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From the Wall Street Journal

Global Crossing Agrees to Level 3 Communications’ Acquisition Bid

New movement in mergers and acquisitions in the telecom space has emerged as Global Crossing, a provider of telecom services to enterprises, government and telecom carriers, has announced an agreement to be acquired by Level 3 Communications Inc.

Level 3 will take ownership of Global Crossing for stock shares valued at $23.04 per share. The terms of the agreement dictate that Level 3 will issue 16 of its shares for each share of Global Crossing. The deal price is a 56 percent premium to GLBC’s closing price on Friday of $14.80.

The two companies said in a joint statement on Monday that the deal value is $3 billion, which includes Level 3’s assumption of $1.1 billion of Global Crossing’s net debt.

According to Level 3 Chief Executive Jim Crowe in a statement, the fit between the two companies’ networks, services portfolios and customers has proven to be compelling. Level 3 is a provider of fiber-based communications services.

The companies also said that ST Telemedia, which holds 60 percent of Global Crossing, has agreed to vote for the offer, subject to certain conditions.

A report in the Wall Street Journal shows the companies’ combined network will serve a customer set with owned networks in more than 50 countries and connections to more than 70 countries. The deal is expected to generate synergies from network expense savings, operating expense savings and reductions in overall capital spending.

The deal gives all Global Crossing equity holders 16 Level 3 shares for each of their common or preferred shares. With Global Crossing valued at $23.04 per share that makes for a 56 percent premium based on Level 3’s close Friday at $1.44.

According to Level 3 officials, the company adopted a shareholder rights plan designed to protect its federal net operating losses. The plan is expected to deter trading that would cause an ownership change that could hurt the company’s ability to use the tax assets. The deal brings the company significantly closer to such an ownership change.

For the past two years, Level 3 has posted straight quarterly losses as many businesses put their Internet- networking services spending plans on hold. Some analysts predict that business spending on tech is picking up again.

Susan J. Campbell is a contributing editor for TMCnet and has also written for

  • Written by Susan J. Campbell
  • Edited by Janice McDuffee

Although we like to believe that we’re safe a reminder may be in order. . .

Every day we get up, go to our computer at work, or our desk in the kitchen or wherever we like to start our day, and open our emails. We may grab a cup of coffee first, or whatever our favorite morning beverage is and take it with us planning to just sort through the newest inbox challenges and separate the info into categories, read through, file, mark for follow-up and reply to the important matters.
With all the latest and greatest services in place we regularly feel sure that whatever appears in our inbox has come from someone we know.
So, one day I open, read, file, open read mark, open, read the words ‘credit card’, ‘error’, and immediately think ‘what’s wrong with my credit card’? Then the creepy feeling goes up my spine when I realize this is not from my bank. What did I just open? What did I do? What should I do now? Did my new firewall protect me? Has my network been hacked? Do they have my private information?
I call my IT person and he assures me that there was no breach and this was a phishing expedition by someone trying to get my social security number attached to that credit card. That’s Nice. . . And I should feel safe now!? Deep down inside how can I know that I am really, for sure, still safe? It all felt very disturbing. I canceled my credit card and had another re-issued and reported the fraud. And then this week, a week after my experience, I see and hear that a regularly trusted email management company was breached and yet again I may be getting what looks like innocent emails because it will be my own, true email address.
What about you? Are you paying attention to the emails you open every day? Really? In our hectic lives containing so much data input we have to be aware that not everything is as it seems. Are you being vigilant? How are you being ‘safe’?
I welcome your thoughts and stories about your own experiences to share with others, so they can be aware. How many of you have had that exposed feeling and has it made you more aware of ‘phishing’ contact?

SIP Trunking Ready for Enterprise Growth in 2011

February 22, 2011

By Ed Silverstein, TMCnet Contributor

Session Internet Protocol (SIP) trunking appears ready for significant new investments from enterprises, a new study reports. Business leaders, meanwhile, are weighing how the deployments will impact operations and future initiatives, according to the study.

A survey of IT decision-makers at enterprises shows a little more than one-third of the respondents are implementing SIP trunking services “in a substantial manner” and “56 percent plan to increase their investments in this technology in 2011,” according to a press release on TMCnet.

The survey involved 138 business executives who have authority to make decisions on telecommunications. It was conducted by Voice Report.

BizTechReports says the trend toward SIP trunking is taking place despite “significant levels of confusion and trepidation about SIP trunking.” Cost, reliability and interoperability are some of the concerns voiced by survey respondents.

In addition, the survey found:

  • Some 56 percent plan to invest more money in SIP trunking during 2011.
  • Some 58 percent plan to deploy SIP trunking to additional locations during 2011.
  • Some 74 percent of the respondents identified “consolidation of telecom services” is a plus to using SIP trunking services.
  • Some 60 percent of SIP trunking users say they achieved 10 percent or more in savings over previous costs.
  • Some 56 percent plan to invest more money in SIP trunking during 2011.
  • Some 58 percent plan to deploy SIP trunking to additional locations during 2011.
  • Some 45 percent of respondents were concerned about SIP trunking service reliability.
  • Some 27 percent of respondents had issues and/or questions on the reliability of their SIP trunking services.

TMCnet’s Patrick Barnard recently interviewed Broadvox’s vice president οf Marketing and Sales, David Byrd (NewsAlert), who said businesses are choosing to transition to SIP for such factors as: cost, capex, and infrastructure. They say they choose a product based on factors other than cost. But the No. 1 reason is still cost. “It’s abοut saving money,” Byrd said.

Ed Silverstein is a TMCnet contributor

Edited by Tammy Wolf

Thinking Phone Networks wins 2010 Product of the Year Award from Internet Telephony Magazine.

Thinking Phone Networks (TPN), a leading supplier of SIP trunks and hosted VoIP and Unified Communications services, continues to receive accolades from those who monitor the telecommunications industry.  This week, TPN’s  “ThinkingSuite” unified communications platform received the 2010 Product of the Year Award from Internet Telephony, a major industry trade publication.  Additional information is provided in the attached press release.

ValuLink Technology Solutions has a proud and long standing relationship with Thinking Phone Networks.  Because of its vision, its operational excellence, and service quality levels so high it is able to provide a 99.999% service uptime SLA, TPN  holds premier provider status with ValuLink where a number of IP services and larger customers converge.

This week’s Internet Telephony announcement follows a string of many honors Thinking Phones has recently received, including their inclusion in both the Gartner Inc. “Unified Communications as a Service” Magic Quadrant, and ABI Research’s Hosted VoIP and Unified Communications Top 10 Matrix.

Thinking Phone Networks_Internet Telephony Product of the Year Award Press Release_02_08_11

Virtual Office Management Means Effective Communication

Bob Dylan had it right when he penned his lyrics “The times, they are a-changing.” In today’s highly competitive world, if entrepreneurs don’t catch up or keep up with the latest advances in technology and management, they’re doomed to fall behind.

A smart move that can save entrepreneurs money–and at the same time implement the latest in technology and management resources–is the virtual office. Very simply, a virtual office is one where employees may no longer be housed on site; in fact, they could be spread across the U.S. or even the world.

The term “virtual conversations” illustrates the idea perfectly–conversations that take place via instant messaging or on social networking sites such as Facebook, MySpace and chat rooms. In a virtual office, employees work out of their own homes, a rented office space or a larger, shared office building. The virtual office contains a computer, printer and fax machine, among other equipment. Often the computers have webcams which allow video conferencing.

For meetings, many employees use software such as GoToMeeting that enables them to see each others’ computer screens without leaving their own desks, even if the meeting is taking place thousands of miles away. This way, an individual can work with others and actually share their screen. This helps members linked in to the meeting to view slides or software from various sites.

Webinars use this process to reach out to a large number of participants at the same time. In Webinars, meeting attendees can also use their telephones to talk to the presenter or moderator and sometimes to each other. The cost of this equipment is more than offset by the savings realized by not having to pay travel expenses, site rentals or office space rent.

What do virtual employees like about this system? Sharyn Katz, accounting manager for Boston Software Systems Inc., in Sherborn, Mass., says, “I enjoy the independence and freedom of being able to set my own workflow based on the company’s needs and priorities.” Certainly, she must be prepared to “deliver the goods” when her boss needs them, but she has a great deal of leeway when creating her own schedule.

Others say they enjoy not having to report to an office on a regular basis. They can work from their own home or another space. In fact, they can be wherever they like–a client’s office, the library, the coffee shop, the beach–wherever they feel content and most productive.

Other employees say they enjoy being almost totally responsible for themselves with no boss or supervisor hanging around their desk, looking over their shoulder or pressuring them for work results. Many employees who prefer the independence of working alone in a virtual environment say they’re spared the bother, distraction and negative office politics found in the traditional office setting.

Deb Beck and Dave Linde, principals of Studio 18 Group in Wellesley, Mass., both say they’ve benefited from gaining strategic management clients from throughout the U.S. They’ve accomplished this not through face-to-face business development meetings, but rather by using electronic tools to increase their client base. Finally, virtual employees are spared the expense, frustrations and time loss commuting to a traditional office location.

Along with these positive features obviously come negative ones. The chief complaint most virtual employees mention is social isolation. There’s no water cooler or “coffee klatch” for a casual exchange of comments, work-related or not. They can’t simply walk down the corridor to chat with a colleague, even for a few minutes.

For these staff members, seeing other employees on a computer or video conferencing screen simply does not replace personal contact. As for time off, those without firm personal or professional boundaries can end up spending much of their non-work hours back at their desk, pounding out more work and forgetting about the importance of work-life balance.

Another drawback is that it’s too easy to start work late, run an errand or find a distraction rather than doing one’s work. Frequently, these behaviors are a means of compensating for the lack of having other people to interact with. A further disadvantage of a virtual office when compared to a traditional one is that in a conventional office, if employees need additional guidance or direction on a project or task, they can simply walk down the hall to speak with someone. In the virtual office, it sometimes takes more time to get information, especially when the key person, or an alternate, isn’t available.

Given these positive and negative factors, what caveats exist for the effective entrepreneur who wants to create a virtual office?

First, hire the right people. This is true in any company, but even more so in the virtual one. Deb Beck of Studio 18 Group says that successful virtual employees are “self-starters and self-disciplined–it’s definitely lonely working in a vacuum, and they need to be able to deal with this.” Katz echoes Beck, saying that effective virtual employees, “need to connect with other outside communities,” not just the virtual work environment they’re in.

The virtual leader needs to have the utmost trust in new hires. The leader will not physically see or interact with employees as easily as in a traditional company. Therefore, business owners in these settings must have an extremely high level of confidence in their employees. Employees need to be exceedingly self-reliant and committed to the task and the organization; self-motivated to work independently and without much supervision; and dedicated to the success of their work. Productivity, self-efficiency and autonomy are essential.

Even though virtual employees need to be self-reliant and self-directed,the effective virtual entrepreneur needs to set realistic benchmarks and check-in times. To be able to manage someone from a remote location you must have some type of criteria to measure progress and success; e.g., total contacts made or total widgets produced. Some leaders reserve a particular time of the day or week for call-ins or staff meetings, using GoToMeeting or video-conferencing products.

Communication needs to be sufficient, frequent and intense enough to satisfy both the employer and the employee. Many set interim deadlines for projects so there are no surprises or gaps. Some, like Boston Software Systems, Inc., organize regional or national retreats once or twice a year. The purpose of these get-togethers is varied: opportunities for social interaction with employees who may never have met or who need to get to know each other; management and productivity purposes to discuss and improve processes, policies and procedures; information sharing; and creating a sense of unity, team building and esprit de corps.

A virtual office in this era of cost-cutting can save you a great deal of money. However, the prospective virtual entrepreneur needs to enter into this state-of-the-art management concept with goals of hiring the most appropriate employees and creating a fail-safe process.

By David Javitch

David G. Javitch, Ph.D., is’s “Employee Management” columnist and an organizational psychologist and president of Javitch Associates, an organizational consulting firm in Newton, Massachusetts. With more than 20 years of experience working with executives in various industries, he’s an internationally recognized author, keynote speaker and consultant on key management and leadership issues.

Insight Reports Businesses’ Increased Spending on Telecommunications Services

Double-digit growth over the next five years in terms of total spending has been predicted for the US telecommunications industry. Insight Research’s new market research report titled “Telecom Services in Vertical Markets, 2010-2015” reports this speculation. The sluggish economy with little or hiring in many industries will however not impact this expected growth.

At the end of 2010, $146 billion for telecommunications services were estimated to be spent by all US businesses. According to the Insight report, by the close of 2015, spending on wired and cellular calling will grow to $269 billion. A compound annual growth rate or CAGR of 13 percent is therefore represented over the forecast period.

All the growth in the telecommunications industry is being created by business spending for cellular and other wireless services. Over the five year forecast horizon, all US business spending for wireline services will be essentially flat. Over the period of 2010-2015, wireless expenditure is however expected to grow at a CAGR of 23.5 percent.

The market segments of construction; financial, insurance, and real estate; professional business services; and transportation will be the biggest spenders on cellular services. 14 vertical industries categorized by the NAICS have been analyzed by the study. Corporate spending for wireline and wireless telecommunications services in each of the 14 industries has been the focus of the study.

In a release, Robert Rosenberg, president of Insight said, “The year 2010 – like 2009 – was all about a shaky economy, unemployment hovering at 10 percent, and retrenchment in every industry sector we examined.”

According to Rosenberg, there are no new businesses being formed. Existing businesses are also retaining fewer employees. Existing employees, however are made more productive with wireless services. New ways to reach potential customers are also provideded to business with wireless services. Wireless is therefore responsible for the growth in demand for telecom services.

By Calvin Azuri, TMCnet Contributor

Calvin Azuri is a contributing editor for TMCnet.

Edited by Jennifer Russell

ABI Research Ranks Thinking Phone Networks in Top 10 Service Providers

ABI Research, a provider of in-depth analysis and quantitative forecasting of trends in global connectivity and other emerging technologies, recently published the results of the latest study, the “North American Hosted VoIP and Unified Communications  Service Providers Matrix.”

The study has ranked Thinking Phone Networks among the Top 10 North American Hosted VoIP and Unified Communications Service Providers based on its recent designation by Gartner, Inc., as a unified communications Magic Quadrant Visionary.

ABI Research has developed the Top 10 Matrix as an analytical tool, which has been designed to provide a clear understanding of vendors’ positions in specific markets and based on several unique criteria such as innovation and implementation among others. The ABI Research report states that the North American hosted VoIP and Unified Communications market continues to display strong growth, driven by the need enterprises’ have to cut capital expenditure through outsourcing their communications.

In a release, the president and CEO of Thinking Phone Networks, Steve Kokinos, said, “Thinking Phone Networks is honoured to be ranked by ABI Research among the Top 10 hosted unified communications service providers. We view our inclusion in the Top 10 as recognition not only of rapid growth, but also of the real value our cloud-based unified communications services are providing to enterprises seeking to streamline business processes.”

Thinking Phone Networks, is focused on unified communications-enabling enterprise organizations and the company’s innovative ThinkingSuite cloud ecosystem is a powerful combination of core unified communications capabilities with a powerful analytics engine and application integration on a single hosted platform. The Unified Communication services have significantly changed the way distributed enterprises collaborate, streamline business processes, and respond to customers. The cloud-based ThinkingSuite unified communications services are available in the market for immediate enterprise deployment.

By Carolyn J Dawson, TMCnet Contributor

To learn more about Thinking Phone Networks please view the Vendor page and click on Thinking Phone Networks.

How to Effectively Manage Storage and Protect Data in the Cloud

Organizations of all sizes have to deal with an economic reality when it comes to cloud computing: cloud computing requires storage. These budgets continue to remain relatively flat even as demand for cloud storage capacity grows at a rate of nearly 60 percent per year. Here, Knowledge Center contributor Stephen Wojtowecz explains how organizations can effectively manage and protect the data stored in cloud environments.

How to Effectively Manage Storage and Protect Data in the Cloud

The shift to cloud brings new challenges to data storage, which is already complicated by virtualized systems, tape storage, network-attached storage (NAS) and other data storage formats. Because all data in a cloud lives in the same shared system, management of the data becomes paramount in maintaining service levels and securing critical business information.

Organizations should evaluate how their storage resources can most effectively be used in the cloud. Before they can do that, it’s best to categorize the model of cloud computing in the organization.

Three types of cloud computing dominate the landscape:

  • private (in which a company hosts, owns and manages its own cloud infrastructure)
  • public (in which a third party owns and manages the infrastructure)
  • hybrid (in which the public and private models are combined)

In hybrid models, the public cloud often acts as an overflow facility for the private cloud or is used to satisfy other application needs such as off-site information protection. The underlying characteristic of each is that cloud services need to be available and reliable to users, while effectively optimizing resources and providing a pay-as-you-go delivery model.

Keys to effective cloud storage management
Despite advantages of the cloud, not all organizations gain the maximum benefits. When outsourcing business processes to the cloud, organizations can select service options such as performance and capacity levels that best suit an organization’s particular needs. Crucial components for storing critical data in the cloud are storage management, data protection and disaster recovery.

For example, a retail company could opt to store and manage data (such as in-store transactions, online purchases and supplier details) on a private cloud because it allows for better control and access to sensitive data. The retailer, however, might decide that keeping copies of data for disaster recovery on a public cloud service is a lower-risk option.

Whether it chooses to leverage a public, private or hybrid cloud model, the company needs to ensure that their cloud has automated data lifecycle management (DLM), built-in data reduction and advanced application protection, to name a few.

Data lifecycle management (DLM)
When assessing their cloud model, organizations should take the following two items into consideration:
Item No. 1: DLM
To better plan and manage storage in cloud environments, organizations must efficiently use their resources by placing data on the most appropriate tier of storage that meets service delivery requirements and then eliminate data that’s no longer needed. For example, a healthcare provider who just admitted an emergency patient will need to access the patient’s recent records quickly.

This type of Tier 1 data should be stored on high-quality, faster media storage, while the patient’s older records may be archived on tape (which is slower to access). Either way, the cloud service should provide a range of service-level options that balance performance and costs based on the expected use of the stored data.

Organizations also need to ensure that their data is segregated to ensure that confidential information doesn’t get into the hands of others, even in a disaster recovery scenario. Organizations should also ensure that they have applications that provide reporting tools that identify where data is located and can sort by access or saved dates, owners and numerous other filters; automation of data migration between multiple tiers of storage based on policies to move unneeded data from primary storage systems, and transparent operations to minimize impact on other key operational processes.

With these tools, organizations can set policies to take appropriate action or move unnecessary data that clog storage systems and run up usage charges. This automated migration creates a more efficient operating environment, reduces administrative costs and the need to acquire extra hardware.

Item No. 2: Storage resource management (SRM), utilization and optimization
An easy way to visualize storage in the cloud is thinking of it as a huge warehouse. However, this design can obscure visibility into individual storage elements. For example, over time, a cloud service provider may add new storage systems from different vendors, choosing the best products available at the time of purchase. How can you tell which devices are performing as expected and which are creating service delivery bottlenecks?

Although storage resources are shared in a cloud, they still require management based on accurate, timely information. Cloud administrators need tools capable of aggregating and displaying that information, then acting on it in a centralized, optimized way that fulfills business goals. By giving administrators consolidated control over storage systems, storage networks, replication services and capacity management, it restores that visibility to help storage managers establish available capacity, evaluate security, correlate backup/restore performance to Recovery Time Objectives (RTOs) and perform many other necessary functions.

Data protection in the cloud
Cloud services rely heavily on keeping data and applications continuously available. Failure to provide access due to data disasters (such as database corruption, virus attack, and hardware failure or local/regional disasters) could be catastrophic to any organization. Data protection processes such as backup and recovery need to be designed into cloud environments from the start—not added later. Before establishing your cloud infrastructure, it’s important to be familiar with technologies and products used for storage management, protection and disaster recovery.

It’s possible to obtain storage and protection services from companies that specialize in storage—assuming they provide management, data protection and disaster recovery among its services. However, outsourcing storage and applications can put your company at risk.

For example, what would happen if your critical applications and cloud data are hosted on a system that experiences a major failure? You should ensure that your service provider is performing backups as often as necessary to meet contracted Recovery Point Objectives (RPOs), which is what an organization determines is an “acceptable loss” in a disaster situation. You must also have tested the restore processes to meet contracted RTOs, which is the duration of time in which business processes must be restored after a disaster or disruption to maintain business continuity.

Planning for the future
Businesses feel the pressure of quickly implementing cloud models, making development of the environment challenging as companies need to find what suits their needs now as well as for years to come. The exponential growth of data combined with the proliferation of data-intensive services is a significant contributor to why data storage is expanding at an even greater pace in the cloud. However, users need to be mindful as storage clouds still present challenges. These challenges include managing cost, intense computing power, security and data mobility across cloud providers—all factors that affect quality of service (QOS).
As solutions come to market to tackle these challenges, companies must prepare themselves for new innovations as the next wave of storage cloud computing evolves. Ultimately, organizations will need to integrate the functions and data in the cloud with various aspects of their business and collaborate with their business partners.

By: Stephen Wojtoweck
published on

IPhone Battle: Verizon vs. AT&T

Panting for a Verizon iPhone? Read this first. We weigh the pros and cons of the two network providers

By Peter Burrows

For more than three years, iPhone owners have grumbled about dropped calls and slow service on AT&T (T), the exclusive cellular network for Apple’s (AAPL) transformative device. Now they’ll have the chance to see if Verizon (VZ) can do any better. The company recently announced it will start selling iPhones on Feb. 10. (Existing customers can pre order the phone on Feb. 3.) For those who still haven’t chosen sides in the AT&T vs. Verizon showdown, consider these points before signing a contract:

Price: Verizon customers will pay the same as AT&T’s—at least for the device itself. A 16-gigabyte iPhone costs $200, while the 32-gigabyte model is $100 more. The more important retail factor, however, is the monthly service charge, and Verizon hasn’t released any details yet. The industry scuttlebutt is that the company will offer an all-you-can-eat data plan, which AT&T stopped doing last year to keep data hogs from straining its network. Verizon currently charges $30 a month for the unlimited plans on other smartphones, with voice and text messages costing extra. That’s $5 more than what AT&T charges its heaviest data users, who can download up to 2 gigabytes of data per month. For those who like to stream The Daily Show with Jon Stewart while in line at Costco (COST), $5 may be a small price to pay.

Quality: It’s hard to know whether AT&T deserves the battering it has received for poor network quality. Each carrier’s coverage differs from area to area. AT&T increased its investment in wireless infrastructure by over $2 billion in 2010, and says it’s improving. As of last August, however, the percentage of dropped calls on AT&T’s network had risen to 5.8 percent, compared with 2 percent for Verizon, according to a survey by Changewave Research. Infonetics Research co-founder Michael Howard says AT&T is more conservative with its network investments and took longer to upgrade from copper wires to fiber-optic cables and other cutting-edge gear. “Verizon planned its network with greater foresight than anyone else,” says Recon Analytics analyst Roger Entner. “They have a very well-built network, and they don’t cut corners.”

Features: The carriers’ iPhones are nearly identical, but where they differ, AT&T has the advantage. Verizon’s network is based on a technology called CDMA, which runs voice and Internet over different tracks. That means Verizon’s iPhone owners won’t be able to surf the Web or use apps while on a call. AT&T users can, and the company says that more of its customers use the simultaneous talk-and-surf capability every day than watch videos or use GPS navigation.

Verizon users can, however, pay extra to transform their iPhone into a Wi-Fi hotspot, and share its cellular signal with up to five other gadgets. AT&T’s iPhones currently link up with only one other gadget, and connect with them via a more limited Blue tooth signal.

Speed: A big part of AT&T’s promotional pushback against Verizon is that its network is faster. Thanks to recent upgrades, AT&T boasts speeds of 6 megabits per second—fast enough to download a song in four or five seconds, and roughly three times what most Verizon subscribers see. Yet that speedy connection is available only in regions where AT&T has finished upgrading the wires that connect cell towers to the Internet, a process that won’t be finished until at least 2013.

Future Proofing: The Verizon iPhone will likely have a short stint in the spotlight. Every year since 2008, Apple has announced a new, upgraded iPhone in early summer. Buying a Verizon iPhone in February likely means missing out on a sleeker version in a few months’ time—although that’s always a worry when buying gadgets.

Both AT&T and Verizon are building next-generation 4G networks with turbo charged speeds. Neither existing iPhone works on them, but analysts expect Apple to introduce a 4G iPhone within a year or so. Verizon is much further along—its 4G service is already available in 38 cities—so its service is a better bet for those hoping to upgrade to 4G speeds as early as possible.

Of course, the iPhone matters not just to Verizon’s customers but also to its investors. No one doubts that winning Apple’s “Jesus phone” will increase Verizon’s subscriber base. UBS Securities (UBS) expects the company to win 3.5 million new customers in 2011, while AT&T, Sprint (S), and T-Mobile will lose around 1 million between them.

Managing that growth won’t be simple. Verizon is expected to pay $5 billion or so to subsidize new iPhone owners this year, which could drag down profit margins. Walter Piecyk, an analyst at brokerage firm BTIG, expects the opposite. He says the iPhone bonanza will allow Verizon to spread fixed costs like stores and TV ads across more units, boosting margins from 46.4 percent last year to 48.1 percent in 2012. If Verizon’s network can handle the new subscribers, he says, it will further damage AT&T’s brand. “They’ve had the iPhone for four years, and they’re still trying to catch up with demand.”

The bottom line: AT&T must now compete with Verizon for iPhone customers. The latter offers a more reliable but slower network.

Burrows is a senior writer for Bloomberg Businessweek, based in San Francisco.