New player emerges in Bulgaria

At least 11 Bulgarian cable operators and ISPs have merged to form a single company named Bulgarian Telecom and Television (BTT).

According to Dnevnik, the companies currently have a presence in 40 cities and 110 smaller locations, covering nearly one million households and claiming over 150,000 subscribers.

The deal is the largest merger so far in Bulgaria’s telco sector in terms of the number of companies involved and BTT aims to become a national player, introducing new services such as mobile internet.

The companies involved in the merger include NetWorx Bulgaria, Digital Communications, Escom, Internet Communication Optic Network, Telnet, STV, Balchik Net, Optinet, Diana Cable TV, PowerNet and BOL.BG East.

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Rumbling of Mergers in Europe

Amidst the talk and challenges of a merger between France Telecom and Deutsche Telekom wireless operations in the U.K. comes the news of a possible tie up between Telecom Italia and Telefonica. Setting aside the political implications, this recent news seems to be another step in the courtship between the two behemoths. Telefonica recently completed the acquisition of HanseNet in Germany. Prior to the acquisition, HanseNet was a part of Telecom Italia's operations in Germany. It will be interesting to follow which portions of Telecom Italia's operations will be up for a merger if one were to actually happen. Coming to the political implications stated earlier, the news publication La Repubblica claims that the Berlusconi family bought into Telefonica late last year. That involves Mediaset now? This is turning out to be quite interesting.

Reshaping the Broadband Market

The incoming administration has made clear their intentions to put the U.S. back in the top 10 for broadband penetration. While the U.S. ranks number one in terms of the number of subscriptions, it comes in at number 15 behind France and Germany in terms of penetration per 100 inhabitants. In that regard, the legislative activities in Washington are setting the stage for another move in the chess game between the cable operators and the Telcos. The cable operators have been offering relatively higher broadband download speeds than the Telcos who thus far have relied on their ADSL infrastructure for broadband offerings. The MSOs would like the minimum download speed for broadband connectivity to be set at 5Mbps which would automatically disqualify the bulk of DSL connections which average at 2Mbps or less as broadband connections. It will be interesting to follow this tussle as the outcome bears significant implications for network infrastructure providers who could really use some good news heading into 09.

No More Pivot for the Cable Guys

I’ve said this before, time and again, that service bundles based on arms-length partnerships never work as well as integrated offerings from a single company. There are simply too many uncertainties involved in a strategic partnership.

During Sprint’s 3rd-quarter conference call, Paul Saleh, the acting CEO, announced that the company has decided to halt further market deployments of its Pivot service, citing provisioning complexity and difficulty to simplify POS (point of sales) activation. Nevertheless, he said that Sprint is still strategically aligned with cable MSOs (whatever that means). Sprint will keep supporting the 33 markets launched so far.

Many industry executives I talked to two years ago praised Sprint’s decision to become a carrier of carriers and divest its landline assets. It seemed like a good strategic move at the time as telecom operators were bleeding landline subscribers. What a change of fortune it was. AT&T and Verizon are rebounding from their dog days, thanks to improving performances of their service bundles. Sprint, on the other hand, lost its focus for a while and was unable to stop wireless subscriber churn. Without strong performance of its bread-and-butter business, any strategic talks are just that, strategic talks. It also appears that managing relationships with business partners can be much more complex than managing consumer relationships.

Telcos must be cheering at the news as this will delay cable MSOs’ rollout of quadruple play services and give them some breathing room. I’ve said that telcos are likely to take the early lead in the quadruple play race, kind of a revenge for their loss in the triple play war. On cable MSOs’ side, they now need to investigate other options such as leveraging the AWS wireless spectrum they acquired last year or buying a wireless carrier.