If you look at all the telcos of various types, it is the incumbents (RBOCs, Baby Bells, ILECs, PTTs...) who are surviving quite well and even prospering. They didn't get sucked into the IP-based boom/bust as much as others, and more importantly their legacy phone switches make significant money through well-established per-minute billing. Wireless operators who charge per-minute are also doing OK, although 3G will probably kill some of them off.
It's precisely the next-gen telcos (CLECs, ISPs, xSPs) who invested in the new IP technology that ran into the boom/bust and are struggling or going bust. WorldCom is something of a special case - it had a lot of legacy technology that should have tided it over, but the accounting shenanigans were too much to survive.
This doesn't mean that IP-based networks are a passing fad, though - all that's happened is that the pioneers have gone through the normal bleeding-edge live/die cycle. Some of them have made it, some have gone bust, and all the old-line telcos have adopted the same technologies.
I agree that failing telcos should normally not be propped up - as long as someone can step in to maintain services by buying up their assets, particularly local loops that are hard to recreate, the customer shouldn't notice that much interruption. My problem is with the analysis that the legacy technology is why telcos are going bust.
If you look at all the telcos of various types, it is the incumbents (RBOCs, Baby Bells, ILECs, PTTs...) who are surviving quite well and even prospering.... It's precisely the next-gen telcos (CLECs, ISPs, xSPs) who invested in the new IP technology that ran into the boom/bust and are struggling or going bust.
You missed a few details - let's rephrase that:
"If you look at all the telcos of various types, it is the companies that control the physical infrastructure that both they and their competitors need (RBOCs, Baby Bells, ILECs, PTTs...) who are surviving quite well and even prospering.... It's precisely the companies who depend on the physical infrastructure that is controlled by their competitors (CLECs, ISPs, xSPs) who invested in the new IP technology that runs over the same copper wires that the incumbents have control over that ran into the boom/bust and are struggling or going bust."
The only thing "new IP technology" has to do with it is that the Incumbents don't like the idea of someone selling faster service over the same copper for a lower price... notice how the ILECs hunkered over their miserably handled ISDN options until the threat of competition forced them to move on to faster, cheaper, better technology. And oddly enough, once they moved, they managed to grow their xSL business while all the non-Incumbent competitors got trashed by ruinous turnaround on copper orders.
There is some truth in what you say - certainly local loop ownership is a big reason why ILECs survived and CLECs didn't, particularly in the xDSL market where ILECs had a natural tendency to be slow and incompetent in integrating their provisioning processes with the CLEC (and benefited from not integrating well).
However, that doesn't explain why AT&T, Sprint and other long-distance telcos in the US, who don't have local loops, are doing OK (despite shrinking long-distance revenues) compared to many CLECs that offered (some of) its IP-based services. The answer IMO is that they have enough customers, revenues and sheer size to survive a downturn, and a diverse enough business that ISP-type services can become less profitable without sinking the company.
So I don't buy the conspiracy theory except in the local loop / xDSL arena. When downturns hit, it is usually the largest and most diverse companies that survive, in any industry.
However, that doesn't explain why AT&T, Sprint and other long-distance telcos in the US, who don't have local loops, are doing OK (despite shrinking long-distance revenues) compared to many CLECs that offered (some of) its IP-based services.
Well, I'm not sure why that needs to be explained - it is an apples and oranges comparison. The LD telcos have a larger user base, have been in business for many years before the boom, and provide mostly telco-only at the consumer level (AT&T is the only one I know of playing in broadband, and that's only through cable not over telecom infrastructure).
The CLECS played heavily to the broadband data marketplace for the last mile, and were consumers of the data backbones provided by the large telco carriers. The broadband data marketplace is much smaller; not only are less people interested in xDSL than phone service, the distance limitations put the kabosh on an enormous number of potential subscribers.
The two segments are at opposite ends of the spectrum. Established, broad consumer base and large B2B businesses versus new companies rolling out new technology to a limited consumer base. How could the new technology be to blame? I haven't seen many stories from people saying "Yeah, I got DSL, but I decided that 56k was all I need so I got rid of it." The biggest problem I hear about the technology is the distance limitations and the sheer volume of crappy wiring that is out there (working fine for POTS, decent for ISDN, poorly for xDSL - and tell me the ILECs don't like it that way...)
When downturns hit, it is usually the largest and most diverse companies that survive, in any industry.
On that, I agree totally. If xDSL had been introduced and pushed by the ILECs instead of the CLECs, I'm sure that the market for it would be rosier (and more expensive) today. Since it cut into their T1 cash cow, though, they only moved when the CLECs became a threat.
So I don't buy the conspiracy theory
Well, that's my weak spot. When it comes to ILECs, I'm happy to entertain pretty much any conspiracy theory;)
"Be there. Aloha."
-- Steve McGarret, _Hawaii Five-Oh_
Traditional telcos aren't going bust (Score:5, Interesting)
It's precisely the next-gen telcos (CLECs, ISPs, xSPs) who invested in the new IP technology that ran into the boom/bust and are struggling or going bust. WorldCom is something of a special case - it had a lot of legacy technology that should have tided it over, but the accounting shenanigans were too much to survive.
This doesn't mean that IP-based networks are a passing fad, though - all that's happened is that the pioneers have gone through the normal bleeding-edge live/die cycle. Some of them have made it, some have gone bust, and all the old-line telcos have adopted the same technologies.
I agree that failing telcos should normally not be propped up - as long as someone can step in to maintain services by buying up their assets, particularly local loops that are hard to recreate, the customer shouldn't notice that much interruption. My problem is with the analysis that the legacy technology is why telcos are going bust.
Re:Traditional telcos aren't going bust (Score:2)
If you look at all the telcos of various types, it is the incumbents (RBOCs, Baby Bells, ILECs, PTTs...) who are surviving quite well and even prospering.... It's precisely the next-gen telcos (CLECs, ISPs, xSPs) who invested in the new IP technology that ran into the boom/bust and are struggling or going bust.
You missed a few details - let's rephrase that:
"If you look at all the telcos of various types, it is the companies that control the physical infrastructure that both they and their competitors need (RBOCs, Baby Bells, ILECs, PTTs...) who are surviving quite well and even prospering.... It's precisely the companies who depend on the physical infrastructure that is controlled by their competitors (CLECs, ISPs, xSPs) who invested in the new IP technology that runs over the same copper wires that the incumbents have control over that ran into the boom/bust and are struggling or going bust."
The only thing "new IP technology" has to do with it is that the Incumbents don't like the idea of someone selling faster service over the same copper for a lower price... notice how the ILECs hunkered over their miserably handled ISDN options until the threat of competition forced them to move on to faster, cheaper, better technology. And oddly enough, once they moved, they managed to grow their xSL business while all the non-Incumbent competitors got trashed by ruinous turnaround on copper orders.
Coincidence? Or Conspiracy? You be the judge...
Re:Traditional telcos aren't going bust (Score:2)
However, that doesn't explain why AT&T, Sprint and other long-distance telcos in the US, who don't have local loops, are doing OK (despite shrinking long-distance revenues) compared to many CLECs that offered (some of) its IP-based services. The answer IMO is that they have enough customers, revenues and sheer size to survive a downturn, and a diverse enough business that ISP-type services can become less profitable without sinking the company.
So I don't buy the conspiracy theory except in the local loop / xDSL arena. When downturns hit, it is usually the largest and most diverse companies that survive, in any industry.
Re:Traditional telcos aren't going bust (Score:2)
However, that doesn't explain why AT&T, Sprint and other long-distance telcos in the US, who don't have local loops, are doing OK (despite shrinking long-distance revenues) compared to many CLECs that offered (some of) its IP-based services.
Well, I'm not sure why that needs to be explained - it is an apples and oranges comparison. The LD telcos have a larger user base, have been in business for many years before the boom, and provide mostly telco-only at the consumer level (AT&T is the only one I know of playing in broadband, and that's only through cable not over telecom infrastructure).
The CLECS played heavily to the broadband data marketplace for the last mile, and were consumers of the data backbones provided by the large telco carriers. The broadband data marketplace is much smaller; not only are less people interested in xDSL than phone service, the distance limitations put the kabosh on an enormous number of potential subscribers.
The two segments are at opposite ends of the spectrum. Established, broad consumer base and large B2B businesses versus new companies rolling out new technology to a limited consumer base. How could the new technology be to blame? I haven't seen many stories from people saying "Yeah, I got DSL, but I decided that 56k was all I need so I got rid of it." The biggest problem I hear about the technology is the distance limitations and the sheer volume of crappy wiring that is out there (working fine for POTS, decent for ISDN, poorly for xDSL - and tell me the ILECs don't like it that way...)
When downturns hit, it is usually the largest and most diverse companies that survive, in any industry.
On that, I agree totally. If xDSL had been introduced and pushed by the ILECs instead of the CLECs, I'm sure that the market for it would be rosier (and more expensive) today. Since it cut into their T1 cash cow, though, they only moved when the CLECs became a threat.
So I don't buy the conspiracy theory
Well, that's my weak spot. When it comes to ILECs, I'm happy to entertain pretty much any conspiracy theory ;)