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SMART Letter #90 -- October 15, 2003
Copyright 2003 by David S. Isenberg
isen.com - "getting the good news back home"
isen@isen.com -- http://isen.com/ --
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********* new!!! isen.blog -- http://isen.com/blog
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CONTENTS
> Quote of Note: "The Node" on Neil Postman's Questions
> The Telecom Downturn -- Whose Problem is it?
> Quote of Note: Dana Frix on 2003 FCC Triennial Order
> If it's Funny it must be True, by Scatt Oddams
> Conferences on my Calendar
> Copyright Notice, Administrivia
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Quote of Note:
"The Node" on Neil Postman's Questions
"The
questions that Postman proposes we ask of technologies are intended
to help us filter out the jargon of progress, efficiency, and whizbangery
and to perceive the crucial, central and oft-overlooked whys, hows,
and implications of technology. What is the problem to which this
technology is a solution? Whose problem is it? Is it actually a problem
at all? Who will pay for it? Who will benefit from it, and who stands
to suffer from it? What new problems might arise from solving this
one?"
From "The
Node," January 2000, http://tinyurl.com/r0ct
in memoriam, Neil Postman, 1931-2003.
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The Telecom
Downturn -- Whose Problem is it?
by David S. Isenberg
Neil Postman,
who died on Sunday, October 5, was known for
asking provocative questions. One of his best was, "Whose
problem is it?"
So let's ask.
The telecom "downturn" -- whose problem is
it? With the Internet still growing at 100% per year, with
always-on services in 20 million U.S. homes and a 40% annual
growth rate, with Skype and SIPphone and Vonage and Addaline
and Packet8and CallWave, who is concerned about a downturn?
With Wi-Fi access points for $39.00 at Staples that provide
network speeds ten times faster than telephone or cable
company will give me for $39.00 *a*month*, is it a downturn
or a horrendously inefficient market? Who, exactly, is
concerned? Whose problem, exactly, is this so-called
downturn?
In the circles
I've been traveling in lately, the dominant
metaphor is medical. Telecom is a *sick*patient*. I
went to a conference on, "*Remedies* for Telecom *Recovery*"
http://www.citi.columbia.edu/CITI_Oct3_Agenda.doc
.
The Wall Street Journal says, "Telecom-Industry *Recovery*
May Be Far Off" http://tinyurl.com/r067
. And an industry
press release declares, "TIA Releases Five-Point Strategy
for Sustained Telecom *Recovery*" http://tinyurl.com/r06x
.
The talk of
today's telecom turmoil as a disease leads us
to think that the telecom industry's pundits, professors,
bankers and regulators will act like do-no-harm doctors,
trained to make an accurate diagnosis and apply the right
remedy -- one that's both effective and safe -- so the
patient will return to health.
Who's the patient?
What are the symptoms? Where is the
pain? Eli Noam, one of the leading promulgators of the
disease-recovery metaphor, and one of the organizers of the
"Remedies for Telecom Recovery" conference, outlines 11
symptoms in the October 1 issue of America's Network
( http://tinyurl.com/qqcq ).
Which parts
of the Body Telecom have the most acute pain? Quoting Dr. Noam directly,
here are the symptoms:
"1. Telecom capital
spending is down by two-thirds
since 2000, threatening future innovation.
2. The debt bomb is ticking. Some European companies
must earn $10 million a day for debt service."
3. Telecom firms face costlier access to financial
markets, as investors adjust their perception of
risk. Already the default rate for telecom firms
has zoomed ahead of that for business as a whole."
4. Equipment firms face bankruptcy unless investment
picks up.
5. Job losses will increase as offshore outsourcing
is used to lower costs.
6. R&D and innovation are slowing down, with long-term
implications.
7. Inefficient mergers of the go-go years are coming
apart.
8. Cellular is reaching saturation, while 3G lags behind
projections that led to extravagant auction bids in
Europe.
9. Long distance prices face continuing commoditization
and price deflation.
10. Investment slowdown and cost cutting is leading to
decline in service quality.
11. In the US broadband market, cable TV networks have
taken the lead and are forcing local telecom companies
into costly fiber upgrades, although they lack the
content of cable."
Here's my best
shot at whose problem it is:
+ Eight of
the symptoms above give specifical pain to
the telecom financial community (1,2,3,4,7,8,9,11).
+ Seven cause pain for large established telecom
equipment makers (1,2,3,4,7,8,9).
+ Six would cause pain for service providers
(2,3,8,9,10,11).
+ Three cause pain for telecom employees (1,4,5).
+ Three bring pain to customers (1,6,10), though
it is hard to argue that the R&D slowdown (1,6)
causes customers pain in any near-term sense.
It is plain
that the pain is financial in the main. The
financiers of the telecom bubble are hurting the worst.
Their large-cap and formerly-large-cap sucker investments
-- in both equipment and service sectors -- are also
seriously diseased.
Now, we're speaking
in generalities about broad categories.
Sure, it could be argued that most of the symptoms
identified by Dr. Noam hurt all the stakeholders in the
telecom community (except for #11, which sounds like good
old healthy competition to me, unless you're an ILEC).
Moreover, one could pick specific quibbles endlessly.
Nevertheless, the trend is clear. The pains of hundreds of
thousands of telecom employees, and former employees, carry
little weight in Dr. Noam's symptomatology. And the value
proposition offered to the end-user customer provides
virtually no guidance to the list.
An employee-centered
problem list would start with failed
management. I'm not just talking about Winnick, Ebbers,
Nacchio and Rigas. Most of the senior telecom executives
that I saw close-up at AT&T simply did not understand the
old business they were in, let alone how their business was
changing in response to new technologies. Also on the
employees' symptom list we'd find unwieldy organizations
that were unresponsive to bottom-up knowledge, bumbled
through quotidian operations, discouraged internal
cooperation and gave clueless top-down direction. Third,
there'd be the tyranny of quarterly financial results and
annual budgets, which devalues longer-term initiatives.
On the end-user
customers' list there'd be two different
kinds of problems. Near-term problems would include
unresponsive and procedure-bound customer service, high
prices, lack of choice, unavailability of new services, and
the poor quality of new services (for example, poor mobile
coverage & dropped calls).
Longer-term
customer issues would revolve around
operational efficiencies and new services -- this is where
the R&D slowdown impacts the customer. On the efficiency
front, sooner or later, the telecom industry is going to
have to tumble to Moore's Law, and halve the price or
double the performance of service applications every couple
of years. There are also fixed costs in running a network,
and eventually telcos will have to confront the difference
between running a network and offering applications. Also,
sooner or later, R&D will bring new applications that will
make vestigial the telephone calls we know and love -- not
because telephone calls are bad, but because we're certain
to discover better ways to communicate, ways in which voice
fades into the background. Already R&D has brought a slew
of new apps over the last decade -- the Internet, the Web,
email, instant messaging, etc. -- but none of the new
popular apps were brought to market by the telephone
industry.
Suppose we killed
off the medical metaphor. Instead,
suppose we spoke in terms that were not conditioned by the
notions of disease and recovery.
There are lots
of appropriate biological metaphors. Jeff
Pulver talks about caterpillars and butterflies. Telecom
has been a caterpillar, and will soon emerge from its
cocoon as a beautiful butterfly that is infinitely
different and vastly more beautiful than its former form
-- and it can fly. Will the new telecom fly?
Or we could
speak in terms of known disruptive
technologies. The hand-held calculator was completely
different than the slide rule, but it disrupted the market
for slide rules completely. Word processing software
killed the typewriter. Horse-powered travel dwindled to a
hobby once the horseless carriage rattled onto the scene.
Will new ways to communicate make telephone calls seem
archaic and irrelevant?
My current favorite
metaphor is evolution. Dinosaurs.
Extinction. Mutation. Changing environments. Survival of
the most adaptable. In an evolutionary metaphor, we'd be
more likely to talk of telcos as transitional, not
permanent; as maladapted rather than ill. Maybe we'd see
their potential demise (rather than their recovery) as the
normal process, not as something that must be stopped.
Maybe we'd be willing to consider that small, cute, furry
mammals with big brains and warm hearts, instead of
cold-blooded dim-witted behemoths, could populate a more
attractive, more delightful future.
-------
Quote of Note:
Dana Frix on the FCC Triennial Order
"Every
word will be challenged. My children will go to
college on this stuff. This is a lawyer's dream."
Dana Frix, a
telecommunications lawyer quoted in the New
York Times, August 22, 2003, http://tinyurl.com/r0j0
.
-------
If it's Funny
it must be True, by Scatt Oddams
OK, if the North
Koreans are as skilled at making H-bombs
as they are at making propaganda, then this
http://tinyurl.com/qaxp
suggests that their bombs might be
filled with dancing hamsters.
Gotta scoot!
Scatt
oddams@isen.com
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CONFERENCES
ON MY CALENDAR
November 10-11,
2003, Santa Clara CA. Wireless Summit.
Glenn Fleishman is Program Chair. I'll be giving the post-
lunch keynote on Day 1. Also includes my friends Dewayne
Hendricks, Steve Stroh, Bob Frankston, Tim Pozar and Jeff
Pulver, plus a speech by Reed Hundt.
http://www.pulver.com/wirelesssummit/
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COPYRIGHT NOTICE:
Redistribution of this document, or any
part of it, is permitted for non-commercial purposes,
provided that the two lines below are reproduced with it:
Copyright 2003 by David S. Isenberg
isen@isen.com -- http://isen.com/ --
1-888-isen-com
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