Video killed the telephone stars?
By Daniel Briere and Russ McGuire
Network World, 06/24/02
nwfusion.com
We all know the story line: 1996: The Telecom Act promises competitive choices for consumer and enterprise telecom buyers. Legacy players - including the regional Bell operating companies, but especially the incompetent, shoddy-service multiple system operators - are doomed to insignificance in the face of well-capitalized new players leveraging disruptive technologies.
2002: New entrants? Choice? RBOC insignificance? Well, at least we were right about the insignificance of the MSOs to enterprise buyers.
Or were we? Initial rumblings indicate the cable players might be the best-positioned to break through the so-called natural monopoly the RBOCs hold on the last mile. Compared with the RBOCs, cable players have consistently delivered on the opportunities before them. Now they have focused their sights on the small- to midsize-business market.
By now you're probably thinking of reasons why the cable players can't succeed, such as:
MSOs lack the wires into the buildings where business customers live. So? Unlike telecom players, cable players have not hesitated to deploy new infrastructure where incremental revenue opportunities make it worthwhile. Every time a cable tech sets foot in a customer's home or office, the MSOs see it as a selling opportunity. Technicians are successful at turning install appointments into upgrade sales to digital service, premium channels, broadband and even telephony.
The cable infrastructure is incapable of supporting enterprise-quality services. And the cable infrastructure was incapable of supporting bidirectional consumer data services. But while the telecom industry was fighting over ADSL vs. SDSL vs. IDSL vs. HDSL vs. BDSL vs. CDSL vs. EDSL, the cable industry was agreeing and collaborating on Data Over Cable Service Interface Specification (DOCSIS) 1.0, 1.1 and now 2.0. They've tackled voice over cable and now are focused on LAN services over cable. DOCSIS 2.0 not only supports higher-speed service but also provides features critical to enterprise networking, including quality of service and security features.
The MSOs have no presence in the business market. And the RBOCs do? Most people buy from the RBOCs because they have to, not because they truly consider their local Bell to be their best telecom partner. We'll place our money on the MSOs, which are more likely to consider viable and valuable channel partners and might even listen to the unmet needs of business customers to create solutions that really work.
Because of their small serving areas, the MSOs are incapable of meeting the needs of multilocation businesses. Unlike the animosity the RBOCs exhibit toward their sister Bells, the MSOs are cooperative. The cable industry has implemented a cross-referral program to ensure a consumer's cable service preferences easily follow him when he moves to a new serving area. Although that program falls short of what's needed for interoperable services crossing MSO boundaries, the cable industry has significantly outperformed the telecom industry in overcoming the natural barriers between companies.
If you're reaching for the phone to call your MSO to move your business circuits and services off the RBOC, you'll have to exercise patience. Although the cable industry is well-positioned to overcome the above obstacles, these are real and challenging issues. Undoubtedly, the MSOs will move methodically into business services. First, they'll focus on home offices and home-based businesses, where they already have the infrastructure. Next, they'll focus on geographies with a mix of residential and business buildings to minimize build-out costs. Then they'll move into serving single-location businesses that don't require cross-company coordination, before finally making the big push into the enterprise market.
But considering how the future looks under an RBOC monopoly, we're sure you'll join us on the sidelines, rooting for the cable players to figure this all out and finally provide us with true competitive choice from a financially viable player.
Briere is CEO and McGuire is chief strategy officer of TeleChoice, a market strategy consultancy for the telecommunications industry. They can be reached at telecomcatalyst@telechoice.com. |
