, and from the suspension of access charges to TOT.

The assessment also showed that TOT itself would also earn three billion baht in interconnection gains every year, and the Finance Ministry would receive an additional four billion baht as corporate income tax from DTAC, True Move and Digital Phone.

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DTAC announces 3G upgrade

Bangkok Post (16 November 2007)

DTAC, the country's second largest mobile operator, has announced a strategic U-turn in its third-generation mobile plans with a possible eight-billion-baht plan to upgrade existing 2G networks to 3G under the concession rights.

The company also plans to provide affordable mobile broadband service over SIM cards, aircards or mobile phones, with the aim of becoming a leading wireless service provider.

The strategies signal a push into the company's 3G and wireless broadband businesses after saying earlier that it would not rush to invest in high-speed data-rich communications.

Chief executive Sigve Brekke said DTAC was now considering an alternative second-tier approach toward 3G investment since the National Telecommunications Commission (NTC) is not issuing 3G licences.

Under the development scheme, he said, DTAC would upgrade existing 2G switching equipment to WiMax and WiFi in Bangkok and major cities in the provinces at the first stage.

The company would then gradually upgrade Edge networks to high-speed download packet access (HSDPA) nationwide.

''Upgrading one base station costs one million baht. DTAC now has 8,000 base stations,'' Mr Brekke said during the GSM Asia Congress in Macau.

''We are now in talks with Nokia and Siemens for upgrading. A decision would be made in the second half of 2008.''

Mr Brekke said the 1800 and 900 frequencies were technology-independent concessions, and that DTAC and AIS had the right to upgrade their existing 2G base stations from analogue to digital GSM, GPRS, Edge and 3G, respectively.

''It would be a waste if we continue waiting for new licences since the NTC still has an unclear policy,'' he said.

Even network upgrading would require less investment than building new ones, Mr Brekke said. He added that he would prefer to apply for a 3G licence with a 2.1 frequency because it would not require paying heavy regulatory fees to its concession provider CAT Telecom, and would be subject to only 7% for licensing fees.

Meanwhile, he said DTAC would continue pressing the NTC to grant licences.

Mr Brekke insisted that DTAC would continue to focus on voice-based services in 2008 with the goal of boosting mobile penetration to 100%, up from an expected 80% by the end of this year.

''We aim to increase the penetration rate to 150% over the next few years.''

He also said that DTAC is preparing to provide affordable mobile broadband services next year to avoid saturated voice services.

The company plans to apply for an international internet gateway (IIG) licence and a fixed-line licence with the NTC. Commercial services would be in the first half of 2008.

DTAC, in co-operation with GSM Association and Microsoft, is surveying 13 countries including Thailand to gather information for wireless broadband demand.

DTAC has 3.5 million mobile internet users out of a total of 16 million subscribers. Data revenue accounted for 10% of total earnings. The country's penetration for the internet is 12.5%, compared with 52% in Malaysia. The figure is expected to reach 50% by 2012, fuelled by 3G WiFi and WiMax, said Mr Brekke.

DTAC shares closed yesterday on the Stock Exchange of Thailand at 38.75 baht, down 25 satang, in trade worth 37.66 million baht.

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Secrets of IT success

HP believes Bangalore will continue to be a world-leading centre for research and development

Back in 1989, HP was only the second company to set up research and development in the southern Indian city of Bangalore. It's now a world famous destination in the IT world, but it wasn't always the case, as Ajay Gupta, lab director of HP Labs India, explained recently.

Earlier Bangalore was a cantonment town for British army officers who found the garrison town of Chennai too hot. Later, after independence, Bangalore became the centre for electronics and it was the days of planned, socialist economics that saw the Indian telecommunications, major electronics and space industries take root here under heavy government protection. When IT companies later came to India, Bangalore was perhaps the only place where one could hire people who knew about electronics and software - and thus the Indian IT miracle took root.

Worldwide, HP Labs has 700 people and has been in operation for more than 40 years, guiding the transformation of HP from an instrumentation company to a computing company in the early days of PA-RISC, and later becoming a printing company through work in the labs on thermal inkjet technology. Today work continues on topics as exotic as nano-mterials, bi-stable displays (electronic paper) and other technologies, most of which are only expected to see the light of days five to 10 years down the road.

Gupta said that while many view India as a place for cost arbitrage, or cheap labour, when someone is doing research, they cannot make that research cheaper. Rather, the labs in Bangalore were set up to tap into the best of Indian talent.

It is expected that three quarters of the new demand for IT over the next 20 years will come from the developing world and many of HP's labs are located there to better understand that demand. By 2020, India's median age will be only 29 against China's 37, due to its one child policy. Europe and Japan will see their median age rise to 25 and 48, with only the US staying young at 37 due to immigration. Gupta says that with such demographics, it is clear that India will be the powerhouse that fuels the global economy in the years ahead.

"Ten years ago we had a problem with a population that was 400 million. Today everyone acknowledges it as an asset. You can't just spend on the local consumers, you have to serve the global market. The question is how we can build up that expertise level."

Language challenges

But with changing demographics comes a challenge. Local language is near the top. There is a clear correlation between English literacy and PC literacy. One Indian telco said that most of its last million new subscribers cannot use an English language interactive voice recognition menu.
HP Labs in Bangalore has been working on an alternative way to input the Sanskrit-based languages, which includes Thai. Most of the Indian languages have between 35 to 40 characters and 15 to 18 modifiers, which means that with over 300 typical symbols in common use, the qwerty keyboard is overwhelmed.

The same is true for Thai. Indeed, the project leader spent time collecting name cards from the Thai journalists at the event, demonstrating his linguistic skills by translating our names into English, and said he was confident that it could easily be adapted to Thai.

The gesture based keyboard works by overlaying a touchpad with the characters in a table the way it is taught in school. The idea is that instead of writing the entire character, the user only writes the modifiers on the template, or for a base character, to simply tap the centre of the character. Instead of having to recognise hundreds of shapes, the system will recognise only the modifiers and knows which character is being modified based on the location on the touchpad.

The gesture based keyboard is also in the testing phase with 1,000 units developed, 500 with the local Karnataka state government. Preliminary data shows that the system is easy to learn and users can reach a decent speed - entering words in as little as 10 minutes at a rate of up to 20 words per minute.

It is expected that the total untapped market for such a keyboard exceeds one billion users.
Going beyond niche languages is the need to input more and more data in limited spaces, such as a mobile PDA phone or a printer. HP Labs in Bangalore is experimenting on gestures, hand movements, head movements or pen and touch.

One recently completed project which has been open sourced is LipiTK, which allows natural handwriting recognition complete with personalisable gestures. Another, the freepad IME, uses the touchpad on a typical notebook combined with a dictionary to allow for finger-written words.
The system would be ideal on PDAs and also for some authentication tasks as the way we write with our fingers is unique to each individual.

Paper security

The authenticity of paper documents for prevention of fraud is a big problem. Most IT companies in India today have to hire a third party to verify university degrees and work records at a substantial cost of around US$200 per employee. Recently, the state of Karnataka, which includes Bangalore, asked HP if it was possible to generate printed documents with paper with the same kind of security as a digitally signed document.

The idea is that a farmer can go to a cyber cafe to access an e-goverment service and print out proof of land ownership. However, because that printout comes from an everyday printer, the farmer still has to go and have that print-out signed and verified by an official before it can be used for loans or to receive fertiliser.

HP Labs created the trusted hardcopy system, whereby a 2D barcode is printed along with the document. A small strip on the lower edge of a transcript, for instance, could hold all the data and style sheets for the transcript. The barcode can be scanned and uploaded to a service, perhaps a central government service or a university server, and the data on it can be verified or printed.

To preserve privacy it is possible only for checksums or signatures to be verified so that the actual data is not transmitted. This will help catch, for instance, transcripts which have been modified and with grades changed.

Data in a typical 2D barcode is stored with a density of 1,000 bytes per square inch and includes both error correction, to ensure that a slightly damaged barcode can still be read, and strong encryption so that it will not be possible to generate a counterfeit certificate and barcode pair.
But perhaps the most interesting use was for e-governance. The back of a typical ID card is large enough for a 2D barcode that includes citizen information and a JPEG digital image. This means that even if a picture was changed on an ID card, the policeman could scan the barcode and bring up the original picture.

Adding print to video

Another government led initiative is HP's Printcast, which adds print to conventional digital broadcast media stream. Digital broadcasting is much more practical than video-on-demand in a country that still suffers from a lack of high-speed broadband penetration. However, the breakthrough lies in adding paper documents to the video stream, which then can be printed though a click on the remote control with a printer connected to the set top box. This additional data can be embedded in the video stream and works with conventional DVB digital TV broadcasting hardware.

Not only can this be used for e-learning documents or recipes for a cooking show, but it could, for instance, be used to print out forms to apply for government subsidy programmes that are explained in the video. This has already been used in rural Karnataka.

A similar project was shown with converged multimedia cast. People watching football on TV can have the highlight clip of the the goal sent to their PDA, which can then be replayed again and again.

Secrets of IT success

Worldwide HP employees 25,000 people in R&D and employs 21,000 people in Bangalore, though it is not allowed to disclose the exact numbers involved in R&D in Bangalore. Virtually all of the R&D's employees are hired from the United States to return to India and are paid roughly 70 percent of a similar US based job. Once the cost of living is taken into account this means that they are three to four times better off than if they had a US-based job, plus they are also closer to friends and family.

Gupta says that the road from labs to commercial success is frustratingly long and not every project that graduates meets with commercial success. However, as a lab, he has to celebrate each graduation and to move on.

The road to success was not a five year one, but more like 20 years of hard work. After independence, India invested heavily in education and today the top 10 engineering schools, and 28 of the top 30, are all state universities. Today this is becoming a challenge as there are simply not enough graduates to satisfy industry demand. The long term challenge moving forward - and one that Gupta spends a lot of time personally working on - is how government, industry and academia collaborate better in doing research.

Asked if he had any advice for the IT sectors in small countries in Southeast Asia, Gupta replied, "The focus must not be local. It opens us to unacceptable risks. Aspiration must be global."

From Bangkok Post,

Story by DON SAMBANDARAKSA, BANGALORE, INDIA

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Business pessimistic on 2008 outlook

Bangkok Post (19 Nov 2007)

Phetchaburi - Six of 10 members of provincial chambers of commerce believe the new government to come after the Dec 23 general election will last more than two years, but believe it will take a year for business to start to pick up, a new poll showed on Sunday.

In a survey conducted among 379 Thai business leaders during the two-day annual meeting of the Thai Chamber of Commerce (TCC) which ended on Sunday in this central resort province, 27.5 per cent of the respondents said they believed the new multi-party coalition government would last only a year.

Regarding the country's economy, the business people were generally pessimistic, but believe that economy will start to improve in the last quarter of 2008 due to sluggish exports during the first three quarters.

They said that the new government must boost domestic consumption and invest in the country's scheduled mega-projects.

In terms of a regional basis, representatives from the South have less confidence regarding the future administration. They believe that whatever post-election government is formed will be shortlived, lasting as little as three months and unlikely to survive for more than a year.

Almost 6 of 10 respondents - 58.75 per cent - also said the political parties contesting upcoming election are focussing too much on populist policies which offered promises to the rural poor to match or exceed those made by the previous government of ousted prime minister Thaksin Shinawatra.

The business community is expressing concern regarding the implications for both the economy and the politics if strongly populist policies are implemented without the economic or political means to follow through on the promises on a long-term basis.

One in four - 25.58 per cent of the participants - at the weekend meeting that the new government will concentrate on national education, 20 per cent on removing corruption, almost 16 per cent on resolving poverty and almost 12 per cent on managing energy. (TNA)

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Telstra must play by rules, court told

November 14, 2007

IF TELSTRA wanted to play in the "telecommunications sandpit" it had to abide by the rules and that meant sometimes sharing its bucket, lawyers for rival telco Optus told the High Court in Canberra today.

Telstra has mounted a constitutional challenge against the Australian Competition and Consumer Commission's power to determine the amount the telco can charge rivals like Optus to use its broadband network.

Current arrangements force Telstra to give rivals access to its broadband "local loops" for as little as $2.50 a month - a price it believes is too low.

Telstra argues that its property is being "compulsorily acquired" but it is not being afforded compensation on "just terms", as required under the Australian constitution.

Stephen Gageler, counsel for Optus, said giving rivals access to its network was "part and parcel" of Telstra's licensing obligations.

"You do not have to play in the telecommunications sandpit," Mr Gageler told the court today.

"If you want to play in the telecommunications sandpit, then you play by the rules." And the rules mean you have to sometimes "share your bucket", he said.

Commonwealth solicitor-general David Bennett argued that Telstra's property was not being taken.

"This is not a borderline case, this is a case where there's simply not an acquisition of property."

Counsel for the ACCC, Neil Young, said the method the regulator used to determine how much Telstra's rivals were charged to use its infrastructure was "appropriate and fair".

AAP

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Govt releases guidelines for 3G services

India Infoline News Service / Mumbai Nov 13, 2007 11:20

The 3G networks will be capable of providing higher data rates and will also be capable of supporting a variety of services such as high- resolution video and multi media services in addition to voice, fax and conventional data services

The Government has released the guidelines for 3G services. With the introduction of 3G services in the country, additional value added services will be available to the public. Guidelines for 3G Services: The 3G (3rd generation) mobile telecommunications is the generic name for the next generation of mobile networks that will combine wireless mobile technology with high data rate transmission capabilities. The 3G networks will be capable of providing higher data rates and will also be capable of supporting a variety of services such as high- resolution video and multi media services in addition to voice, fax and conventional data services. 3G spectrum will be permitted in the 2.1 GHz band. The 3G licences would be granted through a controlled, simultaneous ascending e-auction, by a specialised agency to ensure transparency in the selection process. Besides the initial, one time spectrum charge, it has been decided that the successful service provider would pay additional spectrum charge of 0.5 % of their total Adjusted Gross Revenue (AGR), as the recurring annual spectrum charge. This additional revenue share is proposed to be 1% of AGR after 3 years from the date of spectrum assignment. The roll out requirements, including rural roll-out, as well as stiff penalties for non compliance of the same has been stipulated. Mergers will not be allowed during the initial five years. No trading/ reselling of spectrum is allowed. The CDMA spectrum in 800 MHz band for EV-DO applications would be treated separately from 2.1 GHz spectrum. If the CDMA based service provider(s) ask for the EV-DO carrier of 2 x 1.25 MHz, they would have to pay an amount proportionate to the highest bid for spectrum in 2.1 GHz band. The Government has also issued guidelines for Broadband Wireless Access (BWA) services. With this the level of broadband penetration in the country, especially in rural areas, will be addressed. Introduction of Broadband Wireless Access (BWA) services will enhance the penetration as well as growth in broadband subscribers. Guidelines for BWA Services : To begin with BWA services will be permitted in the 2.5 GHz band by UASL and Category 'A' ISPs, besides BSNL/MTNL. Each service provider will be allotted spectrum upto 2 x 10 MHz in 2.5 GHz band, for use by the service provider in FDD (paired) or TDD mode. The BWA services would be permitted through a controlled, simultaneous ascending e-auction, by a specialised agency to ensure transparency in the selection process. The base/ reserve price would be 25% of amount for 3G spectrum. Besides the initial, one time spectrum charge, additional spectrum charge of 0.5 % of total Adjusted Gross Revenue (AGR), will be levied as the recurring annual spectrum charge. This additional revenue share is proposed to be 1% of AGR after 3 years from the time of spectrum assignment. The roll out conditions, including rural roll-out, as well as stiff penalties for non-compliance of the same has been stipulated. . Mergers will not be allowed during the initial five years. No trading/ reselling of spectrum is allowed. Other service providers will be considered for spectrum allotment for BWA services in the 2.3 GHz band and 3.3 – 3.4 GHz band. After assessing the compatibility with satellite based services, the allotment of spectrum in the 3.4 – 3.6 GHz band will be considered.

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Verizon profit drops 34 pct in 3rd-qtr on tax charges, revenue rises

Associated Press

Article Launched: 10/29/2007 08:17:16 AM PDT

NEW YORK - Verizon Communications Inc., the nation's second largest telecommunications company, on Monday reported third-quarter earnings fell by a third from a year ago due to tax charges.

Verizon earned $1.27 billion, or 44 cents per share, in the July-September period, down 34 percent from $1.92 billion, or 66 cents per share, a year earlier.

This year's figure includes a charge of 16 cents per share for taxes related to a minority investment in Italian cell-phone carrier Vodafone Omnitel, and 3 cents per share in other charges.

Excluding those charges, earnings would have been 63 cents per share, beating the average estimate of analysts polled by Thomson Financial by a penny a share.

Last year's earnings figure includes a number of businesses that have since been sold or spun-off, including the high-margin Yellow Pages business. Excluding those businesses, earnings in last year's second quarter was 53 cents per share.

Revenue came to $23.8 billion in the latest quarter, up 5.8 percent from $22.5 billion a year ago.

Verizon shares rose 14 cents to $45.74 in morning trading Monday. The stock has risen steadily from a 52-week low of $33.98 set last November, as investors have gotten over their skepticism of Verizon's expensive fiber-optic buildout plan.

Analysts said the third-quarter results were largely in line with their expectations. Bank of America's David Barden and UBS's John Hodulik both maintained their

"Buy" ratings and pointed to an increase in the company's planned stock buybacks this year, from $2 billion to $2.5 billion.

Verizon's major growth driver, the cell-phone operations, added 1.6 million customers, for a total of 63.7 million, just behind AT&T Inc.'s 65.7 million. While Verizon has generally been slowly closing the gap with the larger AT&T, Verizon's rival pulled ahead this quarter with an assist from Apple Inc.'s iPhone, for which it is the exclusive carrier.

Verizon Chief Operating Officer Denny Strigl said the iPhone has had "minimal impact," but acknowledged two brief jumps in customers applying to have their numbers transferred to another carrier. The first was when the iPhone went on sale in the previous quarter. The second occurred when the iPhone's price was lowered in September.

"We have a very aggressive fourth-quarter plan in terms of introduction new products" Strigl said. The new phones include the LG Voyager, which like the iPhone has a large touch-sensitive screen. Strigl said it was "a very close competitive offer to the iPhone."

Verizon Wireless is a joint venture of Verizon and Vodafone Group PLC of Britain. All of its revenue - $11.3 billion in the third quarter - is counted on Verizon's books, but only 55 percent of its profits, with the rest going to Vodafone.

Verizon's other growth engine, though still much smaller than the wireless division, is the fiber-optic network that it is building out to replace its copper phone lines.

It added 229,000 fiber-optic subscribers during the quarter, up from 203,000 in the second quarter. It connected 202,000 subscribers to the TV service, FiOS TV.

At the same time, the wireline division continued to lose regular phone subscribers at a much faster rate - 3.7 million in a year.

The New York Times reported Monday that the Federal Communications Commission was set to void agreements between cable operators and landlords that keep out competing video providers like Verizon.

The decision would make it easier for Verizon to bring FiOS to apartment-dwellers, but exclusivity agreements are just one of the contractual and regulatory hurdles that affect its buildout. Exclusive access agreements are already illegal in some states.

Strigl said its FiOS lines pass by buildings with 2.1 million apartments, but it is able to market its service to only 400,000 of those. Of the 4.4 million single-family homes passed by FiOS, Verizon is able to market to about three-quarters.

"It would be very helpful to have the kind of rules the FCC is looking at," Strigl said.

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19 Nov 2007 : Big get-together in City

Africa's telecommunications professionals are heading to Cape Town for their annual industry gathering AfricaCom on 21st and 22nd November, to discuss strategies for the continued growth of the continent's market.

Celebrating 10 successful years, the event will include a 2-day high-level conference and an exhibition showcasing the solutions of over 160 telecommunications companies 3000 telecommunications professionals are expected to attend, representing the continent's whole telecommunications value chain: from mobile (GSM and CDMA) to fixed-line operators, internet service providers, satellite operators, regulators, investors and telecommunications solutions providers.
 

The continent's leading operators discussing their strategies

On both days, the conference will open with a keynote session gathering some of the continent's leading operators discussing their strategies to maximise growth on the continent.

Tim Lowry, VP for Southern and Eastern Africa, MTN Group, and Managing Director of MTN South Africa will present the group's views on the changing role of operators on the continent, and will join a panel discussion in which Paul Edwards, Chairman of Starcomms (Nigeria) and Peter Boyle, Managing Director of Virgin Mobile South Africa, will discuss the evolution of the continent's communications value chain.  Marc Rennard, EVP for Africa, Middle East & Asia at France Telecom Group, will discuss his group's expansion strategy in Africa, where it is currently present mainly in French-speaking Western and Central African countries.

Dr Nizar Dalloul, Chairman & CEO of Comium Group, will explain how his group went out of its original Middle-Eastern market to start new operations in West Africa.  Alieu Conteh, Chairman and founder of Vodacom Congo (DR) will present the success story of an operator in one of Africa's largest countries.. In addition, Sami Al Basheer Al Morshid, Director of the Telecommunication Development Bureau, will represent the ITU, and a senior representative of Zain will answer questions on the group's re-branding from MTC and the commercial strategy of its subsidiary Celtel International in Africa.

Other operators represented throughout the conference include Safaricom Kenya (with its CEO Michael Joseph), Celtel Kenya (CEO David Murray), Orange Cameroon (CTO Jean Le Bel Ngopnang), MTN Rwanda (CTO Peter Schulze), Celtel Chad (Managing Director Beston Tshinsele), Zantel, Tanzania (Director General Noel Herrity), Celtel Malawi (CEO Charles Zouzoua), Emtel, Mauritius (CEO Shyam Roy).

On each day the keynotes will be followed by three specialist streams covering different issues in the continent's communications market, providing participants with a chance to have a deeper understanding of the issues that matter most to their everyday jobs.

On the first day, the streams will be separated into one focusing on business models and market conditions in a converging market, a second one on new technologies to improve networks, and a third one for value added services. On the second day, the streams will cover the topics of networks and infrastructure (with an operator CTO panel), marketing strategies, and advanced services. All streams will include contributions from operators, ISPs, international carriers, regulators, telecom solution vendors, consultants and industry associations, to provide a complete picture of the telecommunications market and the optimum strategies to maximise its growth in Africa.

The larger than ever exhibition will include over 160 companies showing their latest solutions, including infrastructure equipment vendors, international carriers, satellite operators, OSS/BSS solutions providers, value-added services enablers, interconnection service providers, SIM card vendors, and more.

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Verizon chief: Market drives us

MCADAM DISPUTES 'SOVIET' COMPARISON

By Dean Takahashi
Mercury News

Article Launched: 11/18/2007 02:02:59 AM PST

Click photo to enlarge

Lowell McAdam, CEO of Verizon Wireless ( Verizon )

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Lowell McAdam, CEO of Verizon Wireless, is no stranger to controversy. Wall Street Journal Tech Columnist Walt Mossberg recently called cell phone companies the equivalent of "Soviet ministries" for presiding over oligopolies that don't serve consumers. But McAdam, a former general manager for Pacific Bell in San Jose in the early 1980s, contends that his company's focus on customer service requires it to exercise control over its network and who can access it. Over time, he says the cell phone industry will become more open, but not at the sacrifice of quality service.

Q What do you think of Walt Mossberg's crusade against the wireless service providers?

A Walt called us the Soviet ministries for the first time back in 1995. It's not a new charge on Walt's part. I was on stage with Walt at the Cellular Telecommunications Industry Association last year and he leveled that charge at us again. I quipped then that some of the companies that he is most fond of are the KGB, if we are the Soviet ministries.. That's a little bit of the pot calling the kettle black. The issue is important. . . . I am very proud of what this country and industry has created on the innovation front and competition front. If you compare Europe, they are extremely prescriptive. Every aspect of the technology is very prescriptive. We made the decision in this country 20 years ago that we would let competition decide and let the customer decide. That works very well.

Q If you give an inch, people want more. You give them the ability to take their numbers from one carrier to another, then they want to take their phones with them too?

A To me, that's OK. We say in our company that there is always a higher gear. No matter what you do, whether you are in the stores or call centers or in the network, there is always an opportunity to do better. That is what this industry is built on and that is what the whole system in our country is built on. . . . That is why we have the penetration rates we have. That is why they use 700 or 800 minutes in the U.S. and only 150 in Europe. That's why our prices are 7 cents a minute and theirs are 21.

Q A lot of people say there is a race to the bottom with voice services. People aren't willing to pay for it. They want the lowest costs. What do you think of that?

A Voice is still over 80 percent of every carrier's revenue stream. It's always interesting to me that the prognosticators greatly accelerate the advantages of technology when it is introduced and greatly exaggerate the change in the industry. Voice is the example. In the last few months, we introduced a device called the Coupe. It's got large buttons. It's got a couple of pre-programmed emergency buttons. It has a nice screen. It doesn't have any of the gee-whiz digital stuff. We can't keep it in stock. So the acceleration to the next-generation is greatly exaggerated.

Q The same concerns people had about Microsoft and Intel having too much power are moving toward the cellular market. Anywhere someone has a large position in the market is moving that way. The wireless carriers are one recipient of that feeling. Apple is another with the iPod position. People are saying to open it up more.

A Things start out closed and they open up over time. If you look at the example of our content, when we first opened up, we had a completely walled garden. We have been bringing that wall down and opening up more applications. The balance is you have to keep the customer in the equation. It's not just up to the Microsofts or the Intels or the carriers to make the decision. I carry a BlackBerry 8830. That device is one of the most closed devices on the market today. It's also one of the most popular. Customers can rely on it. Return rates are single digits, 1 to 3 percent. You can put anything you want on some open smart-phones. What would you guess are the return rates on a comparable device to the BlackBerry, with open applications?

Q A lot higher?

A Over 40 percent.. You can't predict how applications are going to interact in the real world. It sounds really good. How can a developer of a device predict how those applications are going to interact in the real world? It's back to the fact that they're complicated computers and it's not always predictable.

Q I guess a test is whether Google actually comes out with what they're talking about?

A I think they ought to buy spectrum and build a network. It will bring innovation to the market place. More investment will come.

Q What do you think of Google's mobile phone alliance?

A Verizon Wireless shares the goal of more open mobile application development. Yet again, the highly competitive wireless industry is demonstrating that neither legislation nor regulation is required to produce innovation. We support innovation that is consistent with the values of integrity of service, privacy, security and reliability. We welcome the support of Google, handset makers and others for our goal of providing more open development of applications on mobile handsets.

---

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China to allow fixed-line operators access to mobile services

BEIJING, Nov. 18 (Xinhua) -- China's Ministry of Information Industry (MII) will grant fixed-line operators licenses for mobile telecom services "at an early date", a senior official said here on Sunday.

    The move would give the country's fixed-line operators, who have suffered losses in subscribers in recent months, equal footing with mobile service providers in competition for the huge telecom market.

    MII Vice Minister Xi Guohua told a telecom forum that the rapid development of mobile telecom services had lured away subscribers of fixed-line services.

    According to ministry statistics, the number of newly-added mobile phone users was 6.91 million in the first nine months, compared with 430,000 new fixed-liner users.

    New fixed-line users have been at a record low of 200,000 every month since May. Losses in subscribers were also recorded in August and September.

    Zeng Jianqiu, a professor with the Beijing University of Posts and Telecommunications, said: "The canceling of fees for receiving calls via mobile phones since the beginning of this year has made it more difficult for fixed-line phones to compete with the more advanced and convenient mobile technologies."

    Xi added that more than half of the country's mobile phone users had enjoyed the service of receiving calls free as promoted by the prepaid service packages.

    Mobile phone users previously paid for both making and receiving calls, a difference that favored the fixed-line service which gave the latter certain advantage in vying for subscribers.

    "The sagging performance of the fixed-line market has come to a point where it cannot be fixed by operators themselves," Zeng said. He urged the government to give fixed-line operators access to mobile services.

    "It could create more competition in the telecom market and would benefit consumers."

    Statistics revealed China's telecom service charges have been declining in recent years. The average charges were 62 percent lower in 2006 compared with that in 2001, or 11.5 percent lower if compared with the 2005 level.

    The country's total phone users have exceeded 900 million until present, said Xi, adding that more than half of the revenue of the telecom sector was contributed by mobile services.

    However, rural areas, especially those in central and western China, still lagged behind for coverage of phone services, as users were highly concentrated in coastal areas and the cities.

---

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TOT sues for USD500 million over access fees

Thai fixed line operator TOT has filed two lawsuits demanding unpaid network access charges from its sister state-run telco CAT Telecom and its two cellular concessionaires, DTAC and True Move, amounting to THB15 billion (USD500 million) including interest, reports the Bangkok Post. In one case, TOT named CAT Telecom as the first defendant and DTAC as the second, demanding unpaid access charges plus 1.25% interest totalling THB11 billion. The second case, against CAT Telecom and True Move, seeks THB4 billion in access fees and interest. DTAC and True Move, which offer GSM services under Build-Transfer-Operate (BTO) concessions with CAT, stopped paying access charges to TOT in November last year, in favour of the new interconnection charge framework introduced by the National Telecommunications Commission. CAT is responsible for collecting charges from the two cellcos for interconnecting with TOT's PSTN. Another CAT concessionaire, Digital Phone, a subsidiary of the country's leading cellco Advanced Info Service (which operates under a BTO contract with TOT), also stopped paying access charges to TOT in June. However, TOT said that Digital Phone subsequently relented and paid THB72 million last week. According to the Bangkok Post, TOT earned THB14 billion from access charges last year.

---

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Higher network price boosts Telecom

5:00AM Thursday November 08, 2007
By Helen Twose

An unexpected lift in the final price Telecom can charge rivals to use its network gave the telco's share price a boost but got a mixed reaction from the industry.

The Commerce Commission yesterday set the price for local loop unbundling at $19.84 per customer per month in urban areas and $36.63 in rural areas.

The charge to switch a customer to an unbundled local loop will be $74.83.

The market reacted positively to the news, pushing Telecom's share price up 14c to $4.34.

The commission had originally proposed a draft price of $16.49 for urban areas and $32.20 in rural areas, with a switching charge of $83.70 a customer. Telecom spokesman Mark Watts said the company was encouraged by a price rise which it thought was previously too low to justify investment.

Telecommunications Commissioner Ross Patterson denied pressure from Telecom brought about the boost to the unbundling prices.

He said the same methodology was applied to work out the draft and final pricing but additional international benchmarking data contributed to the lift.

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Ihug chief executive Mark Rushworth said he was surprised by the $3 increase, slightly offset by a reduction in the cost of switching over customers.

Scott Bartlett of Orcon - a company which had previously been bullish on opportunities presented by unbundling - said he was unimpressed by the prices.

"This really does start to put a big question mark around whether or not access seekers can justify investing in broadband and new services," he said.

He didn't rule out an attempt to challenge the commission's decision.

TelstraClear's manager of regulatory access, Wendy Dodd, said it would need to see the details of Telecom's own network investment plans before it made any investment decisions, particularly "cabinetisation" which allows a fibre-based network to bypass the local exchanges.

CallPlus chief executive Martin Wylie said the final price was disappointing and would require analysis of how it stacked up against other options such as wireless and wholesale broadband access.

* IN THE LOOP

The Commerce Commission has given pricing, terms and conditions for internet providers to use Telecom's copper network.

The price for local loop unbundling is $19.84 a customer a month in urban areas and $36.63 in rural areas.

The draft charge to switch a customer to the local loop has been set at $74.83.

Urban areas are: Whangarei, Auckland, Hamilton, Tauranga, Rotorua, Gisborne, Napier-Hastings, New Plymouth, Wanganui, Palmerston North, Kapiti, Wellington, Nelson, Christchurch, Dunedin and Invercargill.

Philippine regulator to ease VoIP rules

By Joel D. Pinaroc, ZDNet Asia
Friday, November 09 2007 02:31 PM

PHILIPPINES--The National Telecommunications Commission (NTC) has proposed new rules regarding interconnection agreements between telecom carriers and voice over IP (VoIP) providers in the country.

NTC Chief Jorge Sarmiento has reportedly said that the proposals are aimed at addressing mounting complaints coming from VoIP firms, which need to "negotiate" separate interconnection agreements with local telephone carriers.

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According to a news article by Inquirer.net, the Philippine telecommunications regulator said the rules will tackle the "easing of requirements for interconnection agreements" that VoIP firms are required to sign with telecom carriers before these VoIP providers can offer the service.

One major problem VoIP vendors have is the "difficulties" in "sealing" the interconnection contracts with the telephone carriers, Sarmiento said.

Under the regulator's new set of rules, VoIP providers will only need to sign a single interconnection agreement with a telephone carrier.

The proposals will also compel VoIP vendors to pay "routing" charges for calls passing through other telephone carriers with no existing interconnection deal with the VoIP firm, instead of paying additional interconnection fees to each telephone network, Sarmiento noted.

Sarmiento added that the NTC may put a cap on the routing charges.

The executive did not disclosed the proposed routing fees, saying only that a hearing on the proposed rules will be conducted by the NTC this month.

According to the NTC, there are more than 20 service providers currently offering VoIP. But the number of VoIP providers is larger, considering thousands of small cyber cafes and Internet shops that are now offering VoIP and pitching the service as a cheaper alternative to long distance telephone calls.

Joel D. Pinaroc is a freelance IT journalist based in the Philippines.

Bridge Alliance Introduces Flat Rate Mobile Data Roaming

Friday, 9 November 2007

Asia Pacific Mobile alliance group Bridge Alliance, has launched a new mobile data roaming plan catering to frequent travelers who need to access their emails or perform downloads from the mobile internet without incurring high charges...



Asia Pacific Mobile alliance group Bridge Alliance, has launched a new mobile data roaming plan catering to frequent travelers who need to access their emails or perform downloads from the mobile internet without incurring high charges.

The ‘Bridge DataRoam’ plan is a one-flat rate data roaming plan that can be used when customers roam on the alliance’s 11 member operator networks.

The operators who are part of this alliance are; Airtel (India), AIS (Thailand), CSL ( Hong Kong), CTM ( Macau), Globe Telecom (Philippines), Maxis ( Malaysia), SK Telecom (Korea), SingTel Mobile (Singapore), Singtel Optus (Australia), Taiwan Mobile (Taiwan) and Telkomsel (Indonesia).

Customers have a choice of two capped usage monthly subscription plans, the Bridge DataRoam 15 and the Bridge DataRoam 40. The former offers 15MB worth of downloads for USD 60 and the latter offers 40 MB worth of downloads for USD 60.

Catered for the mid to heavy data users, the 15MB and 40MB plans can provide up to 300 emails or 1500 WAP pages and 800 emails or 4000 WAP pages downloads respectively.

However, if customers exceed the pre-paid quota, they would have to ride on the prevailing data roaming charges according to the region they are at.

Bridge Alliance, which was previously known as Bridge Mobile Alliance, told journalists at the launch of this new initiative last week that currently different operators are charging different data roaming rates across Asia Pacific which can be confusing for customers. More importantly many customers have experienced a “bill shock” which is vis-а-vis to uncontrolled data usage when unaware of prevailing rates. With the new plan, customers can plan before they travel and will know exactly how much to pay for their data roaming.

“Bridge DataRoam is a service that brings to life the band promise of seamlessness and straightforward services to help our customers stay one step ahead of their busy lives,” said Mr Lim Chua Poh, Chairman of Bridge Alliance.

“Bridge DataRoam is priced at a level that will bring about a sense of “peace of mind” when our customers access their emails and other data services while traveling in the region.”

Both plans can be used for the Blackberry and general mobile data roaming and claims to “provide the best value of up to 10 times more usage benefits.”

With regards to the new brand identity, Mr Lim told journalists that the new name and new logo marks the start of a new phase in the growth of the alliance. With the advancement in technology, the lines that once clearly defined fixed and mobile telecommunications have started blurring and the organisation wants to ensure it will be recognized in both areas and believes the new brand will pave the way for it to do so.
Bridge DataRoam will be available for subscription in the month of November.

Bridge Alliance also mentioned in a prepared statement that beyond the 11 territories, the alliance has plans to extend the roaming coverage to more territories in the future.

Telecom Argentina S.A. Announces Consolidated Nine-Month Period ("9M07") and Third Quarter Results for Fiscal Year 2007 ("3Q07")*

PR Newswire
November 09, 2007: 12:18 AM EST

BUENOS AIRES, Argentina, Nov. 9 /PRNewswire-FirstCall/ --

-- The Telecom Argentina Group maintained an important expansion of its
business in the nine-month period ended September 30, 2007.
Consolidated revenues grew 24% vs. 9M06, totaling P$6,515 million.
Revenues generated by the Cellular and Internet & Data Transmission
businesses increased 37% and 19%, respectively.

-- The Cellular customer base reached 11.7 million (+35%), broadband
subscribers totaled 677,000 (+81%), while fixed lines in service
increased 3% to 4.2 million.

-- Operating Profit before Depreciation and Amortization ("OPBDA") reached
P$2,252 million (+30% vs. 9M06), equivalent to 35% of net revenues.
Operating Profit increased by 78%, totaling P$1,201 million.

-- Net Income reached P$614 million, which includes results for
discontinued operations by P$102 million (related to the sale of
Publicom in 1Q07).

-- Net Debt (before NPV effect) declined to P$ 2,516 million (-P$1.261
million vs. September, 2006), primarily as a result of the cash flow
generated by operations. The ratio of Net Debt to OPBDA declined from
1.6x as of the end of 9M06, to 0.8x.



As of September-30
2007 2006 ^ ^%
Consolidated Net Revenues (in MM P$) 6,515 5,242 1,273 24%
Voice, Data & Internet 2,420 2,249 171 8%
Cellular 4,095 2,993 1,102 37%
Operating Profit before D&A (in MM P$) 2,252 1,730 522 30%
Operating Profit (in MM P$) 1,201 675 526 78%
Net Income (in MM P$) 614 164 450 274%
Shareholder's equity (in MM P$) 2,748 2,043 705 35%
Net Financial Debt - Before NPV effect
(in MM P$) 2,516 3,777 (1,261) -33%
Net Financial Debt - Book value (in MM P$) 2,382 3,579 (1,197) -33%
CAPEX (in MM P$) 981 755 226 30%
Lines in service (Fixed lines
-in thousands) 4,170 4,056 114 3%
Cellular customers (in thousands) 11,665 8,624 3,041 35%
Personal (Argentina) 10,161 7,675 2,486 32%
Nucleo (Paraguay) 1,504 949 555 58%
ADSL customers (in thousands) 677 375 302 81%
Fixed line traffic (in MM minutes,
Internet Traffic not included) 12,528 12,516 12 0%
Incoming/Outgoing cellular voice traffic
in Arg.(in MM minutes) 7,147 5,380 1,767 33%
Average Revenue per user (ARPU)
Fixed Telephony/voice (in P$) 39 39 0 0%
Average Revenue per user (ARPU)
Cellular Telephony Arg. (in P$) 38 38 0 0%


Telecom Argentina , one of Argentina's leading telecommunications groups, announced today a Net Income of P$614 million for the nine-month period ended September 30, 2007.

During 9M07, Consolidated Net Revenues increased 24% (+P$1,273 million vs. 9M06) to P$6,515 million, mainly fueled by the cellular and broadband businesses.

Moreover, OPBDA increased by 30% (+P$522 million) to P$2,252 million (35% of Consolidated Net Revenues, +200 bps).

Company Activities

Net Revenues

The evolution in Consolidated Net Revenues by reportable segment was as follows:

Voice, Data Transmission & Internet

Revenues generated by these services amounted to P$2,420 million, +8% vs. 9M06.

Voice

Total Revenues for this service reached P$1,910 million (+5%).

Monthly Charges and Supplementary Services increased by P$22 million or 4%, to P$555 million, as lines in service grew by 2%.

Revenues generated by traffic (Local Measured Service, Domestic Long Distance and International Telephony) totaled P$905 million, with an increase of 4% vs. 9M06.

Interconnection revenues amounted to P$273 million (+20%), mainly fueled by higher cellular traffic.

Other & Public Telephony

Other revenues reached P$177 million, decreasing by 7% mainly due to the decline in traffic.

Internet and Data Transmission

Mainly due to the increase in broadband connections, Internet continues to deliver revenue growth to the wireline business. During 9M07, revenues from this business grew 22% vs. 9M06 to P$384 million.

Moreover, Telecom's ADSL subscribers reached 677,000 (+302,000 or +81% vs. 9M06). Therefore, lines with ADSL connection accounted for approximately 16% of Telecom's lines in service.

Telecom confirms its market approach, based on delivering higher velocity solutions, allowing its customers to access increasingly complex multimedia content as well as new value-added services. Telecom Argentina recently announced a significant improvement of its Broadband portfolio, by automatically upgrading its Arnet 640 K customers to Arnet 1 Mb product with no additional charge. In addition, Telecom launched the Arnet 20 Mb product, the fastest connection available in the Argentine market.

Revenues generated by Data transmission amounted to P$126 million, (+12% vs. 9M06). The Company continues to work actively in the corporate accounts, public sector and the SME segment, positioning itself as an integrated provider of communications and connectivity solutions.

Cellular Telephony

The Cellular Telephony business generated revenues of P$4,095 million in 9M07.

Telecom Personal in Argentina

As of September 30, 2007, Personal's subscribers reached 10.2 million (+2.5 million or +32% vs. 9M06). Approximately 67% of the overall subscriber base was prepaid and 33% was postpaid. By the end of 9M07, subscribers with GSM technology represented 96% of the total subscriber base.

Total voice traffic increased by 33% vs. 9M06 while outgoing SMS traffic increased from an average of 508 million messages per month to an average of 839 million (+65%). Moreover, the Average Monthly Revenue per User ("ARPU") remained stable at P$38, when compared to 9M06. Value-Added Services accounted for 27% of ARPU.

Revenues totaled P$3,799 million (+P$1,051 million or +38% vs. 9M06). Service revenues increased by 43%, while handset sales grew 9% in the period, totaling P$401 million.

Reconfirming its strong focus on technological innovation, Personal continued the expansion of its 3G services to Cordoba and Rosario cities, therefore becoming the first 3G operation outside Buenos Aires.

In terms of products and services, should be mentioned the launch of "Servicio de Localizacion Movil", a business application developed for sales forces, and "Navegador Personal", incorporating satellite navigation facilities into existing BlackBerry services. In addition, Personal is the first Latin American operator to provide international roaming in 3G.

Finally, Personal continued to expand its commercial network, by inaugurating the country's largest customer care center in Cordoba.

Nucleo

Personal's controlled subsidiary that operates in Paraguay, generated revenues equivalent to P$296 million (+21% vs. 9M06).

By the end of the quarter, the subscriber base reached approximately 1.5 million, +58% vs. 9M06. Prepaid and Postpaid customers represented 89% and 11%, respectively, while GSM subscribers represented 85% of the overall subscriber base.

Consolidated Operating Costs

The Cost of Services Provided, Administrative Expenses and Selling Expenses totaled P$5,314 million in 9M07, which represents an increase of P$747 million or +16% vs. 9M06 with the following breakdown:

-- Salaries and Social Security Contributions: P$712 million (+18%), affected by wage adjustments and a minor headcount increase in the cellular business.

-- Taxes: P$467 million (+23%), in line with the general evolution of the business.

-- Agents and Prepaid Card Commissions: $508 million, (+39%), due to the expansion in terms of subscribers and traffic.

-- Advertising: P$199 million (+38%), to support commercial activity in cellular and internet.

-- Cost of cellular handsets: increased to P$597 million (-9%) as a consequence of fewer handset sales, in the context of an increasingly penetrated market and decreased in the migration process of TDMA to GSM handsets.

-- TLRD and Roaming: P$544 million (+44%) due to increased traffic among cellular operators.

-- Depreciation of Fixed and Intangible Assets: P$1,051 million, stable when compared to 9M06. Telecom Argentina totaled P$626 million and Telecom Personal $425 million (-13% y +26%) respectively.

Consolidated Financial and Holding Results

Financial and Holding Results resulted in a loss of P$323 million, as compared to the P$413 million loss registered in 9M06. This improvement is mainly due to lower net interest expenses by P$138 million (mainly due to the reduction in net debt).

Net Debt

As of September 30, 2007, Net Debt (Loans before the effect of NPV valuation, minus Cash, Banks, Current Investments and Other credits derived from derivative Investments) amounted to P$2,516 million, a reduction of P$1.261 million as compared to September 2006. Interest accrued on the Company's debt totaled P$227 million.

During October 2007 Telecom Argentina performed a prepayment on its outstanding Notes equivalent to the remaining 26% of the mandatory amortization scheduled for April, 2010 and 73.6% of the mandatory amortization scheduled for October, 2010.

Consolidated Capital Expenditures

A total amount of P$981 million invested in fixed and intangibles assets was allocated to the cellular business (P$426 million) and the Voice, Data and Internet businesses (P$555 million).

Main Capex projects in the Voice, Data and Internet Businesses relates to the expansion of ADSL services and the upgrade of the network for services of a new generation, while in the cellular business improvement of the network (capacity, coverage and 3G), and the launch of new and innovative value added services were areas of focus.

Commercial Initiatives

In concern with the massive market, the Company lounged for the first time in the country, the SMS (Short Message Service) for fixed lines, performance that showed the beginning of some innovations that Telecom would offer to its residential clients and which would change the way of communicating at home.

Telecom is the parent company of a leading telecommunications group in Argentina, where it offers directly or through its controlled subsidiaries local and long distance fixed-line telephony, cellular, data transmission and Internet services, among others services. Additionally, through a controlled subsidiary, the Telecom Group offers cellular services in Paraguay. The Company commenced operations on November 8, 1990, upon the Argentine government's transfer of the telecommunications system in the northern region of Argentina.

Nortel Inversora S.A. ("Nortel"), which acquired the majority of the Company from the Argentine government, holds 54.74% of Telecom's common stock. Nortel is a holding company where the common stock (approximately 68% of capital stock) is owned by Sofora Telecomunicaciones S.A.. Additionally, Nortel capital stock is comprised of preferred shares that are held by minority shareholders.

As of September 30, 2007, Telecom had 984,380,978 shares outstanding.

(*) Employee Stock Ownership Program

For more information, please contact the Financial Planning & Investor
Relations Department:

Pedro Insussarry Mariano Martire Gaston Urbina Ruth Fuhrmann
54-11-4968-3743 54-11-4968-3718 54-11-4968-6236 54-11-4968-4448

Voice Mail: 54-11-4968-3628
Fax: 54-11-4313-5842
E-mail: relinver@ta.telecom.com.ar

For information about Telecom Group services, visit:
www.personal.com.ar
www.personal.com.py
www.arnet.com.ar

Disclaimer

This document may contain statements that could constitute forward-looking statements, including, but not limited to, the Company's expectations for its future performance, revenues, income, earnings per share, capital expenditures, dividends, liquidity and capital structure; the effects of its debt restructuring process; the impact of emergency laws enacted by the Argentine Government; and the impact of rate changes and competition on the Company's future financial performance. Forward-looking statements may be identified by words such as "believes," "expects," "anticipates," "projects," "intends," "should," "seeks," "estimates," "future" or other similar expressions. Forward-looking statements involve risks and uncertainties that could significantly affect the Company's expected results. The risks and uncertainties include, but are not limited to, the impact of emergency laws enacted by the Argentine government that have resulted in the repeal of Argentina's Convertibility law, devaluation of the peso, various changes in restrictions on the ability to exchange pesos into foreign currencies, and currency transfer policy generally, the "pesification" of tariffs charged for public services, the elimination of indexes to adjust rates charged for public services and the Executive branch announcement to renegotiate the terms of the concessions granted to public service providers, including Telecom. Due to extensive changes in laws and economic and business conditions in Argentina, it is difficult to predict the impact of these changes on the Company's financial condition. Other factors may include, but are not limited to, the evolution of the economy in Argentina, growing inflationary pressure and evolution in consumer spending and the outcome of certain legal proceedings. Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as the date of this document. The Company undertakes no obligation to release publicly the results of any revisions to forward-looking statements which may be made to reflect events and circumstances after the date of this press release, including, without limitation, changes in the Company's business or to reflect the occurrence of unanticipated events. Readers are encouraged to consult the Company's Annual Report on Form 20-F, as well as periodic filings made on Form 6-K, which are filed with or furnished to the United States Securities and Exchange Commission for further information concerning risks and uncertainties faced by Telecom.

*Non-financial data unaudited

XO Holdings Reports Third Quarter 2007 Financial Results

PR Newswire
- Total Revenue Up 2% to $359.4 Million Compared to Previous Quarter- Data and IP Services Revenue Up 27% Year over Year and 12% Over Previous Quarter- Adjusted EBITDA of $29 Million and Net Loss of $4.5 Million- Launched Enterprise Solutions Group and Completed 800 Gbps Network Capacity Expansion- Signed Nationwide Broadband Wireless Reseller Agreement with Global Crossing
November 09, 2007: 04:29 PM EST

RESTON, Va., Nov. 9 /PRNewswire-FirstCall/ -- XO Holdings, Inc. today reported its third quarter 2007 financial and operational results. For the third quarter of 2007, XO Holdings, Inc. (XOH) reported revenue of $359.4 million, $29.0 million of adjusted EBITDA and a net loss of $4.5 million. XOH operates two business segments, XO Communications, LLC (XOC), its nationwide wireline telecommunications business, and Nextlink Wireless, Inc. (Nextlink), its wireless business.

"Revenue in the third quarter was our highest quarterly revenue in two years, demonstrating continued strong demand for our data and IP services for enterprises and high-capacity network services for carriers and service providers," said Carl Grivner, XO Holdings' chief executive officer.

"With our expanded IP services portfolio and increased focus on the enterprise market we are expanding the number of customer opportunities with higher-margin data and IP services. Enterprise customers accounted for one third of all new sales orders within XO Business Services, up from 24 % in the first quarter of this year. Demand for wholesale high-capacity network services continues to be strong, and our ongoing network investments give us the ability to quickly meet customer demand."

"Overall, our strategic investments in new IP services, network enhancements and enterprise and carrier customer initiatives will increase our growth opportunities in 2008."

Service Revenue

(dollars in millions) Q3 2007 Q2 2007 Q3 2006 % %
Change Change
Sequential Year-
over-
Year
Data and IP Services(a) $138.6 $123.7 $108.9 12% 27%
Integrated/Voice
Services(b) $80.2 $81.4 $89.1 (1%) (10%)
Total Core Services $218.8 $205.1 $198.0 7% 11%
Other Services(c) $140.6 $147.8 $154.3 (5%) (9%)
Total Revenue $359.4 $352.9 $352.3 2% 2%

(a) Data and IP Services, which are a subset of Core Services, are defined
as Collocation, Dedicated Internet Access, Ethernet, MTNS, Private
Line, VPN, Carrier VoIP and Commercial VoIP.
(b) Integrated/Voice Services, which are subsets of Core Services, are
defined as integrated services and carrier voice services.
(c) Other Services are defined as all small business services, sub- T1
(i.e. dial, DSL), web hosting, interactive voice response and XO One
services.


Third Quarter 2007 Financial Results

(dollars in
millions) Q3 2007 Q2 2007 Q3 2006 % Change % Change
Sequential Year-
over-Year
Revenue
XOC $359.2 $352.8 $351.8 2% 2%
Nextlink $0.5 $0.3 $0.7 67% (29%)
Eliminations $(0.3) $(0.2) $(0.2) - -
XOH $359.4 $352.9 $352.3 2% 2%
Gross Margin(1)
XOC $218.1 $202.5 $209.8 8% 4%
Nextlink $0.3 $0.2 $0.7 50% (57%)
XOH $218.4 $202.7 $210.5 8% 4%
Adjusted EBITDA(2)
XOC $32.2 $24.2 $35.8 33% (10%)
Nextlink $(3.2) $(2.4) $(1.9) 33% 68%
XOH $29.0 $21.8 $33.9 33% (14%)
Net Loss
XOH $(4.5) $(36.4) $(23.0) (88%) (80%)
Capital Expenditures
XOC $63.9 $65.8 $31.7 (3%) 102%
Nextlink $1.5 $2.5 $0.4 (40%) 275%
XOH $65.4 $68.3 $32.1 (4%) 104%

(1) Gross Margin is a Non-GAAP financial measure. See the discussion
below entitled "Non-GAAP Financial Measures."
(2) Adjusted EBITDA is a Non-GAAP financial measure. See the discussion
below entitled "Non-GAAP Financial Measures."


Commentary

Consolidated revenue for the three months ended September 30, 2007 was $359.4 million, a 2% increase over both the prior quarter and the same period in 2006. The increase in revenue was driven primarily by growth revenue from the Company's in Data and IP Services, which increased 12% from the prior quarter and 27% from the same period in 2006. The Company continued strong growth in its collocation, commercial VoIP, dedicated Internet access, Ethernet, IP-VPN and high-capacity private line network services. This growth was partially offset by declines in both Traditional Voice Services and Integrated Voice and Data Services. Revenue from these services continued to be adversely impacted by the Company's shift away from traditional circuit- switched voice services, instead focusing on next-generation IP-based services. Carrier VoIP revenue decreased due to recent challenges experienced by some customers in this category. The Company's consolidated revenue for the three months ended September 30, 2007 also benefited from certain carrier private line settlements in the third quarter of 2007.

The improvement in net loss benefited from, among other things, $21.5 million received related to the beneficial settlement of a legal matter regarding the Company's holding of Global Crossing debt securities.

The following are third quarter 2007 highlights from the Company's business segments: XO Communications and Nextlink.

XO Communications Highlights
-- Total sales bookings up 14% compared to same period last year.
-- Continued strong demand for high-capacity long haul network services
with number of orders up 146% compared to same period last year.
-- Wholesale network transport business signed with 55 new carrier,
content provider and Internet-centric customers in the third quarter
2007.
-- Completed 800Gbps long haul network capacity upgrade on major coast-to-
coast network routes.
-- Revenue from XOptions Flex, the Company's flagship business VoIP
service, grew more than 100% to $20.4 million compared with $10.0
million in the same period last year.
-- Revenue from the Company's carrier VoIP services, which include VoIP
Origination and VoIP Termination, declined 37% to $4.2 million compared
to $6.6 million in the same period last year.
-- Launched Enterprise Solutions Group to drive expansion into enterprise
market.
-- Enterprise customers, defined as businesses that have a total monthly
telecommunications spend of $25,000 or more a month, accounted for 33%
of total new sales orders within XO Business Services in third quarter
2007 compared to 24% in first quarter 2007.
-- Expanded IP services portfolio with the launch of three new services:
XO SIP, XO One iPBX and XOptions Flex with MPLS IP-VPN.

Nextlink Highlights
-- Revenue increased 67% compared to previous quarter.
-- Signed nationwide reseller agreement with Global Crossing, allowing
Global Crossing to utilize Nextlink's nationwide broadband wireless
networks and services for high-capacity metro and last mile access
solutions.

Other Developments

The Company continues to generate substantial needs for cash. The current strategy contains elements, including increased levels of capital expenditures to better serve customers, that the Company will not be able to execute without additional financing. As described in greater detail under the sections entitled "Liquidity and Capital Resources" and "Risk Factors" in the Company's Quarterly Report on Form 10-Q filed with the SEC today, the Company is actively pursuing various alternatives to enable it to avoid future violations of its covenants under its Credit Facility and to provide the Company with sufficient working capital to execute its current business strategy.

On November 5, 2007, the Company obtained another waiver of compliance with the EBITDA covenant of the Credit Facility through September 30, 2008, in accordance with the terms of the Credit Facility.

About XO Holdings

XO Holdings, Inc. is the holding company of XO Communications, LLC (XOC) and Nextlink Wireless, Inc. (Nextlink).

XO Communications is a leading provider of 21st century communications services for businesses and communications services providers, including 50 percent of the Fortune 500 and leading cable companies, carriers, content providers and mobile operators. Utilizing its unique and powerful nationwide IP network and extensive local metro networks and broadband wireless facilities, XO Communications offers customers a broad range of managed voice, data and IP services in 75 metropolitan markets across the United States. For more information, visit http://www.xo.com.

Nextlink provides alternative access, backhaul and diverse network solutions and services for the carrier, business and government markets. As one of the nation's largest holders of fixed wireless spectrum, Nextlink delivers high-quality, carrier-grade broadband wireless solutions that scale to meet the demands of today's converged world of communications -- supporting next-generation mobile and wireline voice, data and video applications. For more information, visit http://www.nextlink.com.

XO, XOptions, XOptions Flex and all related marks are either registered trademarks or trademarks of XOC in the United States and/or other countries. Nextlink is a registered trademark of Nextlink Wireless, Inc. in the United States and/or other countries.

Cautionary Language Concerning Forward-Looking Statements

The statements contained in this release that are not historical facts are "forward-looking statements" (as such term is defined in the Private Securities Litigation Reform Act of 1995) that involve risks and uncertainties. These statements include those describing the benefit from new initiatives and enhancements to the enterprise and carrier markets, our ability to continue our growth in data and IP services, our ability to expand our market through VoIP and private networking initiatives, the demand for XOC's core communications services, Nextlink's ability to expand sales within its wireless network, and XOC's ability to benefit from increased network capacity and additional services from its long haul network. Management cautions the reader that these forward-looking statements are only predictions and are subject to a number of both known and unknown risks and uncertainties, and actual results, performance, and/or achievements of Nextlink and XOC may differ materially from the future results, performance, and/or achievements expressed or implied by these forward-looking statements as a result of a number of factors. These factors include, without limitation, our ability to generate sufficient capital or to obtain financing. Management is unable to provide assurance that XO Holdings, Inc. or its subsidiaries will ultimately consummate alternative financing transactions or that such financing transactions could be consummated before the lenders under our Credit Facility could accelerate repayment of the outstanding indebtedness. Other factors to consider also include the risk factors described from time to time in the reports filed by XO Holdings, Inc. with the Securities and Exchange Commission, including its Annual Report on Form 10-K for the year ended December 31, 2006 and its quarterly reports on Form 10-Q. XOH undertakes no obligation to update any forward-looking statements.

This press release contains certain non-GAAP financial measures. Reconciliations between the non-GAAP financial measures and the GAAP financial measures are available below in the section entitled "Non-GAAP Financial Measures."

Accompanying financial statements follow below.



XO HOLDINGS, INC.
Condensed Consolidated Statements of Operations
(Amounts in thousands, except for share and per share data)

Three Months Ended
September 30, September 30,
2007 2006
(Unaudited) (Unaudited)
Revenue:
XOC $359,228 $351,799
Nextlink 446 751
Eliminations (320) (216)
Total revenue 359,354 352,334
Costs and expenses:
Cost of service (exclusive of depreciation
and amortization)
XOC 141,058 141,992
Nextlink 173 64
Eliminations (320) (216)
Total cost of service 140,911 141,840
Selling, operating, and general:
XOC 186,416 174,322
Nextlink 3,459 2,608
Total selling, operating, and general 189,875 176,930
Depreciation and amortization
XOC 45,719 48,485
Nextlink 178 1,649
Total depreciation and amortization 45,897 50,134
Loss from operations
XOC (13,965) (13,000)
Nextlink (3,364) (3,570)
Loss from operations (17,329) (16,570)
Other income, net 23,076 2,148
Interest expense, net (9,904) (8,550)
Net loss before income taxes (4,157) (22,972)
Income tax expense (305) -
Net loss (4,462) (22,972)
Preferred stock accretion (3,593) (3,387)
Net loss allocable to common shareholders $(8,055) $(26,359)
Net loss allocable to common shareholders per
common share, basic and diluted $(0.04) $(0.14)
Weighted average shares, basic and diluted 182,075,035 182,001,285
Gross margin (1) $218,443 $210,494
Adjusted EBITDA:
XOC 32,213 35,770
Nextlink (3,186) (1,921)
Total adjusted EBITDA (2) $29,027 $33,849



XO HOLDINGS, INC.
Condensed Consolidated Balance Sheets
(in thousands)

September 30, September 30,
2007 2006
(Unaudited) (Unaudited)
Cash and cash equivalents $90,882 $164,556
Marketable securities 1,220 7,190
Accounts receivable, net 146,124 126,137
Other current assets 30,464 32,486
Property and equipment, net 716,776 681,230
Broadband wireless licenses and other
intangibles, net 53,515 69,368
Other assets 44,158 38,926
Total assets $1,083,139 $1,119,893

Accounts payable and other current liabilities $309,389 $290,780
Long-term debt and accrued interest payable 366,553 327,098
Other long-term liabilities 66,674 62,987
Class A convertible preferred stock 241,164 227,105
Total stockholders' equity 99,359 211,923
Total liabilities, convertible preferred
stock and stockholders' equity $1,083,139 $1,119,893


Non-GAAP Financial Measures
(1) We define gross margin as revenue less cost of service excluding
depreciation and amortization expenses. Gross margin is a non-GAAP
financial measure which we use to assess our operating performance
related solely to providing telecommunications services to our
customers without taking into account expenditures that are not
directly related to providing such services. Gross margin is not
intended to replace operating income (loss), net income (loss), cash
flow or other measures of financial performance reported in accordance
with U.S. generally accepted accounting principles. We believe that
gross margin allows management to further assess (i) our operating
performance, (ii) profitability across our customer base and (iii)
trends in our competitive and regulatory environments. Additionally,
we believe that gross margin is a standard measure of operating
performance that is commonly reported and widely used by analysts,
investors and other interested parties in the telecommunications
industry. We believe gross margin provides investors with an
additional means to evaluate the results of our operations. Gross
margin as used in this report may not be comparable to similarly
titled measures reported by other companies due to differences in
accounting policies and differences in definition of gross margin.
Therefore, we provide additional information on the components of
gross margin throughout this report and provide the reconciliations to
the most comparable GAAP financial measure. The following tables
reconcile reported net loss before income taxes to gross margin, as
defined above, for the respective periods presented:



XO HOLDINGS, INC.
Reconciliation of Net Loss Before Income Taxes to Gross Margin
(in thousands)

Three Months Ended
September 30, June 30, September 30,
2007 2007 2006
(Unaudited) (Unaudited) (Unaudited)

Net loss before income taxes $(4,157) $(36,170) $(22,972)
Selling, operating and general 189,875 181,402 176,930
Depreciation and amortization 45,897 52,523 50,134
Other income, net (23,076) (4,245) (2,148)
Interest expense, net 9,904 9,191 8,550
Gross margin $218,443 $202,701 $210,494

XOC
Reconciliation of Loss from Operations to Gross Margin
(in thousands)

Three Months Ended
September 30, June 30, September 30,
2007 2007 2006
(Unaudited) (Unaudited) (Unaudited)

Loss from operations $(13,965) $(28,729) $(13,000)
Selling, operating and general 186,416 178,787 174,322
Depreciation and amortization 45,719 52,428 48,485
Gross margin $218,170 $202,486 $209,807

Nextlink
Reconciliation of Loss from Operations to Gross Margin
(in thousands)

Three Months Ended
September 30, June 30, September 30,
2007 2007 2006
(Unaudited) (Unaudited) (Unaudited)

Loss from operations $(3,364) $(2,495) $(3,570)
Selling, operating and general 3,459 2,615 2,608
Depreciation and amortization 178 95 1,649
Gross margin $273 $215 $687


(2) Adjusted EBITDA is a non-GAAP financial measure, which we define as
net income (loss) before depreciation, amortization, asset impairment
charge, interest expense, interest income, investment gains or losses,
income tax expense or benefit, cumulative effect of change in
accounting principle and stock-based compensation. Adjusted EBITDA is
not intended to replace operating income (loss), net income (loss),
cash flow and other measures of financial performance reported in
accordance with U.S. generally accepted accounting principles (GAAP).
Rather, Adjusted EBITDA is an important measure used by management to
assess operating performance of the Company and is used in our
budgeting process. Adjusted EBITDA as defined here may not be
comparable to similarly titled measures reported by other companies
due to differences in accounting policies. Management has historically
used Adjusted EBITDA when evaluating operating performance because we
believe that the inclusion or exclusion of certain recurring and non-
recurring items is necessary to provide the most accurate measure of
our core operating results and as a means to evaluate period-to-period
results. We have chosen to provide this information to investors to
enable them to perform more meaningful comparisons of past, present
and future operating results and as a means to evaluate the results of
our core on-going operations. Adjusted EBITDA as defined here does not
have the same meaning as EBITDA as defined in our secured credit
facility agreement. A reconciliation of net loss before income taxes
to Adjusted EBITDA is included below:



XO HOLDINGS, INC.
Reconciliation of Net Loss Before Income Taxes to Adjusted EBITDA
(in thousands)

Three Months Ended
September 30, June 30, September 30,
2007 2007 2006
(Unaudited) (Unaudited) (Unaudited)

Net loss before income taxes $(4,157) $(36,170) $(22,972)
Depreciation and amortization 45,897 52,523 50,134
Interest income, net (23,076) (4,245) (2,148)
Interest expense, net 9,904 9,191 8,550
EBITDA $28,568 $21,299 $33,564
Stock-based compensation 459 465 285
Investment gain (loss), net - - -
Adjusted EBITDA $29,027 $21,764 $33,849

XOC
Reconciliation of Loss from Operations to Adjusted EBITDA
(in thousands)

Three Months Ended
September 30, June 30, September 30,
2007 2007 2006
(Unaudited) (Unaudited) (Unaudited)

Loss from operations $(13,965) $(28,729) $(13,000)
Depreciation and amortization 45,719 52,428 48,485
EBITDA 31,754 23,699 35,485
Stock-based compensation 459 465 285
Adjusted EBITDA $32,213 $24,164 $35,770

Nextlink
Reconciliation of Loss from Operations to Adjusted EBITDA
(in thousands)

Three Months Ended
September 30, June 30, September 30,
2007 2007 2006
(Unaudited) (Unaudited) (Unaudited)

Loss from operations $(3,364) $(2,495) $(3,570)
Depreciation and amortization 178 95 1,649
EBITDA (3,186) (2,400) (1,921)
Stock-based compensation - - -
Adjusted EBITDA $(3,186) $(2,400) $(1,921)


Limitations on the Use of Non-GAAP Measures

The use of gross margin and adjusted EBITDA has certain limitations. Our presentation of gross margin and adjusted EBITDA may be different from the presentation used by other companies, and therefore comparability may be limited. Depreciation expense for various long-term assets, interest expense, income taxes and other items have been and will be incurred and are not reflected in the presentation of gross margin and adjusted EBITDA. Each of these items should also be considered in the overall evaluation of our results. Additionally, adjusted EBITDA does not consider capital expenditures and other investing activities and should not be considered as a measure of our liquidity. We compensate for these limitations by providing the relevant disclosure of our depreciation, interest and income tax expense, capital expenditures and other items both in our reconciliations to the GAAP financial measures and in our consolidated financial statements, all of which should be considered when evaluating our performance.

Gross margin and adjusted EBITDA are used in addition to and in conjunction with results presented in accordance with GAAP. Gross margin and adjusted EBITDA should not be considered as an alternative to net income, operating income or any other operating performance measure prescribed by GAAP, nor should these measures be relied upon to the exclusion of GAAP financial measures. Gross margin and adjusted EBITDA reflect additional ways of viewing our operations that we believe, when viewed with our GAAP results and the reconciliations to the corresponding GAAP financial measures, provide a more complete understanding of factors and trends affecting our business than could be obtained absent this disclosure. Management strongly encourages investors to review our financial information in its entirety and not to rely on a single financial measure.