Thursday, September 25, 2003
Hard Times in Telcoland, cont'd
Verizon just revised its forecast in the usual direction -- down. And it cut its plan for capital expenditures by US$500 million. That won't make telecom equipment suppliers happy. And it filed for a US$10 billion self-dilution. That won't make VZ shareholders happy.
Then IDT announced that it is offering a US$40 UNE-P based all-u-can-call package in four states, with others to follow. That won't make Verizon, Sprint and AT&T happy; IDT is undercutting them by 20%.
Meanwhile, in a great example of how customers can run their own network services, Dartmouth University is making long distance calling free for its faculty and students. That won't make any telco happy.
Warren Buffet has sold off half his stake in Level3 since June. Telecom reporter (and friend) Scott Moritz says:
I think the last year has been a telecom echo-bubble. The longer term trend for telephone companies is down. Here's why: as technology improves, we need them less and less.
The over-crowded long haul market is a different story. Even companies that are all-optical and all-IP will suffer until the U.S. gets a broadband access policy that's shaped more by technological progress than by dying incumbents.
Then IDT announced that it is offering a US$40 UNE-P based all-u-can-call package in four states, with others to follow. That won't make Verizon, Sprint and AT&T happy; IDT is undercutting them by 20%.
Meanwhile, in a great example of how customers can run their own network services, Dartmouth University is making long distance calling free for its faculty and students. That won't make any telco happy.
Warren Buffet has sold off half his stake in Level3 since June. Telecom reporter (and friend) Scott Moritz says:
"After a brief period of stability, wholesale phone capacity prices once again appear to be in free fall. Here's why: A stampede into what was one of telecom's few remaining high-margin businesses has reignited a damaging price war. It wasn't supposed to be like this. After a three-year plunge in business communications spending resulted in a raft of bankruptcy filings, the industry was finally beginning to breathe easier, its bloodiest battles behind it.At least some customers should be happy.
*snip*
[But w]holesale rivals are back from the brink, and so-called service integrators have entered its turf. It seems some failed foes have returned with a vengeance: Restructured outfits such as WilTel (WTEL:Nasdaq) and ICG have emerged from bankruptcy, wielding a sharp knife on capacity prices. Not to be outdone, AT&T (T:NYSE) , Qwest (Q:NYSE) and Sprint (FON:NYSE) have been willing to take lower terms to keep customers."
I think the last year has been a telecom echo-bubble. The longer term trend for telephone companies is down. Here's why: as technology improves, we need them less and less.
The over-crowded long haul market is a different story. Even companies that are all-optical and all-IP will suffer until the U.S. gets a broadband access policy that's shaped more by technological progress than by dying incumbents.
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