Friday, December 16, 2005

The ghost of Christmas past

Christmas is a time for reflection and nostalgia, so let's take a break and relive a great moment in telco history, verbatim and courtesy of a nostalgic Triple Platinum mega-uber value reader:

How the world got flat-fee Internet (and why they are still trying to “correct the error”).

This story is from a supplier to the cable industry. He once asked a bar full of top-dogs from the industry if his reconstruction was correct. They told him he only made one mistake: it was actually on a golf course...

Act 1 : middle of the crazy 90’s, USA, board room of a leading cable company.
Jack (CEO), Ted (CTO), Dick (VP Marketing).
Ted: Hey guys, I tested these new boxes from XYlabs and it works. I get Internet access on cable.
Jack: Great. Now we can compete with dial-up. Dick, start selling it. What are you going to charge for it?
Dick: Dunno. Ted tells me he can’t shut it off so we cannot sell minutes. Furthermore we don’t have the billing systems now to charge anything but a monthly fee.
Jack: Shit. If we wait someone else will start with this. What do you think they are willing to pay per month?
Dick: Uhh, maybe 50 bucks?

Act 2: competitor cable company
Harry (CEO), John (CTO).
Harry : [Expletive deleted] Why don’t we have this Internet thing? What have you been doing? Sleeping?
John : [Blah, blah, feeble excuse]
Harry: I don’t care. Get the f”*& out of here and get me the results.
John: I got this stuff from Xylabs and it works indeed.
Harry: Roll it out and tell marketing we will charge whatever the other guys charge.

Act 3: Telco
Carl (CEO), George (CTO)
Carl: Dammit, the cable guys are selling their Internet access like crazy. We need to get an always-on product too. George call Lucent and find out if they have something.
George: They say they will have something called ADSL soon.
Carl: Get it as soon as possible, and get the cost down, we cannot charge more than the cable guys.

Act 4 : leading cable company
Jack (CEO), Charles (CFO), Dick (VP Marketing).
Charles: The more we sell this Internet product, the more losses we create, the fees are too low to recover the investments. Dick you have to tell your customers we are selling this at a loss so we can raise prices.
Jack: No, no. Look, the share prices are going through the roof, our option package is worth millions, invent a new EBITDA-something to show we are doing great.

And so the world got an abundance of flat fee internet access. And since that time the industry is trying to backtrack to the wonderful times of selling “Internet by the Pound”.

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