On Mon, 06 Oct 2008 23:45:15 EDT, Patrick Giagnocavo said:

If you assume for example, that Verizon has notes of 10-year terms, then (if the notes are spread evenly) they will need to borrow some $4Billion in the next 12 months.

Close but no cee-gar. They'll need to come up with $4B to pay off the notes. There's no requirement that they borrow to do it. They can do it out of their revenue stream, for instance, just like most people who have to make a mortgage payment will do so out of their paychecks, rather than borrowing to do it (and in fact, if a person or company is relying on borrowing to pay off previous debt, that's a Bad Sign).

Are there any recommendations from an operational perspective, should one or more of these or other telecom companies have such problems?

Make sure that you have more than one upstream provider, preferably three providers minimum so that if one of them is suddenly shut off, you still have resiliency. In general, your upstream providers' operational networks and you, the customer connected to that operational network, are considered to be valuable assets so if a company falls into Chapter 11, there is a good chance that another company will acquire the assets. At the operational level, this is practically invisible until they start to consolidate data centers, prune unprofitable customers, etc. But, sometimes the financial community looks at an industry and decides that there is too much capacity chasing too few dollars, and the best solution for all concerned is for one of more companies to fail hard. This happened in Europe a few years ago when KPN-Qwest bought Ebone's pan-European backbone and then promptly declared bankruptcy. The receivers sent everyone home, shut down the power to all the sites, NOC included, and auctioned off all the equipment piecemeal, except for the fibre network. That went to another company that was also building a competing pan-European fibre network and which also went through a bankruptcy process, shed all its employees, and then was reborn. Not sure what happened to the customers in that case. So this could happen in the USA, and the solution is to spread the operational risk by maintaining 3, 4 or 5 upstream relationships. Don't risk losing 100% or even 50% of your connectivity. Get it down to 33% or 25% or 20% depending on what you can afford. Having a connection to a local Internet Exchange of some sort is probably a darn good idea. If you aren't peering with your local competitors, maybe you should start to do so, and reduce the risk to your community. In smaller markets, not NFL cities, maybe you should consider using different upstreams than your competitor to reduce the risk on a community-wide basis. Also, remember that this whole crisis could blow over in a few months, and if it does, you need to be prepared for increased traffic on your network, increased customer connections, etc. That too, is a risk to evaluate. --Michael Dillon