Telecom industry hears tough
message at conference
'Dinosaur dance': Inconsistencies between
what industry preaches and what it
practises
Simon Avery
Financial Post
SCOTTSDALE, Ariz. - The telecommunications industry is hearing
a difficult message these days.
On one hand, technology is creating unprecedented opportunities
for new wealth, and money is pouring into the telecommunications
industry as firms rush to capitalize on quadruple digit growth in the
data transmission market.
On the other hand, to capitalize requires drastic change, not a
traditional trademark of the giant telecom companies.
In the middle are the consumers, who hear how converged
networks and ubiquitous connectivity will change their lives and wait
patiently for further details.
But the reality on display at a global communications forum here this
week is that investment and technology are outpacing individuals'
natural willingness to adapt.
The three-day conference virtually took over The Phoenician, one
of the most exclusive hotels in the city, where rooms run between
$300 and $400 (all figures in U.S. dollars) a night.
On Monday evening, close to 700 delegates and spouses piled into
a fleet of 90 white stretch limos for a night on the town.
The costs, paid mostly by the conference host, Andersen
Consulting, are not out of line for an industry where upstart
companies, such as Qwest Communications Inc. and Level 3
Communications, are spending billions to build fibre-optic networks,
and in doing so have managed to amass market capitalizations in
excess of $27-billion in just a few years.
The incumbent telephone and cable firms, meanwhile, are spending
billions to upgrade their own networks to carry converged voice,
video and data, and thousands of dollars per customer to add
Internet subscribers to the faster links.
Time Warner Inc., for example, is spending somewhere between
$600 and $700 a home just to lay upgraded cable out front. The
cost of actually signing one of those homes up to high speed Internet
access is even higher.
But as the industry throws money around lavishly and hypes the
merits of broadband networks, its leaders cannot clearly articulate
exactly where the revolution of convergence is taking the customer
or how they will differentiate their products and services, which are
moving towards commoditization.
Many executives in fact don't use the technology themselves and
some even believe that finding a use for it is somebody else's
problem.
Author and futurist Frank Feather accused the giant cable and
telecom firms of being dragged into the broadband business and
once on the floor doing nothing more than a "dinosaur's dance" with
each other, out of touch and insensitive to consumer needs.
His charge was bolstered somewhat when Carl Rossetti, executive
vice-president of Time Warner Cable, admitted that he had never
made an online purchase because he is afraid of credit card fraud.
This startling confession by the head of one of the largest broadband
players in the world led to a quick audience survey, which revealed
that nearly half of the telecom officials present, from all over the
world, also had never shopped online.
John Sidgmore, vice-chairman & chief operating officer of MCI
WorldCom Inc., did one of the best jobs of trying to articulate how
a world tethered to the Internet would change everyday lives,
predicting a proliferation of connected computer devices, from
pagers and watches to reading glasses.
But Mr. Sidgmore's company is the only one of the large U.S.
telecoms not to have a wireless network, essential for the next
generation of products he described.
Indeed, until a very short time ago, MCI WorldCom said it saw no
need to acquire wireless capabilities.
The inconsistencies between what the telecom industry preaches
and what its executives actually practise were also on display just
outside the conference hall, where organizers had set up two
high-speed Internet terminals.
A few executives checked share prices in the morning, but the far
more popular spot was a few metres away at two old-fashion notice
boards where about 50 messages had been posted for various
delegates.
Unfortunately, those pulling wafer-thin portable phones off their
belts to respond were regularly stymied by the limitations of their
own industry's technology.
Dozens of executives walked the outdoor courtyard between
breaks, trying to get a clear signal.
Many others simply dropped 35¢ into old fashioned pay phones.
Peter Georgescu, who as chairman and chief executive of the
advertising and consulting firm Young & Rubicam Inc., has helped
set the standard for global branding across many industries, warned
the telecom executives present that to be successful in the future,
they will need to stop thinking in terms of just piping and plumbing
and start selling "intellectual capital" -- something that requires a
deeper understanding of customer needs and also, presumably, the
content they are using. |
