Dear Telco/Cable/ISP executive - Industry Trend or Event - Editorial

Telecommunications, Jan, 2001

Stephen McClelland Editor-in-Chief, Telecommunications[R] International

It's obvious that few providers ever talk to any customers in any sort of a proactive way.

You seemed upset by my year-end letter. I thought I was being realistic, but you accused me of outright pessimism. Still, as I said last month, a year is a long time in telecom. Things could get better - or worse. The end of 2001 could see every bit as different an overall industry scenario from what we see now, as the change from 12 months ago. What I was really saying (though) was that telecom is a dynamic industry - dynamic up and dynamic down. But it's the dynamism that makes it so attractive.

You criticised me for lumping you and your company with the dotcom bust. But in investors' minds, you are all part of the same continuum. Sentiment may have changed for the pure dotcoms, but you have hardly avoided a misstep yourself. In spite of a gigantic amount of analysis on future business prospects, you have also wasted vast amounts of cash. Your bum rate has been high - unsustainable for many other businesses. Still, your problem is hardly lack of cash - not yet, anyway. It's a lack of willpower, of decisiveness over the options that do exist. And the evidence is now mounting of a general economic slowdown stemming from the US but with marked international effect too. Against a background of less congenial business conditions, speculative activity is going to continue to be even more difficult.

What are the options, you've asked me? Simply to get out of ridiculous businesses and get into healthier ones. In spite of your analyses, shame on you for ignoring it and going with the tide of received opinion. And shame on you for letting the 3G auction shambles get perpetuated. What is needed now is courage to grab creatively the opportunities that are unfolding.

Opportunities? Well, it is obvious that several international CLEC and long-distance operations are hitting trouble even as they are building networks. Investors are clearly worried and even the quality operations have publicly pulled high-profile rollout plans, or chopped them to a fraction of original plans. The public doesn't seem to have realised it yet, but broadband internet access could be farther away than we thought. Universal service? Not on the agenda anyway. So, watch out for some heated accusations when consumers uncover this. The industry may not have as much room for maneouvre as it thinks. Public opinion is less tolerant these days to blunders than it used to be. All in all, telecom sounds tailor made for regulators and governments to become involved all over again to me.

The problem (ironically) is that telecom will deliver the goods - but the high tech sector has been tarnished over the last six months. I say 'will' but it probably is delivering the goods already. Telecom usage is higher than ever. E-commerce has undoubtedly taken off and so (if in lesser ways) have other aspects of e-life: e-banking, pre-paid mobile, SMS. The internet is most definitely changing the way people and organizations act. Hype apart, this is hardly an industry in slowdown. But it is an industry in consolidation. And consolidation might be the best way to achieve realistically and cost-effectively decent service coverage. But we both know - speaking privately - that cost-effectiveness has not been a hugely important part of your strategy in the past. Nor too are adequate customer service procedures. The industry continues to get away with appalling attitudes - well, I should say, no attitude at all. It's obvious that few providers ever talk to any customers in any sort of a proactive way. And for many new entrants the most basic of customer complaints is enough to reveal yawning gaps in back office adequacy in these companies. So, anyway, time for some changes. It's a fair bet that we need them. Even in a complex technologically based industry, problems usually come down to mostly human issues. Focus is what is needed - not expensive and glamorous projects. Forget the highflown technology and convergence plays, and consider the industry as a basic service industry and run it and talk to its customers accordingly. Concentrate on getting the simplest possible issues absolutely right. And when the dust has settled, the best companies should have survived to prosper. It would be a good idea if your own was one of them.