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TMCNet:  The Philadelphia Inquirer PhillyDeals column

[January 23, 2013]

The Philadelphia Inquirer PhillyDeals column

Jan 23, 2013 (The Philadelphia Inquirer - McClatchy-Tribune Information Services via COMTEX) -- Because more American businesses cut their old phone cords and buy Internet- and cloud-based services, New York Stock Exchange-listed Warwick Valley Telephone Co. said Tuesday it is dropping its century-old name, which recalls its origin as a local pole-and-wire network, in favor of that of its Philadelphia-based subsidiary, Alteva, one of the growing providers who sell "unified communications" linking clients' voice, e-mail and data.

Warwick bought Alteva from owners led by founders Bill Bumbernick and Mark Marquez for $17 million last year. Alteva moved its headquarters last summer to a glass-walled "innovation center" in vacant Wells Fargo Bank space at 401 Market St., from the nearby Bourse.

The parent company's last quarterly Securities and Exchange Commission report shows Alteva accounted for more than half the combined company's sales, which topped $30 million last year.

Warwick boss Duane Albro runs the combined company; he's often in Philadelphia, staying at the Omni or Monaco and calling on his president and chief operating officer, Alteva veteran David Cuthbert. "The market is very fragmented; there are a lot of independents" who offer hand-holding service to midsize companies, while Internet giants like Comcast and Verizon provide similar connections for big corporations that can service their own networks, he told me.

The largest independent company in the sector, California-based 8X8 Inc., is about four times as large. Privately held, West Conshohocken-based Evolve IP, which offers other computing services in addition to communications, reported sales of $17 million in 2011, which "we exceeded dramatically last year," with new customers and acquisitions, chief technology officer Scott Kinka told me. Alteva employs 150, up from 120 last year. Evolve IP employs 80 locally.

How do these firms win business After all, any broadband user can add voice-over-Internet protocol (VoIP) services using free or cheap software.

But "in a business situation, it's different from using Vonage or Skype. Those are not business-class services," Tom Hopkins, telecom manager at the Philadelphia-based U.S. arm of British clinical drug trial provider Premier Research Group, told me.

Reliable phone service depends, for example, on careful and redundant routing, an easy-to-reach help desk, and steady relationships with software, hardware and service providers, Hopkins says. "If a line goes down in a legacy system, your voice service is tied [to] that, and callers just get dead air. With Alteva, you get a voice mail. And I can manage this system from anywhere." Settled Egan-Jones Rating Co., the Haverford credit-ratings firm that predicted the 2008 mortgage crash, has settled the SEC's complaint that it exaggerated its record on its application for an SEC license.

Egan-Jones has agreed to stop rating asset-backed and sovereign-backed debt for the next 18 months; it will continue to rate "corporate, bank, financial and insurance securities" for its investor clients, William Hassiepen, vice president and co-manager of Egan-Jones' rating desk, told me.

The SEC accused Egan-Jones of "falsely stating" that it had met all legal standards for past ratings on asset-backed and foreign-government-backed bonds. But Egan-Jones actually failed to qualify, the SEC said, because it hadn't made those ratings "available through the Internet" or other public means.

Founder Sean Egan had complained that the SEC aggressively pursued his small firm for paperwork problems, while failing to pursue more costly failures by Standard & Poor's and Moody's. In a statement, Egan called the settlement "agreeable." -- Contact Joseph N. DiStefano at 215-854-5194, or @PhillyJoeD on Twitter.

___ (c)2013 The Philadelphia Inquirer Visit The Philadelphia Inquirer at Distributed by MCT Information Services

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