A Few Clear Winners Emerge from FCC 911 VoIP Order
While last week’s FCC decision requiring VoIP operators to offer 911 service to their customers in 120 days presented huge challenges for Vonage and other independent VoIP operators, the decision also created a number of potential winners, as VoIP independents look for ways to address the mandate. Other VoIP firms that have some 911 functionality built into their service are using that as a selling point
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Most notably, the stock prices of Level 3 and Intrado popped up sharply Thurs. after the FCC made its decision. After the much-anticipated ruling by the FCC, Level 3 shot up 18% to close at $2.05. Level 3 has since retreated, to close at $1.80 on Mon. Intrado increased 13% to close at $12.58 Thurs. It has since retreated to $12.29 at the end of regular reading Mon. Intrado also benefitted from 2 ratings upgrades tied to the regulatory ruling.
Level 3, a 3rd-party 911 access provider, sells cable companies and other VoIP operators a service allowing them to provide 911 service. Buying the service may offer VoIP providers one alternative to meet the ruling. Level 3 said last week its service currently covers 66% of households nationwide. Intrado, meanwhile, connects carriers to the 911 system and already works with other national carriers, including the major wireless operators.
Numerous other companies last week put out press releases offering E-911 solutions or stressing that as a carrier they were E-911 ready, after or leading up to the FCC vote. Pac-West, for example, put out press releases before and after the order was approved highlighting the 911 service it offered for sale to VoIP providers and other carriers.
VoIP guru Jeff Pulver told us Mon. he doesn’t see any winners from last week’s order, even if momentum investors drove up the prices of a few companies when the decision was unveiled. Pulver said these same investors will likely sell off the stock just as quickly as they jumped in.
“I don’t see any major winners based on the announcement. I see losers. I see our future possibly being marginalized,” Pulver said. “I certainly wouldn’t see any players as lock-down winners… I'm glad to see some stocks that are repressed gain some momentum, but that’s short term.”
UBS disagreed. The analysis firm said in a research note the decision could provide a “blessing in disguise” for carriers like Vonage. “Vonage has experienced dramatic increase in subscriber additions since the launch of its nationwide advertising campaign in 4Q04,” UBS said. “The company has exceeded 650,000 lines in service and is adding more than 15,000 lines per week” with 1 million subscribers likely by the end of 2005. UBS added: “While imposing additional costs on the providers, we believe that once Vonage and other VoIP providers roll out the 911 capability, it would help to add further ‘legitimacy’ to their offerings, possibly making it a bigger threat for Bell primary line substitution.”