Wednesday, October 25, 2006

And another ten things...

A Palladium Class uber mega-value reader submits his own "Ten Things" list, based on his perceptions from life in the supplier space. It's a bit harsher than my take from the investor's point of view, but then again investors typically can be more selective in their exposure and don't rely entirely on telcos for their subsistence. Read it and weep.

"Conclusion: Sell the rat bastards (aka the carriers) what they want to buy, especially all this IMS crap...


  1. The carriers don't know what the f*&k they are doing anyway (AT&T thinks one HDTV channel over ADSL2 is enough for America);
  2. There is no more money in voice (how much was your long distance bill last month? If it was greater than $3, you're being taken);
  3. There is no money in services (any 18 year-old in the Valley is a better new business development manager than any of the telcos have);
  4. If NBC can't make any money in television why do the telcos believe they can?;
  5. There is no money in transport (especially long haul);
  6. There is little or no money in access (but let's spend $5-8K per new sub on FTTH, the carriers will just screw their stock holders later - bondholders please note);
  7. There is little or no money left in mobility (it's all about the phone anyway);
  8. The carriers' customers all hate them (no brand loyalty in telecom);
  9. All their efforts at customer control (except political) have failed/will fail;
  10. And even when they actually buy something they want us to finance it on our books!"

UPDATE: A Platinum Class mega-value reader writes in with the following observation:

"Reading this I could not help but think that this guy is extrapolating future telco by starting from present telco. I think future telco will be anything but an iteration/variation of present telco.

Witness Iliad and their 300k wifi hostpots that popped up overnight in France - it gave Iliad a national SIP-based mobile network (a nasty one, probably, but nonetheless a network).

Morph this into a larger Wimax version (Iliad has the only French license) and you could get an almost decent national mobile voice network. Best of all: access capex is done by the end user (sort of like Skype, whose 100+ million users are the voice switching infrastructure).

This probably means that for incumbents to survive, they need to change into something they are not right now (e.g. could a tier 2 voice operator suddenly become a global SIP operator, i.e. a better/new/improved Vonage)?"

Spot on, though my question remains, does "future telco" evolve out of the current incumbent morass, or does it happen from outside, as with Iliad? To use a mass extinction metaphor, do the dinosaurs evolve into creatures which can survive (birds), and/or is it the nimbler, more adaptable small mammals which inherit the earth?

UPDATE 2: Another mega-uber value reader, also from the supplier space, chimes in:

"Both the original author and the commenter are correct. Traditional telcos are approaching this as a red ocean problem - what can I do within my own walls, where as the Illiads are the relatively new comers with blue ocean strategies. The latter has a value prop that appeals to the user while the former appeals to the street. I don't see morphing as a likely outcome soon; so I'd just assume sell weapons to both sides."

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