The Great Communicators
Most of you are old enough to associate the phrase, "the phone company," with one name: AT&T. That’s because most all of us remember a simpler time not too long ago when there was only one telecommunications show in town: AT&T. Ma Bell. The phone company.
Today, led by its aggressive CEO C. Michael Armstrong, the old phone company is hell-bent on remaking itself. Its intended $54 billion buyout of MediaOne, coming on the heels of the purchase of TCI, means that AT&T wants to do for telecommunications what IBM did a generation ago for computing, namely becoming a one-stop shop for all enterprise communications needs.
But thanks to the Telecommunications Act of 1996, AT&T is facing a ton of competition. This would be great news for enterprise consumers except that deregulation has spawned more competitors in more niche areas than anyone can track.
You can’t tell the players without a scorecard. So here’s a telecommunications industry scorecard that I’ve assembled, largely through the work I do as conference chair for the ComNet conference and exposition. I have to admit, I, too, was amazed at the number and type of players out there, as well as their various attributes.
Incumbent local exchange carriers (ILECs). These include the likes of BellAtlantic, BellSouth, U.S. West and so on. They are rapidly developing new Internet and data services since the high-priced and profitable T1 and T3 leased lines they used to sell have begun to fall victim to virtual private networks (VPNs). Their underlying strength is a huge installed base of customers and heaps of network and back office processing facilities. Their weaknesses are their voice legacy -- voice is becoming less a part of the corporate communications structure -- and their unwieldy bureaucracies still tied to the past.
Incumbent interexchange carriers (IXCs). Included here are AT&T, MCI/WorldCom and Sprint. They, too, are diversifying into new Internet service areas. MCI/WorldCom, in fact, is the leader in enterprise Internet services provisioning. Their strengths are similar to those of the ILECs, and they are all well-funded for growth and acquisition. AT&T is still hobbled somewhat by old thinking, as is parts of MCI. But this group is not as stodgily managed as the ILECs are. These are giants. Watch for them to strike huge alliances with international telecommunications providers and then begin offering stunning new global services.
Competitive local exchange carriers (CLECs). These players include wireless service providers and DSL providers. They pride themselves on the quick deployment of new technologies. Because they aren’t huge, they often offer better customer focus and are generally more responsive. The downside is that they aren’t well-funded, and making it today in telecommunications services means being well-funded. These are great take-over candidates. Proceed with caution.
Cable operators. The big guy here is AT&T-TCI-MediaOne, but @Home and Roadrunner are among some others. They offer great and affordable broadband services -- particularly for remote office locations -- as well as the expansion of voice and data service capabilities. But the legacy of cable operators vis-a-vis customer service is deplorable, and cable companies historically have lousy technical staffs and a monopoly mentality that translates into, "You got a problem? Tough!" There is a lot of ill will the big cable aggregators need to overcome.
Internet service providers (ISPs). The big dog is AOL, but you can include UUNet and PSInet. These companies are investing heavily in providing a new generation of packaged applications and services over their far-flung networks while they strive to improve network uptime to accommodate business-critical applications. Because these companies are largely Internet players, their stocks have been bid up astronomically and they are awash in money. But with the exception of UUNet, which is owned by MCI/WorldCom, these companies don’t have much voice experience.
New kids on the block. Fast, up-and-comers like Quest, Level 3 and Frontier/Global, to name a few, have invested billions of dollars into building high-speed, fiber optic cable networks along old railroad beds and elsewhere. They have perhaps the best infrastructure for handling data traffic and for scaling up to industrial-strength capacities. But today those capacities far outstrip the customers using the infrastructure. They have to start generating greater revenues with limited resources, given that their money has been poured into their infrastructure. Look for the big dogs to eventually acquire these companies, though they are certainly worthy of your attention today.
There you have it, the players on one neat score card. And to think, it used to be so simple. --Bill Laberis is president of Bill Laberis Associates Inc. (Holliston, Mass.) and former editor-in-chief of Computerworld. Contact him at firstname.lastname@example.org.