South Carolina House Passes Tax Break for Data Centers

I just saw an article in The State about the South Carolina House passing tax incentives for new data center builds. Basically, it waives sales tax on power consumption, matching similar incentives in North Carolina and Virginia.

This should be interesting to see how South Carolina stacks up versus North Carolina for future builds from the likes of Google, Facebook, Apple, etc. South Carolina taxes are overall lower anyway (NC currently has the 6th highest gas tax in the country – versus 47th for SC), so it should give them a slight advantage. Additionally, the Upstate of South Carolina is very close to Atlanta, which is a major hub for Internet traffic.

Vonage – Recommended!

I first used Vonage about four years ago. At the time, I really didn’t need it. It was a new technology and I thought it was worth trying out. I was pretty impressed at the time, but Lingo and Packet8 both came out with cheaper plans, so I figured I’d give the others a shot. I returned Packet8 within the first 30 days because of severe latency issues. I don’t know if they were still working out the bugs in their system or what, but it was painful to use. I used Lingo for about two years on their $8 plan because it was a pretty good deal. I never had the best quality, and the sound level was always really low even with the phone cranked to maximum volume. But for $8 per month, it was hard to beat. I canceled Lingo when I moved last year and just used my cell phone.

I decided to get Vonage again on Monday. I went to Circuit City and purchased one of the D-Link Vonage Telephone Adapters (VTA) for $50 that came with a $150 mail-in rebate. Not a bad deal even without the rebate, when you consider what Vonage charges through the web site. I brought the VTA home and was making phone calls in about 5 minutes. Setup was really, really easy. Phone quality is way better than it ever was with Lingo, and I really can’t tell the difference from a land line. I got the first month for free, and once I get the $150 back, that will pay for about 3-4 months of service. Vonage is definitely king when it comes to VoIP, and I highly recommend them.

Senate Commerce chief backs lawyer for FCC slot

By Jeremy Pelofsky

WASHINGTON (Reuters) – U.S. Senate Commerce Committee Chairman Ted Stevens said on Tuesday he backed telecommunications lawyer Robert McDowell to fill the final Republican seat on the Federal Communications Commission.

“I’ve suggested him and others, but I would support him,” Stevens, an Alaska Republican, told reporters after a hearing. If nominated, McDowell would require confirmation by Stevens’ committee as well as the full Senate.

President George W. Bush is expected to nominate McDowell to the position, three sources familiar with the matter told Reuters on Monday. An announcement may not come until February, one source had said.

The five-member FCC, which regulates and oversees the telecommunications and media industries, has been deadlocked with two Republicans and two Democrats for almost a year.

McDowell is senior vice president and assistant general counsel at Comptel, a lobbying group for companies that primarily compete against big telephone carriers like AT&T Inc. and Verizon Communications.

In addition to unsuccessfully running for the Virginia state legislature, he worked on the 2000 Bush presidential campaign, as did FCC Chairman Kevin Martin.

Stevens had previously recommended former aide Earl Comstock, who now heads Comptel, but he withdrew from consideration. His other recommendation also withdrew, deputy staff director Christine Kurth.

One analyst said that if McDowell is nominated and confirmed, he could be sympathetic to concerns of companies that compete against the big telephone carriers on issues like intercarrier compensation and universal service, among others.

“That has to be a concern for the Bells, though we suspect Mr. McDowell would come under pressure to demonstrate some degree of even-handedness as a commissioner,” Stifel Nicolaus analyst Blair Levin, said in a research note.

This guy sounds like he might be interesting if confirmed. A Republican who isn’t pro-AT&T/Verizon/et. al. With issues pending like network neutrality and Internet taxes over the next two or so years, I’m hopeful that this guy will fight against the Bell and cable companies for open networks and competition. These recent mega mergers with AT&T/SBC and Verizon/MCI make me nervous when you team them up with Time Warner Cable, Comcast, Cox, Charter, etc. The power that these companies hold over the future of the Internet, and whether it will continue to prosper is staggering.

Your new Cingular Account Number

Dear (name removed),

Thank you for your recent upgrade! Your new Cingular phone will allow you to take advantage of all of the great services and features available to you as part of the nation’s largest wireless family.

To distinguish between the new and previous services, your new service has been assigned a new account number. To ensure the smoothest possible transition, please note the following:

Previous Service Invoice

You will continue to receive an invoice on your previous account as long as a balance remains unpaid. To prevent any possible interruption to your new wireless service, please make timely payments using one of the following options:

* Make your payments using the payment slip and return envelope included with your invoice. Please be sure to include your old account number on your check or money order.
* You may also speak with a representative at 1-800-331-0500 who can assist you with a payment by credit card, debit card, or electronic funds transfer from your bank account.

New Service Invoice – Your new account number is: 0

Services associated with your new phone will be billed separately, and must be paid separately from your previous service.

New Service Features: Once your new equipment is activated, please take the following actions to continue (or begin) to enjoy these features:

* Voicemail – Be sure to record your voicemail greeting and set up your password once service is activated on the new account. Simply press and hold the “1” key on your wireless phone to connect, and then follow the recorded instructions.
* Online Account Management – If you were previously registered for Online Customer Service, you will need to re-register using your new account information at www.cingular.com/myaccount
* Bill Payment Services – Remember to update these services with your new account number to ensure that future payments are applied to your new Cingular invoice. Examples of such services are: your bank’s bill pay service, Quicken, Scout, Yahoo Bill Pay or Paytrust.

Once again, we thank you for being a part of the Cingular family. We will continually work to provide you with the best wireless experience.

Sincerely,
Cingular Wireless

Man, I must be special. Account number 0!! That’s gotta win me a prize or something.

Net-Phone Firm Vonage Gives Mixed Signals

I think Vonage would be a great acquisition for one of these companies looking into expanding into VoIP. They have an established platform that is one of the best out there (and I’ve tried quite a few). I’ve been excited about Vonage’s product since way before it was getting buzz in the Wall Street Journal, and was one of their first customers. It will be interesting to see what happens.

Net-Phone Firm Vonage
Gives Mixed Signals
By SHAWN YOUNG
Staff Reporter of THE WALL STREET JOURNAL
November 3, 2005; Page C1

Vonage Holdings Corp., a pioneer in selling Internet-based telephone service to consumers, is sending mixed signals to Wall Street.

Vonage is both preparing for an initial public offering of stock that could raise as much as $600 million and exploring selling itself to a larger company at a price that could top $2 billion, according to people familiar with the matter.

Venture investors, including Bain Capital, 3i Group PLC, Meritech Capital Partners, Institutional Venture Partners and New Enterprise Associates, have poured $408 million into Vonage, of Edison, N.J., and are likely ready to start collecting a payout.

These investors can hope for a hefty price tag because Vonage is a leader in Internet voice, a technology that enables phone calls to be made using Internet technology for lower costs and with more features than traditional phone service.

Vonage’s hopes got a lift in September when eBay Inc. agreed to pay $2.6 billion for Skype Technologies SA, a Luxembourg Internet calling company whose revenue of $7 million last year is a fraction of Vonage’s. But there is a chance Vonage could fall short of that mark because several potential acquirers seem more interested in developing their own versions of the service than in making a costly acquisition.

Internet calling, a threat to the conventional phone business, works by transforming voice into data and beaming it along the Internet like an email or photo. The service requires customers to have a high-speed Internet connection, which most people get from their phone or cable company. Vonage’s customer roster of more than one million subscribers has more than doubled this year and the company continues to advertise aggressively, so revenue is likely to continue growing quickly in the near future.

Vonage’s fastest route to a big payday would be to sell itself to one of the cable, Internet or telecommunications companies that have been scrambling to get into the technology. The Skype deal proved that companies are willing to pay handsomely for a head start. Skype, which is primarily used by consumers sitting at their computers talking to one another free of charge, appealed to eBay largely because it would enhance eBay’s core Internet auction business. Even so, many analysts and investors questioned the high price.

It is far from certain that a suitor would pay a comparable sum for Vonage or that its big IPO — which is being underwritten by Deutsche Bank AG, UBS AG, Citigroup Inc. and Bear Stearns Cos. — would be smooth sailing.

“I think it’s not the most appealing business model in the world,” said Rob Bartolo, co-manager of the T. Rowe Price Media and Telecommunications Fund. “It’s a business with limited barriers to entry and falling prices.”

Vonage’s business model is more like a conventional phone company and could appeal to an acquirer seeking a steady revenue stream. Consumers pay the company about $25 a month for a way to plug their phones into high-speed Internet connections. While the company doesn’t disclose financial results, some estimate that revenue is coming in at a rate of about $300 million a year. Vonage so far has moved faster and been more successful in promoting the service than rivals, including cable companies and AT&T Corp.

But many of the most obvious phone and cable company buyers for Vonage are quickly rolling out their own Internet phone offers, as are Internet companies such as EarthLink Inc. and Yahoo Inc. Large telecom and cable companies also can bundle Internet calling with high-speed Internet and TV services, something that Vonage can’t match.

Also perhaps ominous for a Vonage IPO is that a smaller Internet phone company that went public yesterday, Cbeyond Communications Inc., twice cut its offering price. The IPO was priced at $12, down from an original range of $16 to $18. Cbeyond’s stock didn’t gain in its first day of trading, and closed at $12 a share in Nasdaq Stock Market trading.

Investors could give a Vonage IPO a similar reception.

“Skeptical is a good characterization of my view,” said Michael Mahoney, a partner at EGM Capital LLC, a hedge-fund firm based in San Francisco. Vonage’s growth has been impressive, Mr. Mahoney said, but its service isn’t unique and it doesn’t yet have the sheer size that has proved to be crucial in the phone business

On the acquisition front, Vonage so far this year has held exploratory talks with several potential suitors, including Sprint Nextel Corp. and T-Mobile USA Inc., a unit of Deutsche Telekom AG, according to people familiar with the matter. Traditional media companies and Internet players also have expressed interest, these people say.

None of Vonage’s discussions with prospective buyers have reached an advanced or exclusive stage. They could fizzle over price, as talks with Sprint Nextel did several months ago, say people familiar with those discussions.

In recent weeks, rumors have circulated that BellSouth Corp., which provides conventional phone service in the Southeast, was courting Vonage. A BellSouth spokesman declined to comment directly on the speculation, but said the company plans to launch an Internet phone service later this year “and it will not be with Vonage.”

A deal with Vonage could make sense for a wireless carrier such as T-Mobile that is seeking to expand its presence and has no conventional phone business that is threatened by Vonage. T-Mobile held exploratory discussions with Vonage earlier in the year, according to people familiar with the matter, but it isn’t clear if the company still has an active interest.

Sprint, Nextel Reach Tentative Deal

Sprint, Nextel Reach Tentative Deal
Combined Entity to Spin Off
Sprint’s Local Exchange Carrier

By DENNIS K. BERMAN and JESSE DRUCKER
Staff Reporters of THE WALL STREET JOURNAL
December 10, 2004 3:58 p.m.

Sprint Corp. and Nextel Communications Inc. have tentatively agreed to economic terms of a merger of equals that would create a third giant cellular carrier with nearly 39 million subscribers, said a person familiar with the matter.

The talks, characterized as advanced negotiations, could still fall apart, but if things stay on track, a deal could be announced soon. Those terms will pay Nextel shareholders the equivalent of 1.3 shares of Sprint stock, with a small cash element in order to ensure that current Sprint shareholders have more than 50% of the combined company.

That is important, this person says, because the combined company, post-closing, will be spinning off Sprint’s local-phone carrier. This new spin-off will maintain its headquarters in Overland Park, Kan.

Current Sprint Chief Executive Gary Forsee will continue to serve in that role at the new, largely wireless company, which will be called Sprint-Nextel. Nextel Chief Executive Timothy Donahue would serve as executive chairman of the new company. The company would have a 50-50 split among board members.

The company will have a corporate headquarters in Reston, Va., where Nextel is currently based, with an operating headquarters in Overland Park, KS, where Sprint is currently based.

Write to Dennis K. Berman at dennis.berman@wsj.com and Jesse Drucker at jesse.drucker@wsj.com