|Tim McElligott Blog|
Natural-Disaster Analogies for Telecom Wearing Thin
I admire TM Forum Chairman Keith Willetts and all he’s done for the telecom software sector and subsequently for the communications industry as a whole. But I have to say, the picture he painted this week on the canvas of his tremendously successful conference in Dublin struck me as melodramatic. But it’s not just his painting. It’s the brush strokes of many experts who see, and always seem to see, only the doom on the horizon for communications service providers.
I don’t know why his words struck me this way, because he has been saying similar things for as long as I have been covering this industry, calling on service providers to transform their businesses or else. Perhaps it is because I have seen service providers weather the storm so many times that I am less concerned than he and others that they will succumb to the competitive pressure de jour. And speaking of weathering the storm, I assure you I have made my last natural disaster analogy for describing the competitive and/or economic turmoil in the telecom industry. We have been beset by enough figurative tsunamis, tornados, nuclear winters (not that this one is natural), droughts and floods – and survived – that Chicken Little is beginning to look and sound like Marcus Welby, MD delivering his best bedside manner.
I think we’ve all learned in the last year to avoid the tsunami analogy, and the more severe our weather becomes, we’ll all have to start looking outside of Mother Nature for comparisons, but old habits are hard to break. So Willetts' new analogy is the digital tornado. In his keynote address this week, of which I have only seen reports since I was preoccupied on this side of the Atlantic, and in his new book, “Unzipping the Digital World," he describes ways the industry can best weather this tornado. They are all good suggestions by the way and should be heeded, but I think we are losing something in the translation when people, not just Willetts, talk about the digital revolution as if it is some outside influence, some destructive and unpredictable force with which the stodgy, old telcos must learn to deal, as if it is a phenomenon for which the industry itself wasn’t responsible for creating. What force but telecom supplied the wind for such whirlwind change? Telecom was instrumental in launching the digital revolution.
Granted, some opportunities were lost, some residual benefits not realized, and others innovated while telcos were busy building the physical foundation that enabled them to do so. But the industry was not blindsided by the digital concept. It is part of the telecom DNA. And I don’t think communications service providers are in danger of being shoved out of the marketplace, even by Google or Microsoft or any of the other rumored new-age giants. All would be better served by partnerships because this juggernaut is too big and too complex for one or two companies to handle. Anyone who tries to be the content creator, distributor, app developer, device maker, network provider, ISP, social media trendsetter and friend will stretch themselves to the limit, lose focus and crumble.
We have seen time and time again that the first movers, the innovators, are not always the ultimate winners in the markets they revolutionize. Innovators get rich. Innovators force change. But innovators often get rich by being acquired. The acquirers last. Look at Oracle, for example. When was the last time that company built anything? They don’t innovate. They sit back while others innovate then gobble them up and they are still pushing HP over the cliff. CSPs have already displayed more willingness to be acquisitive. Just look at all the acquisitions they’ve made in the last year or so to ready themselves for the cloud. They need to do more of that as long as they don’t take it too far and spread themselves too thin. Buy cloud infrastructure, buy some innovative automation tools, some transaction processing companies, maybe a storage company or two, but learn to get along with others for everything else.
Willett also said that companies are “unwilling to eat their own babies," or in slightly less gruesome terms, cannibalize their own market, and therefore face the potential death of their business. But service providers have been doing that. Service providers of all stripes and sizes have been feeding landline users to their wireless and broadband businesses for years. And when they’re done there will be big, fat and happy service providers everywhere.
I agree with Willetts for the most part on something else he said: "The future is a place where our children work for companies that don’t yet exist, which create products that don’t exist, that solve problems that don’t yet exist." Unfortunately, I am now looking more at grandchildren rather than children experiencing this future, but thank the Flying Spaghetti Monster they will live and work in a future with new companies and new products. It would be pretty boring for them otherwise. As for solving problems that don’t yet exist … if the past 20 years are any indication, these youngins will still be trying to fix the same problems. Ultimately they will be working on ways to make the world better communicate, and that world will include people, machines, devices, ecosystems, sensors and biometrics. But the problems remain the same.
Willets sat on a panel with Graham Finnie from Heavy Reading and Hannes Witting of JP Morgan to discuss ways to weather Willett’s tornado. I find myself agreeing most with Finnie who said the network is service providers’ greatest asset and that it is valuable and defensible on its own. If the service providers ultimately decide to focus on the network and some of the quality, authentication and business intelligence aspects of it, I don’t think that would indicate failure. It may be the wisest course after all.
And given JP Morgan’s recent losses reaching into the billions, I am less inclined to take seriously Witting’s assertion that telecommunications firms in Europe are in a state of managed decline.
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