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2018 Retrospective

Early last year we pointed out ten areas that enterprises should plan for in 2018. This week, we are launching a series of podcasts with our predictions for 2019 (available on our websites), but before we do that, here is a quick retrospective on our 2018 predictions and how things have panned out.

1.  The impact of the CenturyLink acquisition of Level 3 and Verizon’s acquisition of XO.  As predicted, the removal of two strong competitors from the market impacted enterprises’ choices and strengthened the footprint of CenturyLink. CenturyLink became a stronger factor in RFP responses and increased its position as a “real” competitor to AT&T and Verizon. CenturyLink now derives about 75% of its revenue from enterprise customers. As anticipated, enterprises who had contracts with CenturyLink-acquired companies struggled (and are still struggling) to deal with the new reality and often two or more contracts with competing terms. CenturyLink and its customers are still working through the fallout from the merger. It hasn’t helped that CenturyLink has faced management changes as well as some high-profile network issues, including a two-day outage on its cloud network in December.

2.  Investment in entertainment.  Last year we warned that telecom companies were increasingly focused on growing their “entertainment” footprint, and while that would not mean they would forgo investing in their networks, it would mean that enterprise customers would not receive their full attention. This has proven to be the case in many instances. AT&T’s wooing of Time Warner created palpable distractions from its core business. Despite closing last year, AT&T’s acquisition faced new challenges when antitrust regulators at the Department of Justice appealed a District Court decision approving the acquisition. That appeal has not yet been decided. T-Mobile purchased Layer3TV and plans to use it to compete with the cable market. T-Mobile’s CEO has reportedly announced that, although it did not do so in 2018, in 2019 T-Mobile will “take our first steps to take on another . . . arrogant industry . . . cable and satellite TV.” Verizon appears to be the only one proceeding cautiously. Verizon’s recent write-off of over $1 billion to shut down its mobile video service Go90 last year got a lot of media attention. And its new CEO, Hans Vestber, states that Verizon will focus on investing in 5G – not entertainment.

3.  Net Neutrality.  We told you last year that the Net Neutrality wars would continue, and they have. Or maybe we should call it a circus, rather than a war. The FCC’s repeal of the Net Neutrality principles (or most of them) became effective in June 2018. Congress has continued its efforts to overturn the FCC’s decision. Appeals were filed against the FCC. States and municipalities (e.g., California and New York City) adopted legislation to protect Net Neutrality principles. The FCC investigated claims that dead people filed comments and their systems were hacked. Hear more on this front in our upcoming podcasts.

4.  Auctioning Toll-Free Numbers.  Toll-free numbers are supposed to be “free” right? Telephone numbers are a public resource held in a database that an independent company, Somos, Inc., administers. If a customer wants a toll-free number, its RespOrg (usually a carrier like AT&T or Verizon) will assign one to the customer on a first come, first served basis. Numbers no longer in use go back to the pool and numbers cannot be bought or sold. Last year, we alerted enterprises that the FCC was considering changing that model to roll out a new toll-free prefix (-833), and make premium numbers with that prefix (e.g., numbers that spell recognizable terms or that might otherwise be highly valued, such as 833-333-3333) available via a lottery or auction. In September, the FCC announced that it will auction approximately 17,000 numbers in the 833 code. The FCC will use that experience to determine whether it should auction other toll-free numbers. It also decided to allow a secondary market for any toll-free numbers that are acquired in an auction, upending a decades-old prohibition on brokering numbers. Accordingly, an entity can bid on an 833 “vanity” number, and then turn around and sell it to another entity. If a company had 800-BUY-CARS and wanted 833-BUY-CARS, it could purchase that number from a successful bidder in the auction. The FCC’s actions have opened the door to higher costs for toll-free numbers. Thus, the advice in our 2018 alert rings true: Enterprise customers should watch for the new market for toll-free numbers and be prepared to balance the potential costs of obtaining new premium toll-free numbers against the possibly more affordable costs of enhancing your presence on the web.

5.  Verizon’s VRD.  Verizon’s “Rapid Delivery” platform, which was designed to expedite contracting for, and delivery of, services, has been hugely unpopular in the enterprise market, in large part because it relies on carrier-dictated terms rather than negotiated contracts. We predicted last year that Verizon would gradually recognize the adverse impact its take-it-or-leave-it approach to contracting was having on its business customers and would start taking a more balanced approach to its VRD agreements. The pace of “reform” has been slow, but in our experience, last year’s prediction is proving true as enterprise customers, who are all for expedited contracting and implementation, are unwilling to accept inflexible contract terms as the quid pro quo.

6.  Long, Slow Demise of Legacy Services.  TDM legacy services have been in a slow-moving death spiral for a few years. Last year we pointed out that the carriers’ focus on newer technology and ethernet networks is a good thing, but that many enterprises continue to rely on legacy services such as POTS lines and PRIs, and the carrier’s disregard for these services would remain a thorn in the side of enterprise customers. The trends continued throughout last year and the five suggestions we made this time last year to mitigate the effects of TDM phase-out remain valid.

7.  GDPR.  In May 2018, the EU General Data Protection Regulation, or “GDPR,” took effect, impacting any enterprise that collects personal data about, or monitors the behavior of, EU residents. As anticipated, this has become a major factor in multinationals’ service agreements, as customers and providers alike are dedicating substantial time and resources toward ensuring compliance with the newly minted, but seldom tested, requirements. Observing this process has been a bit like watching blindfolded people feel their way out of a dark maze. The adventure will continue as the GDPR matures and is enforced. Listen to our upcoming podcasts for an update on predictions for the impact of GDPR in 2019.

8.  Application of the Stored Communications Act.  Last year we alerted folks that the U.S. Supreme Court was considering two cases involving the territorial and legal limits of the federal Stored Communications Act (“SCA”): Carpenter v. U.S. and U.S. v. Microsoft Corp. The issue in the Microsoft case was whether the SCA gave U.S. law enforcement personnel access to information related to a crime when that information was physically stored outside the U.S. In March of last year, Congress preemptively answered the question by enacting legislation (the Clarifying Lawful Overseas Use of Data Act (get it, “CLOUD” Act), that expressly extends the SCA to information in a service provider’s possession, regardless of whether the information is stored in the U.S. or abroad. The Carpenter case considered whether law enforcement required a warrant to obtain cell site location information (“CSLI”) about a suspect from a wireless carrier. Traditionally, information that a suspect provided to a third party (e.g., telephone numbers that one dials) have not been protected the 4th Amendment’s prohibition of searches and seizures, thus no warrant was required for law enforcement to obtain them from a third party, such as a telco. In June, the Supreme Court muddied the waters by holding that law enforcement does require a warrant to obtain CSLI showing the location of a suspect over a period of 7 days or more, but it did not address whether the same requirement applies to location information gathered over a shorter period of time. Legal scholars have criticized the decision as creating more questions than it answered. As we noted last year, the clear implication of Carpenter that some CSLI may be obtained from a wireless carrier without a warrant could be extended to other information that individual users voluntarily provide to their carriers or others in the chain of a communication, e.g., Google or Apple. Given how much data tech companies collect from us based on indecipherable privacy disclosures, this possibility is cause for concern.

9.  Development of 5G.  The confusion around 5G that we saw a year ago continues into 2019. As we saw with 4G, the major wireless carriers (i.e., AT&T and Verizon Wireless) are making claims about 5G that don’t pass the straight-faced test. As we say in our forecast for 2019, “Caveat emptor.” On a more positive note, the FCC announced its “5G FAST [that is, “Facilitate America’s Superiority in 5G Technology”] Plan” last fall, which will focus on three areas: making additional spectrum available for 5G; updating infrastructure policy and encouraging private sector investment; and taking a fresh look at existing regulations to see if changes are necessary to spur the deployment of 5G in this country. The hand of industry lobbyists is obvious from this last item, which includes reaffirming the repeal of Net Neutrality and deregulating rates for business data services. Do you see the connection to 5G? In our upcoming podcasts and in a piece in Network World this month, we will see what the tea leaves foretell for 5G in 2019.

10.  Cable Entry Into Wireless.  Last year, we mentioned the entry of cable competitors in the consumer wireless market, but we questioned whether the enterprise market would be affected by the new competitors. We predicted that it wouldn’t, and we were right. Enough said.

Please join us for our upcoming podcasts and hear our predictions, recommendations, and warnings for 2019. At the conclusion of the podcast series, you will also be able to download the full set of 2019 forecasts from our websites: or We will continue to keep an eye out for trends, market and regulatory developments that impact your businesses. If you want to hear more, please contact: Laura McDonald or Kevin DiLallo, senior partners at LB3 or Joe Schmidt, Project Director at TC2.

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