5/20/98 Upside article. Telco Tar Pits.
upside.com
I've been taking in the
conversation at Bob
Metcalfe's Vortex
conference this week.
Vortex is about the
"Internet-telephone
convergence." There are lots
of telco folks here--Bellcore, US West,
BellSouth--plus some tech and networking
leaders, including Cisco, Lucent, Qwest and
3Com. Even an executive from the Federal
Communications Commission and former
FCC Chairman Reed Hundt are making
appearances.
I've come away with one strong conclusion:
The traditional telcos and the FCC are dead.
Kaput. Walking corpses. We're talking
mangled and desiccated roadkill on the
information highway here. They just don't
know it yet.
Sure, some of them may actually adapt and
survive. Attendees were impressed with
some of what Solomon Trujillo, CEO of US
West, had to say about his company's move
to digital technology. It's possible that some
of the dinosaurs survived and became birds,
too. But at the very least, the survivors will
be extraordinarily different companies than
they are today. Even their own Ma Bell
won't recognize them in a few years.
So it's exciting to sit back, take it all in and
think about the enormity of the change we
talk about, day in and day out. Consider the
speculation, and decide for yourself who is
right.
Cisco CEO John Chambers insists that voice
phone calls will be free some day. It's just a
question of when. For a clue, he predicts
that the critical crossover point--when voice
transmissions over packet-switched
networks (the Internet or derivatives) exceed
voice transmissions over traditional phone
lines--will come by about 2002. Cisco's
future is the convergence of data, voice and
video over one powerful network.
Chambers is right.[ASND is well-positioned here]
Joe Nacchio, CEO of Qwest, notes that
telcos will not go into the dark night easily.
"We live in the age of dinosaurs. They move
slowly, but they've got big goddamn feet," he
says. Nacchio is right.
Jim Crowe, CEO of Level 3
Communications, patiently explained the
orders-of-magnitude cost benefits of IP
switches over traditional telco circuit
switches. Crowe is right.
Traditional institutions are out of place in the
new telecom environment. The Baby Bells
resist opening markets, in some cases with
good reason. The FCC is on the run,
reevaluating its purpose in life, which is
becoming the task of making deregulation
happen. We don't know how these wild
cards will play out--but they only affect the
timing, not the inevitability of the outcome.
This bunch of dinosaurs have lived for the
past century in a legal, regulated monopoly.
Suddenly they come up against the giant
Internet asteroid, deregulation's climate
change and fleet-footed mammals
(Internet-savvy companies such as Cisco
and Qwest). What do you think will happen?
Nothing left but the tar pits.
Some day we'll explain to our children what
a telephone company was. Most of them will
disappear. The cable companies will
disappear. They will be merged and
absorbed into oblivion. The computer and IP
companies will become the new
communications industry. Many of them will
die out in the change, and the strong will
survive.
I love coming to conferences like this. They
make the future look like such fun!
05/20 05:12p.m.
Richard Brandt is the editor of UPSIDE.
Do you think the Baby Bells will survive the
IP age of telecom? Do you think the
dinosaurs aren't extinct, but rather are hiding
in underground caves playing gin rummy with
Jimmy Hoffa? Join our discussion of this
topic.
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