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North American Network Operators Group Date Prev | Date Next | Date Index | Thread Index | Author Index | Historical Re: The Paradox of Commoditization
Hi David Bigge and Peter Galbavy, Peter K and James St Clair David's point first..... of course people will pay for convenience and will pay for phone service. phone service is not going away and bankruptcy won't make the lecs go away. bankruptcy will transform them (at least i hope it will). My point was not intended to be JUST VoIP....although VoIP is, i believe, the current most powerful force driving commoditization and the rate at which it is being adopted will make a bad situation much worse for the LECs. The future, in addition to a commodity end-to-end IP net where everything rides IP as an application is in areas like linux and open source. What fascinates me is that I see interesting evidence that IBM gets the hypothesis I laid out. Everyone knows the huge amounts IBM has invested in linux and i was also aware that IBM was positioning itself in the user services and education area. At VON i got first hand evidence of this. There was an IBMer from the IBM Institute for Business Value in Chicago on one of the panels. Afterwards I grabbed him and we talked one on one for 90 minutes. ABSOLUTELY AMAZING....... if there is such a thing as an Isenberg-Googin-Cook school of thought, he is a full fledged member... IBM ....big huge.... former mainframe.... now decentralized. Plunging head long into customer education..... IBM GETS IT! Customer education, consulting, and services is the area that will stay solid and likely grow. Virtually everything else will shrink. Will it shrink by another million in the US? It could but it will likely take a few more years. My point in the essay was to encourage folk to think about the commoditization dynamic. I had not thought about it in quite the same way myself before. no one can predict what the time table will be. Telecom and IT won't go away, but they will never in the future operate with anything like the same economics and employment patterns that they did as recently as 2 or 3 years ago. Peter K's point As for sounding like David Isenberg. Absolutely. And Roxane Googin as well. the net paradox URL cited is as much googin as isenberg. Apparently at the spring VON 2002 Isenberg, Googin, Anders Comstadt of Stokab the municipal dark fiber net in stockholm which is making a profit, and Tim Horan of CIBC had a panel in a breakout room with 15 people in the audience. This year at 5pm april one the same four were in the main auditorium talking to an audience of about 800. the wisdom is spreading. Peter G's point, sorry -- it was anything but a very thinly veiled jingoistic plug for 'Made in USA' It is my best attempt to report what i see. And that is that " made in the USA" is to some extent history...like it or not. This part is reality and inexorable. It was a lament for the stupidity of my own government in the form of the FCC and the current congress critters for not understanding how the duopoly approach to broadband is cutting our own throats from the point of view leaving us with a second rate and expensive infrastructure upon which our future economic activity depends. The same commoditization is affecting European telcos for sure. The question is whether the EC will deal with the dynamics more intelligently than we have in the US. Question: Is telecom a sick industry? If it is, then you regulate it like the FCC has been doing in the US. If on the other had you see telecom as a sick underlying infrastructure on which economic growth depends then you better think of doing treating the industry in a way different than you would if you were just trying to preserve share holder value. Jim St Clair's point largely agree. Think big picture cost point of view. To deliver voice as a telco what does your current infrastructure COST, and what is its complexity? Give cost, complexity and debt service how can you compete against another player who is delivering its service via IP over gig E and doesn't need to buy all that complicated legacy switching gear. And increasingly large enterprises are going to themselves deliver telecom services. Case in point is IBM which on march 3rd i believe announced a huge project to globally convert to voice over IP. To do so they will rip out token ring in all their offices and install ethernet at a minimum estimated cost of $100 million. the calculation is that they will save more than that on their phone bills and via use of SIP proxies they can get new features of tailorability in voice service that cannot be gotten from the PSTN many thanks - now back to your regularly scheduled operational issues -- ============================================================= The COOK Report on Internet, 431 Greenway Ave, Ewing, NJ 08618 USA 609 882-2572 (PSTN) 703 738-6031 (Vonage) [email protected] Subscription info & prices at http://cookreport.com/subscriptions.shtml The Paradox of Commoditization - Studies in VoIP and Telecom Economics, April -June 2003, 128 pages available at http://cookreport.com/12.01-02.shtml and http://cookreport.com/12.03.shtml =============================================================
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