More on the Death of the Telco Paradigm
This is my second go-around at this post. Scribefire’s hostile lack of undo pushed the first iteration into the abyss. I had to step away from the computer, as that’s the sort of thing that changes the whole attitude I bring to writing a post.
Recently I’ve poked a stick at a couple of industry hornet’s nests. And while both generated some discussion (at least one is moving ahead with this post), I’m generally disappointed.
I tried the VoIP is Dead stake in the ground in an effort to shakeup some folks I think are being too complacent. The economy is in the toilet right now, and I see a lot of people doing the same things they’ve always done. It feels complacent and lethargic. It seems to me that my methods were simply too sublte, something I’m rarely accused of. Rather than really bring about any change in thinking and talking, I see a lot of industry folk edging at the conversation and thinking about some new ideas, then circling the wagons and diving right back to the same tired language. I believe they’re trading an opportunity to reinvent and re-energices into incremental success balanced with a rough or two.
I also tackled the problem, and it is a huge problem, of the telecom industry. I said before, and I will say again that the very concept of Telco 2.0 is flawed at its core and such an enterprise can never exist.
Telco 2.0 is an aberration that cannot exist
My good friend Rich Tehrani brought out some excellent points in his recent posts on the topic. He echoed the question Is There a Need for Telco 2.0? Rich agreed with me on a couple of fronts, but also pointed out some things I missed.
Ken’s most important thoughts are as follows:Five words that do not describe telecommunications or the telecom industry – Participation, Openness, Conversation, Community and Connectedness. The industry, the whole construct of that framework is to control four of those by ensuring there is no community in the first place. To embrace community is not to become Telco 2.0, but to create something entirely new.
And he is right. Traditional telcos haven’t been about community building and many of these other terms but I might mention that allowing subscribers to speak with one another via voice, SMS, etc are basic forms of enabling community.
Rich went on to agree further and add more:
In a follow-up post Camp mentions the following nugget:
Social media companies really do look to do exactly the opposite of what the telcos did. They’re a huge disruptor because they change how we communicate with others. They don’t change the technology of communications; instead social media makes communications a multi-modal experience.
To me it is not the terminology which is as important as the reality that telcos are the opposite of social media networks/services.
This means that whatever term we apply to companies who want to be next-generation communications enablers, we are going to have to realize that they will need to be the polar opposite of what phone companies have been this past century.
Telcos are the opposite of social media networks/services.
This means that whatever term we apply to companies who want to be next-generation communications enablers, we are going to have to realize that they will need to be the polar opposite of what phone companies have been this past century.
Rich rightly points out that I didn’t speak to the revenue models, and I should have. One of the dangers of blogging is that the extemporaneous thought process can lead to writing and publication without the breadth of touching on every aspect of a subject. For me that’s important, and a value; but it can lead to overlooking some key elements
Another friend, Thomas Howe joined in with an excellent post Ok – That’s Enough Bullsh*t for Me. You should go read it, because Tom takes me to task and calls bullshit on me. And I think he’s way off base, but we only differ in how we think. When it comes to what we want for the future of communications, Thomas and I are very much in synch. If you haven’t read his post, go read it now. This window will be here when you get done. Go. Read. You’ll need that information.
Thomas made some great points there and I’d like to consider one or two from different angles. He said:
Let me get this straight, telecommunications, a two trillion dollar market, indisputably critical to every single civilization and citizen thereof on earth and delivered nearly exclusively by telco’s is not relevant to society, business or the world. Sure thing. Makes sense to me.
Ok, that seems a fair point, but I’ll insert another perspective. First, I will absolutely concede that the two trillion dollar market impresses anyone who thinks in terms of dollars alone. Yes, the telco industry are the great robber barons of the last 150 years who have raped and pillaged the global economy by overpricing and underserving in ways never previously imagined. I’ll concede that point
(Note: Remember I worked in that industry for twenty years. I’m closer to the mark than you might like to acknowledge.)
Consider the US automotive industry today. They want the government to bail them out. They aren’t alone, but let’s stick with them simply for comparison. I’ll argue they’re another large industry filled with maintaining status quo and stifling real innovation.
The Telco Mentality is driven to the same flawed thinking, but they already had their bailout in the US. The telecom market bailout came as a pre-emptive granting of legacy monoply services that the old Bell System enjoyed until 1984. Then came divestiture when that industry, after a century of monopoly power, was invited to step into reality of the competitive market and free enterprise. And I’m sorry, but they suck at it. Sure a few telcos have bought a few wireless carriers and wave their flag about how cool they are. Bunk and poppycock. They’re stuck in a rut.
Worse than being stuck in a rut, they like it there. It’s trillions of dollars, and while it’s dwindling for the Telco 1.0 so the all are Telco 2.0 Wannabe now, the truth is, they’re dead. Elephants. Dinosaurs. Dead, but not yet extinct. Yes, they’re stuck in a rut, and we should move the revenue into the future and leave them there to rot.
I tried to suggest that driving revenue into a failing industry isn’t as productive as reinventing the communications industry. Tom said:
Go ahead and hate Telcos if you want. Hate them for reliable services. Hate them for the revenue they generate. Hate them for the jobs they create. Hate them all you want. Thank god all of the really great social media communication efforts like Twitter, Facebook and Jaiku have nothing to do with those evil corporations.
Here’s where my subtlety failed miserably. I don’t hate the telcos Tom. Beyond all the great things they’ve done that you cite, they employed me for twenty years. Hate them? I love what they were. Before enterprise cancer took over and metastisized to their corporate culture they were the leaders in thinking and innovation. That was before. Now they’re terminally ill. It’s terminal and the patient will not survive. And while we can’t simply euthanize them, we don’t have to let them drain our life force interminably either.
Lest it sound like this is something unique to telcos, let’s acknowledge that there are other trillion dollar industries also suffering from this disease, including:
- Mainstream Media (broadcast entertainment, printed media)
- Automotive
- Airlines
- Oil
These are industries all in the throes of death in their current forms. I simply propose that incremental improvement to a release 2.0 of any of these industries will prolong the patient’s life, making the pain and suffering last longer. Doing so will simply delay what comes next.
So now I’ll toss an insult. At my friends and colleagues if they take it that way. It’s a compliment to some who take it that way. If you’re hanging on to the idea that the telecommunications industry future lies with the Telco 2.0 path, you’re a bellhead. Not because bellheads were bad or wrong. Bellheads simply tried to stick with what they knew and improve it incrementally.
I’m glad I’m not constrained to just the telecommunications industry. I’m glad the horizon reaches for miles and miles.
Should any of you take this as a swipe at my friend Thomas, it is not. We’re friends who see through different lenses. And I’d love to have the opportunity to take opposing sides of the conversation at a conference or on a Calliflower call. I’m pretty sure Thomas would agree with me that we all come out better for having the conversation.
Related posts:
Speaking the Unspeakable – VoIP
Open Invitation to VoIP: Dead or Alive
Extinction Events Don’t Just Hit the Yucatán Peninsula
Leapfrogging the Telco Paradigm
The Flawed Delusion of Telco 2.0
Technorati Tags: Rich Tehrani, Thomas Howe, Telco 2.0, telco, telecommunications, telco paradigm, paradigm shift, kicking another dead horse, VoIP, unified communications, bellhead
on January 11th, 2009 at 11:34 am
Hey Ken, Great post.
I don’t agree with everything you said in the above. Mostly on Telco as an industry. Main actors of this industry would perfectly fit in your description but not the industry itself.
Some are trying to change Telco industry. This move will take time and lots of $$$. Apple really changed dominant position of carriers from a 180° prespective.
Carriers are losing their leadership, customer need has shifted, content providers are more prolific.
Its a revolution. You are right Telco 2.0 is born dead but it might give birth to a bigger baby Telco 3.0.
Hope to see you soon again to discuss it
on January 11th, 2009 at 11:40 am
Entertaining and provocative, good for a Sunday afternoon, thanks.
Is twitter the birth of a new PS(T)N?
Are twitter clients the new PBX
Matt
on January 11th, 2009 at 11:44 am
Thanks Florian. So maybe you can help me gain a perspective that other’s just haven’t been able to get through my thick head. Your words put it in a way I can ask the question maybe.
You said “Main actors of this industry would perfectly fit in your description but not the industry itself.”
If the main actors, the ones who shape and define the industry fit, then it seems to me the industry fits. And it seems to me that the companies trying to change the industry are really trying to fit within an existing paradigm rather than create a new one. That’s where I think the problem lies. I think too many people/companies are trying to fit within the constraints (both real and artifical) of the telco industry paradigm.
Sure Apple changed the game, but not the telco game. iPhone revenue isn’t a dro pin the bucket of the traditional telco paradigm. It’s really negligible on the grand scale. iphone changed the handset paradigm, absolutely. And it’s shifted attention on the handset usage model (more data), but those are still teensy incremental changes to the telecom industry model.
We agree Telco 2.0 is a stillborn baby, but I don’t agree that Telco 3.0, or Telco anything is a good next model. I think it still ties us to the past.
Telco is simply a utility like water or power. And I still believe we’re thinking in outdated terms.
THanks for taking time to comment. I hope we get some face-to-face time again soon to chat about it. That would be a blast.
on January 11th, 2009 at 11:59 am
Yes Telco is a utility and will never die.
Telco like water or power is an ongoing revolution. You took the perfect example.
Power is the #1 innovation industry and despite all efforts since Thomas Edison no one found a cheap, renewable, cordless power source. But believe – they are trying.
Telco is on the same trend. Most of media [if not all] are being delivered by Telco guys. Our world has changed – quietly in last 20 years from a cable model to an IP model. An incredible revolution few know about.
Television broadcasting, data transfer, cellular, satellite radio, messaging, virtual worlds are all powered by Telco.
The world without Telco and we are back to Stone age.
I agree more could be done. But Telco is a sensible industry where there is no Alpha, or Beta. Telco is binded to an obligation of results. No failure can be accepted. Its not very attractive for entrepreneurs – can you imagine your home phone service working like Twitter. A small whale ringtone when service is down
Ken – Telco is one of the most advanced, innovative industry. You’d be amazed to see what is cooking in R&D labs. Simply it takes time to validate a model, implement it and market it.
I agree- Telco x.0 is so 2008.
on January 11th, 2009 at 1:18 pm
Thanks again for engaging so vocally, Florian. I love that we can debate these things and drag other people along.
You said “Telco like water or power is an ongoing revolution. You took the perfect example.
Power is the #1 innovation industry and despite all efforts since Thomas Edison no one found a cheap, renewable, cordless power source. But believe – they are trying.” I have to tell you that you picked perhaps the worst flawed comparison you could have.
It’s probably worth mentioning that in my day job I’m the principal network systems architect for a major global player in the utility market. A hufe piece of that is power. And yes, while they are trying to make improvements, I’d argue they’re doing so to hold tighter control over customers and drag even more money out of something that’s clinging to the past. It’s an industry that could be doing much more to look to the future of energy consumption, but rather looks at how to protect the revenue stream they have today while making teensy incremental changes. It’s a sector I get a view of that most of us dabbling in communications space won’t ever see.
That industry is fraught with the same problems of the telco industry, for as many years. The advantage they have is that, for the most part, their bailout is guaranteed. In many cases, it’s already in place. Regulated monopoly market based on geography. That’s not a business model I believe is sustainable in the global information economy. And I don’t really believe the power industry is doing much to innovate.
I don’t believe the telco industry is the big innovators of the last 50 years like you said. I believe the last compelling innovation we saw from that industry was the transistor in 1947. That’s 62 years since any powerful and compelling innovation. So I’d say the reverse. You say they’re the most innovative. I say the telco industry has been comatose for over 50 years.
And in my experience, with the major players, the ones who shaped and molded the industry, R&D is a joke. R&D is in innovators, entrepreneurs, startups and small niches. And those niche innovators are under-serving themselves by hanging on to the old paradigm. That’s my point that’s not being heard.
Innovation is NOT happening in the telcos. It hasn’t in well over 50 years. Unless you count CallerID as a real innovation. But remember, that was just selling the customer something they already had and convincing customers to pay for it.
on January 11th, 2009 at 1:33 pm
I’m sure telco has elements cooking in R&D, but telco needs to be more expeditious in development as the time lines for inovation and development have shortened dramatically over the past decade. There is no such thing as standing still, either you are moving forward or moving backward. Complacency is just a kind way of stating that you are falling behind slowly.
Telco needs to step outside the box or the box will step outside of them. They are facing countless options and viable alternatives that the public never had in the entire history of telco. My opinion is that telco needs to embrace the new technologies and media and step up their game before the telco game is over for good.
on January 11th, 2009 at 7:18 pm
Ken:
I am assuming that you were in jest when you said that telcos haven’t innovated since transistor. Digital transmission doesn’t rate one? How about data modem? Fax modem? Why be dismissive about Caller ID? I would say delivery over the tip and ring interface required innovation. I could keep adding to the list.
on January 11th, 2009 at 7:48 pm
Teknek – Great points. Lead, follow or get out of the way.
Aswath – I guess I’ll argue they were magnificent revenue protection technologies. Sure they were innovations. I’ll revise to say the transistor was the last revolutionary innovation. All those others were incremental “draw between the lines” stay inside the box incremental improvments and advances in technologies the telcos already had sewed up better than anyone else. Noteworthy yes. Revolutionary no. Incremental improvements, even digital carrier systems were just a larger incremental improvement.
on January 11th, 2009 at 10:34 pm
Telecommunications is a broad term. Telco is not, Telco is typically associated with the local exchange company.
Telcos allowed us to communicate in real time when there was no alternative other than face to face meetings.
But our world has changed. Dramatically. We now have tons of choices to electronically interact. Websites, Twitter, email, SMS, to name a few.
The Telco model is all about voice and voice just isn’t that important any more. In fact, it is becoming the electronic method we use when no others are available.
Voice isn’t dead and has a long life ahead of us, but it isn’t as important as it used to be, and neither are the telcos.
on January 12th, 2009 at 2:23 am
Ken, gotta agree with you.
Tom, gotta agree with you.
How can I do both? Well, you are talking about different things.
Ken is talking about the vast bulk of minutes used in ‘social’ communications.
Tom is talking about high value ‘business’ minutes.
It just so happens
that these minutes are (pretty much) un-differentiated (and served by the same carriers) at the moment.
It is pretty clear to me that in the future these classes of minutes will split with wildly differing services, rules etc.
The social minutes will trend to zero (incremental) cost, they will be facilitated by online channels such as facebook, and increasingly they will have groups of participants – many on speakerphones and provided by
startups bulk buying telco bandwidth (like the MVNOs of today).
The business minutes will settle at (sticks neck out here) 10c/min – they will be HD audio, with automatic (notarized) call recording, guaranteed provenance (like ANI on 800 numbers). The calls will be tagged with their origin and topic and integrated into the business processes (CRM etc), they will be searchable. These services will be provided by existing players such as BT/Ribbit .
on January 12th, 2009 at 11:34 pm
Hey -
Great comments, all around – and Tim – you’re probably got it as close to right as Ken and I ever will.
Although I’m taking the opposite side on this, thanks Ken for putting this out there. It’s really helping me understand where I stand – I owe you one for that. At eTel – the first three beers are on me!
Thomas