& cplSiteName &

NeuStar: Competition Didn't Cause Fee Cut

Light Reading
News Analysis
Light Reading
9/22/2006
50%
50%

Neustar Inc. (NYSE: NSR) has quickly recovered after falling nearly 7 percent overnight after the company announced it will soon charge carriers less to operate the database it uses to connect and route telephone calls in the U.S. (See NeuStar Extends Contracts.)

NeuStar shares were down $0.56 (1.93%) to $28.44 in mid-afternoon trading on Friday.

The company said Thursday it had amended and extended seven exclusive contracts with the North American Portability Management LLC (NAPM), a consortium of telephone carriers that use NeuStar's directory to route calls in the U.S. NeuStar says it has extended its contracts by two years to 2015 and also reduced its per-call transaction rates starting next year.

NeuStar will continue getting $1.05 per transaction for the rest of 2006, and then will lower the price to 91 cents for transactions during 2007. Starting in 2008, the rate drops to a sliding scale of 75 cents to 95 cents, depending on transaction volume.

NeuStar’s contracts with NAPM have contributed about three fourths of its total revenues over the past three years, analysts say.

Investors at first didn’t take the news well. NeuStar stock closed at $29 dollars Thursday, dropped overnight, and bottomed out at $25 in mid-morning trading Friday. The stock then quickly recovered.

“The pricing change may reflect competition, I suspect from players like Telcordia Technologies Inc. and VeriSign Inc. (Nasdaq: VRSN), for what are NeuStar's core contracts, and also represents volume pricing based on continuing growth,” says Heavy Reading analyst John Longo. “The real question is how effectively they continue to manage their performance for the rest of the term of the contract.”

NeuStar CEO Jeff Ganek denies his company was pressured by competition into reducing its rates. Ganek says his company is merely trying to “strengthen its position” as the sole owner of the contract in the future. NeuStar says transactions have grown at a compounded annual rate of more than 35 percent since January 2004.

"You can’t complete a telephone call in the U.S. without using NeuStar,” Ganek says. “We cannot charge monopoly rents; we have to share the benefits of fast volume growth with our industry.” NeuStar says the amended pricing will save carriers approximately $30 million in the first year alone.

Several analysts came out Friday with sympathetic views of NeuStar’s contract renegotiation. “We believe investors are overreacting to NeuStar's price reduction and contract extension,” says ThinkEquity LLC analyst Jonathan Hoopes in a research note Friday.

“With the NP [number portability] transaction pipeline now locked up until 2015, NeuStar can redeploy assets and focus on next-gen growth initiatives that should expand the company's international presence, which accounted for only 3 percent of revenues in fiscal 2005.” (See NeuStar Unveils SIP-X.)

The company declined to provide 2007 guidance. (See Neustar Reports Q2.)

— Mark Sullivan, Reporter, Light Reading

(4)  | 
Comment  | 
Print  | 
Newest First  |  Oldest First  |  Threaded View        ADD A COMMENT
voyce_overipee1
50%
50%
voyce_overipee1,
User Rank: Light Beer
12/5/2012 | 3:39:52 AM
re: NeuStar: Competition Didn't Cause Fee Cut
95 cents a dip? holy crap. It's like printing money. I'm really surprised they weren't forced to go with flat rate. The transactions are increasing faster anyway, so lowering the per-dip fee is not going to hurt their earnings in the end.
telcobiz
50%
50%
telcobiz,
User Rank: Light Beer
12/5/2012 | 3:39:47 AM
re: NeuStar: Competition Didn't Cause Fee Cut
Please help me to understand Neustar!

I understand what NeuStar's business does, but what I don't understand is why the RBOC's let someone carve out this nice little monopoly from THEIR business?

This company does not seem, to me, to be at all essential for the execution of a number portability system however they sure do make a nice profit from it, profit from operations exceeding 50%, With some form of FCC gifted monopoly, till 2012, but why?

confused


alchemy
50%
50%
alchemy,
User Rank: Light Beer
12/5/2012 | 3:39:45 AM
re: NeuStar: Competition Didn't Cause Fee Cut
fgoldstein writes:
The dip charges for each call are a modest fraction of a penny. Of course they're made for pretty much every call nowadays.

...a very nice government-mandated monopoly indeed. And now NeuStar is madly lobbying in Washington D.C. to get themselves in the same sort of monopoly business for VoIP. They champion a VoIP 911 solution that pretty much assures them the business. They push their ENUM at anybody and everybody. I guess you have to tip your hat to them for being so good at the government mandate game. When your roots are as a defense contractor, you develop a very different skill set from the rest of us.
fgoldstein
50%
50%
fgoldstein,
User Rank: Light Sabre
12/5/2012 | 3:39:45 AM
re: NeuStar: Competition Didn't Cause Fee Cut
It's not 95 cents a dip. It's more like 95 cents to write into the database, which is done when a number is ported. I am not sure about the exact pricing but a port operation generally takes two writes, one to stage it (and give notice) and one to complete it.

The dip charges for each call are a modest fraction of a penny. Of course they're made for pretty much every call nowadays.
Educational Resources
sponsor supplied content
Educational Resources Archive
Light Reading’s Upskill U is a FREE, interactive, online educational resource that delivers must-have education on themes that relate to the overall business transformation taking place in the communications industry.
NEXT COURSE
Wednesday, September 14, 1:00PM EDT
What Is Agile?
Kent J. McDonald, Product Owner, Agile Alliance
UPCOMING COURSE SCHEDULE
Friday, September 16, 1:00PM EDT
How to Implement Agile
,
Wednesday, September 21, 1:00PM EDT
What Is DevOps?
Colin Kincaid, CTO, Service Provider, Cisco
Friday, September 23, 1:00PM EDT
How to Implement DevOps
,
in association with:
From The Founder
Light Reading today starts a new voyage as part of a larger Enterprise.
Flash Poll
Live Streaming Video
Charting the CSP's Future
Six different communications service providers join to debate their visions of the future CSP, following a landmark presentation from AT&T on its massive virtualization efforts and a look back on where the telecom industry has been and where it's going from two industry veterans.
Between the CEOs
CEO Chat: Intel's Alexis Black Bjorlin

8|17|16   |   06:23   |   (0) comments


Join us for an in-depth interview between Steve Saunders of Light Reading and Alexis Black Bjorlin of Intel as they discuss the release of the company's Silicon Photonics platform, its performance, long-term prospects, customer expectations and much more.
Telecom Innovators Video Showcase
Accelerating Telecom Digital Transformation With Nominum DNS

8|1|16   |   12:04   |   (0) comments


Light Reading's Steve Saunders gets an update from Nominum CEO Gary Messiana on how his company is helping carriers on the digital transformation journey.
LRTV Custom TV
Reinventing Operations for a Virtual, Software-Defined World

7|28|16   |   5:23   |   (0) comments


Heavy Reading Senior Analyst Jim Hodges speaks with Accenture's Larry Socher and Matt Anderson about what service providers must do to transform their business to get the benefits of SDN and NFV including: leveraging DevOps, introducing real-time OSS and implementing analytics.
Women in Comms Introduction Videos
Fujitsu Sales Leader Shares Lessons Learned

7|27|16   |   5:12   |   (1) comment


As Fujitsu's only female sales leader, Annie Bogue knows the importance of asking for what you want, being flexible (she's been relocated five times), keeping a meticulous calendar, 'leaning in,' working harder than everyone else around you, being aware and more.
Telecom Innovators Video Showcase
VeEX Test & Measurement Solutions

7|25|16   |   08:57   |   (0) comments


Cyrille Morelle, president and CEO of VeEX Inc., talks test and measurement with Light Reading's Steve Saunders at BCE 2016. This includes innovative products such as VeSion Cloud-Based platform for network monitoring; MTTplus Modular Test platform for Access, Business, Carrier Ethernet, Transport and Core services; and OPX-BOX+ for Fiber Optics.
LRTV Custom TV
VeEX: Live From BCE 2016

7|25|16   |   03:20   |   (0) comments


VeEX's Senior Director of Business Development, Perry Romano, explains how VeEX provides tools to help install, maintain, monitor and manage network infrastructure efficiently and effectively. The portfolio of products on display include the RXT-6000, MTTplus and TX300s.
LRTV Custom TV
Real-Time Telemetry & Analytics for Intelligent SDN Orchestration

7|25|16   |   03:09   |   (0) comments


Packet Design CEO Scott Sherwood discusses how real-time network telemetry and analytics are enabling a new breed of SDN orchestration applications.
From the Founder
The Russo Report: Driving Disruption

7|25|16   |   07:44   |   (2) comments


In the first episode of a four-part series, Light Reading Founder and CEO Steve Saunders and Calix President and CEO Carl Russo drive around town discussing the disruptive mega-changes in the communications industry and where hope lies for service providers to meet the escalating demands of the cloud.
LRTV Custom TV
NetScout: Maximizing Enterprise Cloud for Digital Transformation

7|20|16   |   04:53   |   (0) comments


Light Reading Editor Mitch Wagner talks to NetScout CMO Jim McNiel about maximizing the benefits of enterprise cloud and digital transformation while minimizing potential pitfalls with a proper monitoring and instrumentation strategy.
Women in Comms Introduction Videos
Ciena's VP Offers a Career Crash Course

7|20|16   |   4:14   |   (2) comments


How did Ciena's Vice President of Sales, Angela Finn, carve out her career path? Simple, she tells WiC. She stayed true to her company, customers and principles. She shares her advice for women on how to be authentic and credible, as well as for companies that want to make a real change to their culture and practices.
LRTV Custom TV
NFV in 2016: Part 2 – Climbing the Virtualization Maturity Curve

7|19|16   |   06:56   |   (0) comments


Many of the initial use case implementations are single-vendor and self-contained. The industry is still climbing the virtualization maturity curve, needing further clarity and stability in the NFV infrastructure (NFVi) and greater availability and choice of virtualized network functions (VNFs). Interoperability between NFVis and VNFs from different vendors ...
Telecom Innovators Video Showcase
Versa Networks' Kumar Mehta on SD-WAN Managed Services

7|19|16   |     |   (0) comments


In Silicon Valley, Steve Saunders sits down with Versa's Kumar Mehta for an interview focused on why service providers are building SD-WAN managed services, and how Versa's telco customers are innovating.
Upcoming Live Events
September 13-14, 2016, The Curtis Hotel, Denver, CO
November 3, 2016, The Montcalm Marble Arch, London
November 30, 2016, The Westin Times Square, New York City
December 1, 2016, The Westin Times Square, New York, NY
December 6-8, 2016, The Westin Excelsior, Rome
May 16-17, 2017, Austin Convention Center, Austin, TX
All Upcoming Live Events
Infographics
Five of the Top 10 most targeted countries in Check Point Software Technologies' global Malware & Threat Index for Q1 2016 are in Africa.
Hot Topics
Cisco Developing 'Monica' Digital Assistant
Mitch Wagner, West Coast Bureau Chief, Light Reading, 8/22/2016
Cisco Throws 5,500 Overboard on Cruise to Richer Waters
Mitch Wagner, West Coast Bureau Chief, Light Reading, 8/17/2016
VoLTE Can Drive 4G Small Cells Adoption
Ravi Narayanan, Senior Analyst – Cloud & Next Generation Mobile Networks, Heavy Reading, 8/18/2016
Slow Roll Builds for DOCSIS 3.1
Mari Silbey, Senior Editor, Cable/Video, 8/17/2016
Rocket Fiber Lights Up Detroit With Gigabit
Elizabeth Miller Coyne, Managing Editor, 8/22/2016
Like Us on Facebook
Twitter Feed
BETWEEN THE CEOs - Executive Interviews
Join us for an in-depth interview between Steve Saunders of Light Reading and Alexis Black Bjorlin of Intel as they discuss the release of the company's Silicon Photonics platform, its performance, long-term prospects, customer expectations and much more.
There's no question that, come 2020, 5G technology will turn the world's conception of what mobile networking is on its head. Within the world of 5G development, Dr. ...
Animals with Phones
Live Digital Audio

Bridging the tech skills gap is a major challenge for service providers and suppliers alike today – and the challenge is two-fold when it comes to increasing the number of women in the comms space. Level 3 Communications has made it a priority to overcome both challenges by implementing several unique programs focused on building the right candidates from within – in addition to filling the funnel by supporting STEM and other education programs. During this radio show, you’ll learn about these programs from Mary Beth McGrath, SVP of Global Talent Management at Level 3, and the best ways to bridge your own skills gap so that you are motivated and equipped for change. Plus you’ll have the chance to ask Mary Beth your questions live on the air.