Posted tagged ‘ISP’

Wither now telcos (and cable companies)?

April 6, 2010

The one true measure all of us have of how smart is someone else is…how much they agree with you.

To that end, Danny Briere, in his column today on Connected Planet (formerly TelephonyOnline), showed himself to be brilliant.

I have been arguing for more than five years that the future of the telcos (and cable companies) is limited to being big, fat, pipe providers.  Their current business model simply cannot be sustained.  They are not fast enough, agile enough, or imaginative enough.  Their core business and competency (providing reliable connections 7/24 without fail) prevents them from becoming so.

Trust me, you do NOT want a network provider to move fast, change directions, and/or offerings in rapid, unexpected ways!  You want three things from a bandwidth provider:  lots of mbps; very little down time; and a cheap price.

Would you want the freeway designers & construction companies to change designs, methods, and materials as fast as car companies change models?  Probably not.  When it comes to freeways, we want them designed consistently, built reliably, and as cheaply as possible.

The telcos and cable companies keep thinking that they can create “stickiness” with their customers by becoming some kind of all in one shop.  In the mid-nineties, it was combining your phone, cable, and cell phone bills into a single bill.  How many of us have that now?  If you do, how much lower would a competitor’s single offering have to be to entice you away from the joys of “one bill”.

In the late 90’s, the idea was to be the customer’s portal to the new and confusing world of the internet.  Of course you would trust your phone/cable company to provide you with the “home page” that would guide you through the internet.  How many of us now use our ISPs portal as our home page?  As our email ID domain?

Now, the new siren call is Unified Communications….which Google is already doing and most of us can cobble together ourselves with things such as Call Forwarding, Smart Phones, and cutting loose of the land-line.

Don’t get me wrong.  There is money to be made in being a fat pipe provider.  But it will not be a low-cost, high-margin business.  Think of it more like the cargo shipping lines.  They make a “boatload” of money too, but it’s all low-margin business.

Briere, in his column gets it right when he says they will still make a ton of money.  But the money will be made by the ones who figure out how to become McDonalds, not Ruth’s Chris.