Sprint picked up a cable-telephony contract with
Mediacom Communications Corp.. At least one analyst, Ari Moses, an analyst with Blaylock & Partners, says it could be a sign that cable companies won't be playing into Net2Phone's business model.
"This decision by Mediacom is a meaningful competitive loss for NTOP," Moses writes in a note to clients. "This decision leads us to question whether NTOP can close deals with the other top tier-II providers."
A carrier in its own right, Net2Phone began packaging its services for sale under the Net2Phone Cable Telephony brand in October. Other providers, including 8x8 Inc. (Nasdaq: EGHT) and Vonage Holdings Corp., are trying a similar tactic, offering their prepackaged services to cable providers (see CommPartners Plays Host to MSOs).
But by going with Sprint, Mediacom seems to be snubbing that model, instead going with a "build" model, Moses writes. That's because Sprint's offering adds crucial telecom features such as 911 service to a carrier's own telephony buildout.
There's good news to be had, though. Mediacom's contract is further evidence of cable providers' interest in telephony, a general trend that ought to help Net2Phone. And Moses does expect Net2Phone to pick up a "meaningful share" of the outsourced cable telephony market. The only problem is that the company "has yet to deliver a meaningful slate of customers," he writes, noting that it's announced six deals, with only Liberty Cablevision of Puerto Rico having deployed.
Net2Phone floated a $58.5 million stock offering in November to fuel its push into cable. Participating investors included IDT Corp. (NYSE: IDT) and Liberty Media Corp. (NYSE: LMC), owner of Liberty Cablevision (see Net2Phone Raises $58.5M). Blaylock Partners was one of the stock offering's underwriters.
Net2Phone officials were not immediately available for comment. The company's stock was down 16.5 cents (5%) at $3.17 in midday trading on Thursday.
This would be Sprint eating its young to ensure that they have the cable/wireless market sewn up before anyone else can get there. The cost of this is potentially serving up their Local business on a platter to the cable competitors/partners.
Reliability might be part of it but I doubt it is a large part. My question is why is Sprint first to market with a MGCP solution? What makes them able to do this and ATT can't? Is it their Nortel solution? I attended a meeting at Supercomm where there was talk of some Session Border Controller device that Sprint was using to enable them to be first to market in the cable space.
Is this a new battle, the IXCs helping the cable cos bash the RBOCs with VoIP? How does Sprint keep this service out of its own local territories? Perhaps in the post-UNE world it is now nuclear winter - since the IXCs can't rent lines at a profit, just take those local profits out.
NTOP is a mysterious company. They do offer a service to cable cos, but a big part of a recent quarterly call was about how Liberty Media chose to buy out assets, in Puerto Rico I think, rather than use the NTOP service. That could be a sign of disintermediation. Even after the call, it was not clear what they really bring to the party, or why Liberty chose that route.
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