Verizon
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The Wall Street Journal is reporting that Tim Armstrong is in talks to leave Verizon as soon as next month.
Armstrong heads up the carrier giant’s digital and advertising division, Oath (formerly AOL, prior to the Yahoo acquisition and the subsequent merger of the two units). Oath also happens to be TechCrunch’s parent, of course.
We reached out to our corporate overlords for a confirm or deny on the newspaper report. A Verizon spokesperson told us: “We don’t comment on speculation and have no announcements to make.”
The WSJ cites “people familiar with the matter” telling it Armstrong is in talks to leave, which would mean he’s set to step away from an ongoing process of combining the two business units into a digital content and ad tech giant.
Though he has presided over several rounds of job cuts already, as part of that process.
Verizon acquired Armstrong when it bought AOL in 2015. The Yahoo acquisition followed in 2017 — with the two merged to form the odd-sounding Oath, a b2b brand that Armstrong seemingly inadvertently outted.
Building an ad giant to challenge Google and Facebook is the underlying strategy. But as the WSJ points out there hasn’t been much evidence of Oath moving Verizon’s growth needle yet (which remains tied to its wireless infrastructure).
The newspaper cites eMarketer projections which have Google taking over a third of the online ad market by 2020; Facebook just under a fifth; and Oath a mere 2.7%.
Meanwhile, Verizon’s appointment of former Ericsson CEO, Hans Vestberg, as its new chief exec in June, taking over from Lowell McAdam (who stepped down after seven years), suggests pipes (not content) remain the core focus for the carrier — which has the expensive of 5G upgrades to worry about.
A cost reduction program, intending to use network virtualization to take $10BN in expenses out of the business over the next four years, has also been a recent corporate priority for Verizon.
Given that picture, it’s less clear how Oath’s media properties mesh with its plans.
The WSJ’s sources told the newspaper there were recent discussions about whether to spin off the Oath business entirely — but said Verizon has instead decided to integrate some of its operations more closely with the rest of the company (whatever ‘integrate’ means in that context).
(Since the story broke, Verizon CFO Matt Ellis has expanded slightly on the ‘no comment’. Speaking during an appearance at a Bank of America Merrill Lynch conference this morning, he said: “Our commitment is as strong today to Oath as it has ever been… There’s a lot of good work going on there. It’s really setting the foundation of what we expect to do with the business going forward, and we still feel very strongly there’s a great opportunity there… So we continue to be very committed to Oath. There’s a significant opportunity for us there.”)
There have been other executive changes at Oath earlier this year, too, with the head of its media properties, Simon Khalaf, departing in April — and not being replaced.
Instead Armstrong appointed a COO, K Guru Gowrappan, hired in from Alibaba, who he said Oath’s media bosses would now report to.
“Now is our time to turn the formation of Oath into the formation of one of the world’s best operating companies that paves a safe and exciting path forward for our billion consumers and the world’s most trusted brands,” Armstrong wrote in a staff memo on Gowrappan’s appointment obtained by Recode.
“Guru will run day to day operations of our member (consumer) and B2B businesses and will serve as a member of our global executive team helping to set company culture and strategy. Guru will also be an important part of the Verizon work that is helping both Oath and Verizon build out the future of global services and revenue,” he added, saying he would be spending more of his time “spread across strategic Oath opportunities and Verizon… leading our global strategy, global executive team, and corporate operations”.
At the start of the year Oath also named a new CFO, Vanessa Wittman, after the existing officer, Holly Hess, moved to Verizon to head up the aforementioned cost-saving program.
Reaction to the rumour of Armstrong’s imminent departure has sparked fresh speculation about jobs cuts on the anonymous workplace app Blind — with Oath/AOL/Yahoo employees suggesting additional rounds of company-wide layouts could be coming in October.
Or, well, that could always just be trolling.
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The infrastructure that underpins our lives is not something we ever want to think about. Nothing good has come from suddenly needing to wonder “where does my water come from?” or “how does electricity connect into my home?” That pondering gets even more intense when we talk about cellular infrastructure, where a single dropped call or a choppy YouTube video can cause an expletive-laden tirade.
Recently, I visited Verizon’s cellular switch for the New York City metro area (disclosure: TechCrunch is owned by Oath, and Oath is part of Verizon). It’s a completely nondescript building in a nondescript suburb north of the city, so nondescript that it took Verizon’s representative about 15 minutes of circling around just to find it (frankly, the best security through obscurity I have seen in some time).
This switch, along with its sister, powers all cellular service in New York City, including three million voice or voice over LTE (VoLTE) calls and 708 million data connections a day. High-reliability and redundancy is a must for the facility, where dropping even one in 100,000 connections would create more than 7,000 angry customers a day. As Christine Williams, the senior operations manager who oversees the facility, explained, “It doesn’t matter what percentage of dropped calls you have if you are that person.”
As we walked through the server rows that processed those hundreds of millions of connections, I was surprised by just how little digital equipment was actually in the switch itself. “Software-defined networking” has taken full hold here, according to Michele White, who is Verizon’s Executive Director for Network Assurance in the U.S. northeast. As the team has replaced older equipment, the actual physical footprint has continued to downsize, even today. All of New York City’s traffic is run from a handful of feet of server racks.
The key to network assurance is two-fold. First is multiple levels of redundancy at every level of the infrastructure. Inside the switch, independent server racks can take over from other servers that fail, providing redundancy at the machine level. If the air conditioning — which is critical for machine performance — were to fail, mobile AC units can be deployed to pick up the burden.
All equipment in the building is serviced by DC power, and in the event of an external power loss, two diesel generators connected to a large fuel storage tank will take over. The facility is also equipped with battery backups that can sustain the facility for eight hours if the generators themselves don’t function appropriately.
Diesel generators can sustain power to the switch in the event of an external power outage
At a higher level, the switch and its sister share all New York City cellular traffic, but either one could handle the full load if necessary. In short, the goal of the switch’s design is to ensure that that no matter how small or large a problem it might experience, there is an instant backup ready to go to keep those cellular connections alive.
The other half of network assurance is centralization, something that I was surprised to hear in this supposed era of decentralization. Cellular sites in an urban area like New York are often placed on buildings, as anyone looking at roof lines can see from the street. Given those locations, it can be hard to provide backup generators and other failover infrastructure, and servicing them can also be challenging. With centralization, increasingly only the antenna is located at the site, with almost all other operations handled in central control offices and switches where Verizon has greater control of the environment.
Even with intense focus on redundancy, natural disasters can overwhelm even the best laid plans. The telecom company has an additional layer of redundancy with its mobile units, which are placed in a “barnyard” owing to the names of the equipment stored there. There are GOATs (generator on a truck), and COWs (cell on wheels), and BATs (bi-directional amplifier on a truck). These units get deployed to areas of the network that either are experiencing unusually strong demand (think the U.S. Open or a presidential inauguration) or where a natural disaster has stuck (like Hurricane Harvey).
A barnyard filled with animal-named mobile cell infrastructure, including COWs, COLTs, HORSEs, and others
That said, both White and Williams noted that mobile cell deployment is much rarer than people would guess. One reason is that cell sites are increasingly being installed with Remote Electrical Tilt, which allows nearby cell sites to adjust their antennas so as to provide some signal to an area formerly covered by an out-of-commission cell. That process I was told is increasingly automated, allowing the network to essentially self-heal itself in emergencies.
The other reason their deployment is rare is that network assurance already has to handle a remarkable amount of surging traffic throughout the normal ebb and flow of a dense urban city. “Rush hour in Times Square is pretty heavy,” noted Williams. Even something as heavy as a parade through Midtown Manhattan won’t typically exceed the network’s surge capacity.
One other redundancy that Verizon has been exploring is using drones to provide more adaptive coverage. The company has been testing “femto-cell” drone aircraft designed by American Aerospace Technologies that can provide one square mile of coverage for about sixteen hours. A drone capability could be particularly useful in cases like hurricanes, where roads are often littered with debris, making it hard for network engineers to deploy ground-based mobile cells.
I asked about 5G, which I have been covering more heavily this year as telecom deployments pick up. Given the current design of 5G, White and Williams didn’t expect too much change to happen at the switch level, where most of the core technology was likely to remain unchanged.
The trend that is changing things though is edge computing, which is in vogue due to the need for computing to be located closer to users to power applications like virtual reality and autonomous cars. That’s critical, because 50 milliseconds of extra latency could be the difference between an autonomous car hitting another vehicle or a new support pylon and swerving out of the way just in time.
Edge computing in many ways is decentralizing, and therefore there is a tension with the increasingly centralized nature of mobile communications infrastructure. Switches like this one are getting outfitted with edge technology, and more installations are expected in the coming years. 5G and edge are also deeply connected at the antenna level, and that will likely affect cell deployments far more than the switch infrastructure itself.
Edge, internet of things, 5G — all will increase the quantity and scale of the connections flowing through these networks. In the future, a cellular outage may not just inconvenience that YouTube user, but could also prevent an automobile from successfully navigating to a hospital during a natural disaster. It takes backups, backups, and backups to prevent us from ever having to ask, “where does that signal come from?”
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Verizon is cutting off access to its mobile customers’ real-time locations to two third-party data brokers “to prevent misuse of that information going forward.” The company announced the decision in a letter sent to Senator Ron Wyden (D-OR), who along with others helped reveal improper usage and poor security at these location brokers. It is not, however, getting out of the location-sharing business altogether.
(Update: AT&T and Sprint have also begun the process of ending their location aggregation services — with a caveat, of which below.)
Verizon sold bulk access to its customers’ locations to the brokers in question, LocationSmart and Zumigo, which then turned around and resold that data to dozens of other companies. This isn’t necessarily bad — there are tons of times when location is necessary to provide a service the customer asks for, and supposedly that customer would have to okay the sharing of that data. (Disclosure: Verizon owns Oath, which owns TechCrunch. This does not affect our coverage.)
That doesn’t seem to have been the case at LocationSmart customer Securus, which was selling its data directly to law enforcement so they could find mobile customers quickly and without all that fuss about paperwork and warrants. And then it was found that LocationSmart had exposed an API that allowed anyone to request mobile locations freely and anonymously, and without collecting consent.
When these facts were revealed by security researchers and Sen. Wyden, Verizon immediately looked into it, they reported in a letter sent to the Senator.
“We conducted a comprehensive review of our location aggregator program,” wrote Verizon CTO Karen Zacharia. “As a result of this review, we are initiating a process to terminate our existing agreements for the location aggregator program.”
“We will not enter into new location aggregation arrangements unless and until we are comfortable that we can adequately protect our customers’ location data through technological advancements and/or other practices,” she wrote later in the letter. In other words, the program is on ice until it can be secured.
Although Verizon claims to have “girded” the system with “mechanisms designed to protect against misuse of our customers’ location data,” the abuses in question clearly slipped through the cracks. Perhaps most notable is the simple fact that Verizon itself does not seem to need to be informed whether a customer has consented to having their location polled. That collection is the responsibility of “the aggregator or corporate customer.”
In other words, Verizon doesn’t need to ask the customer, and the company it sells the data to wholesale doesn’t need to ask the customer — the requirement devolves to the company buying access from the wholesaler. In Securus’s case, it had abstracted things one step further, allowing law enforcement full access when it said it had authority to do so, but apparently without checking, AT&T wrote in its own letter to Sen. Wyden.
And there were 75 other corporate customers. Don’t worry, someone is keeping track of them. Right?
These processes are audited, Verizon wrote, but apparently not an audit that finds things like the abuse by Securus or a poorly secured API. Perhaps how this happened is among the “number of internal questions” raised by the review.
When asked for comment, a Verizon representative offered the following statement:
When these issues were brought to our attention, we took immediate steps to stop it. Customer privacy and security remain a top priority for our customers and our company. We stand-by that commitment to our customers.
And indeed while the program itself appears to have been run with a laxity that should be alarming to all those customers for whom Verizon claims to be so concerned, some of the company’s competitors have yet to take similar action. AT&T, T-Mobile and Sprint were also named by LocationSmart as partners. Their own letters to Sen. Wyden stressed that their systems were similar to the others, with similar safeguards (that were similarly eluded).
In a press release announcing that his pressure on Verizon had borne fruit, Sen. Wyden called on the others to step up:
Verizon deserves credit for taking quick action to protect its customers’ privacy and security. After my investigation and follow-up reports revealed that middlemen are selling Americans’ location to the highest bidder without their consent, or making it available on insecure web portals, Verizon did the responsible thing and promptly announced it was cutting these companies off. In contrast, AT&T, T-Mobile, and Sprint seem content to continuing to sell their customers’ private information to these shady middle men, Americans’ privacy be damned.
AT&T actually announced that it is ending its agreements as well, after Sen. Wyden’s call to action was published, and Sprint followed shortly afterwards. AT&T said it “will be ending [its] work with these aggregators for these services as soon as is practical in a way that preserves important, potential lifesaving services like emergency roadside assistance.” Sprint stopped working with LocationSmart last month and is now “beginning the process of terminating its current contracts with data aggregators to whom we provide location data.”
What’s missing from these statements? Among other things: what and how many companies they’re working with, whether they’ll pursue future contracts, and what real changes will be made to prevent future problems like this. Since they’ve been at this for a long time and have had a month to ponder their next course of actions, I don’t think it’s unreasonable to expect more than a carefully worded statement about “these aggregators for these services.”
T-Mobile CEO John Legere tweeted that the company “will not sell customer location data to shady middlemen.” Of course, that doesn’t really mean anything. I await substantive promises from the company pertaining to this “pledge.”
The FCC, meanwhile, has announced that it is looking into the issue — with the considerable handicap that Chairman Ajit Pai represented Securus back in 2012 when he was working as a lawyer. Sen. Wyden has called on him to recuse himself, but that has yet to happen.
I’ve asked Verizon for further clarification on its arrangements and plans, specifically whether it has any other location-sharing agreements in place with other companies. These aren’t, after all, the only players in the game.
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Sprint and T-Mobile, after years of going back and forth as to whether they are going to tie up two of the largest telecom providers in the U.S., have announced that the two companies have entered a merger agreement this morning.
The merger will be an all-stock transaction, and will now be subject to regulatory approval. That latter part is going to be its biggest challenge, because it will not only tie up the No. 3 and No. 4 carriers into the U.S. into a single unit, but also that international organizations hold significant stakes in both companies. SoftBank controls a majority of Sprint while Deutsche Telekom controls a significant chunk of T-Mobile. Following the administration’s intervention in the Broadcom-Qualcomm takeover attempt, it isn’t clear what will actually go through in terms of major mergers these days.
Bloomberg is reporting that Deutsche Telekom will have 42% ownership of the combined company, while SoftBank will own around 27% of the company.
As expected, the argument here is for the expansion of 5G networks as plans for that start to ramp up. T-Mobile argues in its announcement that it will help it be competitive with AT&T and Verizon as telecom companies start to roll out a next-generation 5G network, though it does in the end remove a carrier choice for end consumers in the U.S..
“The New T-Mobile will have the network capacity to rapidly create a nationwide 5G network with the breadth and depth needed to enable U.S. firms and entrepreneurs to continue to lead the world in the coming 5G era, as U.S. companies did in 4G,” T-Mobile said in a statement as part of the announcement. “The new company will be able to light up a broad and deep 5G network faster than either company could separately. T-Mobile deployed nationwide LTE twice as fast as Verizon and three times faster than AT&T, and the combined company is positioned to do the same in 5G with deep spectrum assets and network capacity.”
Both companies appeared to be finalizing the deal on Friday, when they set valuation terms and were preparing to announce the merger today. The deal values Sprint at an enterprise value of around $59 billion, with the combined company having an enterprise value of $146 billion. AT&T has a market cap of around $214 billion, while Verizon has a market cap of around $213 billion, as of Sunday.
I’m excited to announce that @TMobile & @Sprint
have reached an agreement to come together to form a new company – a larger, stronger competitor that will be a force for positive change for all US consumers and businesses! Watch this & click through for details.— John Legere (@JohnLegere) April 29, 2018
The transaction, the companies said, is of course subject to regulatory approval. But, pending approval, it is expected to close “no later than the first half of 2019.”
Disclosure: Verizon is the parent company of Oath, which owns TechCrunch.
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On December 14, the FCC will vote on whether or not to roll back Obama-era policies protecting a free and open internet. In fact, during yesterday’s announcement of the upcoming vote, the FCC neglected to mention the historic 22 million comments on the issue, the majority of which were opposed to its rollback. Read More
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Only a few days after announcing that it was selling 29 of its data centers to Equinix, Verizon today announced that it is selling its cloud and managed hosting business to IBM. The acquisition is expected to close later this year.
This move pretty much puts an end to Verizon’s loftier ambitions in the cloud — an area it started pursuing in earnest back in 2011 when it acquired… Read More
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Equinix, an international data center company based in Redwood City, California, announced today that it has completed the purchase of 29 data centers from Verizon for $3.6 billion. The acquisition greatly expands Equinix’s footprint, including giving it access to Latin America through a data center in Bogota, Colombia, along with a new presence in Houston, Texas and Culpeper, Virginia. Read More
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Verizon just released its first quarter earnings results, with adjusted earnings per share of 95 cents on revenue of $29.8 billion.
Revenue (minus divestitures and acquisitions) is down 4.5 percent from the first quarter of 2016. The numbers also fall short of what analysts had been predicting: EPS of 96 cents per share on revenue of $30.5 billion.
Verizon says there was a net decline… Read More
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Evie is bringing its app search technology to a new location on your phone. The startup has partnered with Verizon to launch a new product called AppFlash. Like Evie’s existing app launcher, AppFlash helps users find content and services across different apps — and Evie is working with Verizon to make this the default experience on customers’ Android devices. Read More
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