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News recap: Verizon snaps up AOL mobile technology

In telecom news, Verizon snaps up AOL for mobile video and advertising technology; data center interconnect shows major revenue growth.

This week in telecom news, Verizon put $4.4 billion on the table to buy AOL to acquire its mobile video and advertising technology, hoping it will take the telecom operator to the next level in streaming video.

British Telecom and Boingo Wireless are two of the first Internet providers to upgrade to the fastest Wi-Fi speed. As more providers begin to upgrade, many wireless hotspots are expected to see an increase in Wi-Fi quality. Global analyst firm Ovum has also completed a study highlighting a significant increase in revenue for data center interconnect from 2013 to 2014.

Verizon scores with AOL mobile technology

In news that took the technology world by storm, Verizon, the largest American telecommunications provider, bought AOL for $4.4 billion. America Online (AOL) was forerunner in the days of "You've got mail" dial-up Internet, but became a has-been with the progression of Internet speed. Why is Verizon buying the one-time juggernaut? The answer is because of the company's most valuable feature: Its mobile video and advertising technology. Verizon is the wireless provider for 109 million mobile devices, and layering this little-known technology with Verizon's desire to grow its mobile technology could be a goldmine for the telecommunications giant.

The move comes at a time when direct competitors of Verizon in the cable and telecom spaces are also making major acquisitions to expand their brands. Comcast recently bought NBCUniversal, while AT&T is acquiring DirectTV.

"Verizon's vision is to provide customers with a premium digital experience based on a global multiscreen network platform," said Verizon chairman and CEO Lowell McAdam in a statement. 

Despite Verizon's lust for AOL's mobile advertising technology, AOL still has 2.3 million dial-up Internet customers that provide most of its profit, according to AOL's recent earnings report. According to The Washington Post, most of AOL's revenue comes from advertising, but dial-up brings in the money.

The Federal Communications Commission has announced it does not need to review the deal.

Hotspots to feature faster Wi-Fi

Wireless service operators are expected to invest more this year in 802.11ac high-speed upgrades to hotspots, also called carrier Wi-Fi.  Infonetics Research said operator investment in carrier Wi-Fi equipment will increase 88% this year, up from $336 million in the second half of 2014.  Service opportunities like data analytics, location-based services and Wi-Fi roaming are driving investment in access points and hotspot controllers.

Wireless operators haven't made many announcements yet, according to PCWorld, adding that a range of fixed, cable and mobile operators have already started or are planning upgrades to 802.11ac. British Telecom and Boingo Wireless have already begun upgrading Carrier Wi-Fi to 802.11ac.

In addition to offering higher speeds, the Wi-Fi upgrade helps reduce and remove bottlenecks by allowing networks to transmit data to multiple users with multiuser MIMO (multiple-input multiple-output).

Public hotspots will be the biggest beneficiaries of this upgrade.

New study shows major data center interconnect growth

Revenue for data center interconnect (DCI) is continuing to grow at a rapid pace, according to a recent Ovum study. The study showed that 2014 revenues grew more than 16 percent from 2013 and rose to $2.5 billion.

Ovum said the recent surge in data center build-outs has made DCI the fastest growing application for optical networking equipment. In addition, growth in the number of data centers clustered in metro and campus environments is increasing the requirement for high-capacity, low-cost optical networking gear that is fundamentally different than traditional metro optical networking equipment.

With the global DCI market projected to grow at 10.5% CAGR over the next five years, DCI revenue is expected to exceed $4.2 billion by 2019.

"2015 is shaping up to be a very exciting year as metro-optimized 100G and adaptable-rate flex-spectrum 200G/400G capabilities enter the DCI market," Ovum analyst Ron Kline said in a statement.

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