Creating the 21st Century Communications Company. Global Executive Symposium La Costa, California September 28, 1998. Key issues facing executives. Regulatory changes?. Access to customers?. Technology choices?. Optimum size?. Non-traditional challengers?. Cheaper, better operations?.
Global Executive Symposium
La Costa, California
September 28, 1998
Access to customers?
Cheaper, better operations?
A. Incumbency Counts - hype evaporates
B. Mass Matters - megacarriers dominate
C. Pinpointing Prevails - specialists win
D. The Revolution comes
The SBC-Ameritech deal is not good for what we’re trying to get. I’m not sure bigger is going to be better. Ron Johnson, Chmn., Nebraska PUC
A breakthrough in price or performance is necessary for the [revolutionary] scenario. I am relatively pessimistic about it. I don’t see the shift from circuit switching to IP as providing a sufficient jump.
VP, new telecom venture
Incumbency counts, they say
The bulk of traffic will migrate from switched circuits over the next 10 years, but this will be a gradual process. The current circuit-based networks will be the cheapest and most convenient for most customers during that period.
SVP, European PTT
In SBC’s view, this globalization will result in a half dozen or so integrated global competitors vying with a very large number of regional, niche, and local competitors.
Customers are looking for single-source providers. They are looking for simplicity.
Senior RBOC exec.
We must commit to provide end-to-end service to customers, any place anywhere, any time.
Senior ATT exec
There will always be some niche players but, basically, the world is going to be three or four 300-pound gorillas. VP Canadian telco
Customers say they want bundled
working solutions, not just parts. They want
us to show them how to deploy these products within their existing fabric of networks.
We’ve combined the 4th-largest long distance company in the U.S. with the largest provider of local-access services -- outside of the RBOCs -- with the largest ISP in the world.
SVP of large IXC/wireless carrier:
Our experiment in calling party pays (for wireless) entails the shared use of a 500 number for long distance and wireless (with a single bill). To deliver CPP, long distance must be provided. Can’t break out the two services.
Integrated communications carriers will be in the best position to satisfy customer demand for simplicity. Not just one-stop-shopping, but fully-integrated products. What we now see as different products will be integrated not just at the customer end but in the actual delivery so they can’t be pulled apart.
Intelligence in the network is key. It enables simplicity and transparency. As customers sign up for more and more services -- and indeed as bundles of services become the only way of signing up -- the intelligence in the network becomes more and more applicable.
I call this “strong bundling” or integrated bundling” as opposed to “weak bundling” that simply stuffs various services into a single package.
are so high, acquisition is often the superior
approach, even though there are these issues,
because you get there so much faster.
WorldCom COO Sidgmore sees acquisitions as core competency...
Acquisitions are essential
We know how to make them work
MFS, UUNet, and WorldCom are all acquisitive companies. Together we’ve acquired 65 companies in the past 4 to 5 years. We’ve developed a significant expertise in integrating cultures and putting manage-ment teams together that balance the organizations’ cultures. It’s a core competency of WorldCom’s.
It’s the same story we’ve seen in U.S. industry for 100 years. Big companies are not as agile as smaller ones, and there are always big opportunities for smart people everywhere. But continent-wide or even global operations require a company with appropriate scale to handle that size of operations. That means a very large company. VP, major wireless carrier
You can’t even imagine what dealing
with 70 million customers involves.
VP, TCG (now part of AT&T)Mass really really matters
If you have an under-depreciated, over-regulated,
attacked, monopoly phone company, why double
the size of that?
President, RBOC subsidiary
The colossus mergers, seeking economies of scale and
geographic coverage, are solving all the problems of yesterday.
You have to ask a fundamental question -- “What got better
from a customer’s point of view “?
President, wireless carrier
Ameritech’s wholesale business has increased from $150m to more than $1bn in 2 years. The wholesale retail split is aready here.
Disintermediation and the collapse of the valuechain is occurring in every industry affected by IT.
VP Strategy, equipment manufacturer
Network ownership will be less and less important as time goes on. Today it is reasonably important. Twenty years from now it won’t be important at all. President, wireless carrier
We already have contracts to buy long distance minutes at an 80-90% discount from retail. Why do I need to own the network?
A successful carrier of the future doesn’t necessarily own networks. It controls and operates networks, but it may not own them.
President, equipment manufacturer
Of the value created (in the telecom process), 45% will go to the content provider, 45% will go to those that actually work with the customer, and bill and innovate with the customer, and 10% will go to the infrastructure provider. President and CEO, LEC
W(h)ither the incumbents in this case….?
Customer service wins us customers
every day. We expect to get 80%
of the GTE’s business in our town
within 3 years CLEC COO
WinStar will deliver a level of personal service that will amaze businesses. Customer care will be a primary focus for WinStar."
Bill Rouhana, Winstar CEO
“If regulators set the rules for the marketplace, any structure is sustainable because the rules keep it in place.”President, wireless carrier
Price/performance ratios shift by at least one order of magnitude, within
Unlike evolutionary scenarios, these scenarios are not mutually exclusive
Voice infrastructure is a handicap; at a minimum, new data-centric market entrants have big cost advantages
Our business model
calls for 50% revenues
from data within 5 years.
VP European PTT
Intelligent networks are
useless in the age of data.
Stupid networks win every time
former AT&T exec
Scale will come from a focus on data,
not voice, and from a willingness to be
a growth company, not a safe cash cow
for investors. IP has some advantages
over CS, but scale is the key.
Senior exec, Microsoft
None of these is mission critical
The existing network is a critical source
of competitive advantage. the issue is
how to take advantage of it.
VP, RBOC wholesale group
Ameritech is going to
replace its CS network
with a state of the art
packet switched design.
Richard Notebaert, Ameritech
everywhere by 2003
Strategy VP, major MSO
You have T1 speeds inbound and half T1
speeds outbound all for $35 a month.
Nothing else is practical or affordable.
Technology director, major universityCable Connects
Cable operators will have 2-way plant running to 40-50m homes by the end of 1999, and will be offering high speed data to 20-30m subscribers.
Cable telephony faces all the problems of voice over IP, plus another layer of cable problems.
Cable has huge problems in setting up effective back office and customer service systems for Internet access, let alone Internet telephony.
Seven years is not long enough to change consumer behavior. Cable assoc. exec
In Europe, wireless revenues are
already about 20% the size of the
revenues of fixed network voice traffic
. …Mobile services could deliver 50%
of fixed service revenues by 2001.
Worldwide, the number of fixed wireless subscribers will grow from 4m in 1997 to more than 45m in 2001. NBI
Independent wireless companies are
already cost competitive with BT’s
landline rates in some cases.
Dir. Strategy, European wireless co.
Incumbents’ position weakens
Managers and customers leave