I've been a good girl this year, so I'd like to think that Santa may bring me what's on my list.
All I want for Christmas is some sanity and stability in the telecom industry. Santa has his work cut out for him if he is going to deliver to me a rational telecom world. He's going to have to temper constant bad news in the daily business press, imbue justifiably shaken investors with confidence, force unrealistic expectations regarding capital expenditures and return on investment out of the heads of Wall Street barons, and stop the self-destructive and lemming-like behavior of service providers and vendors.
It's time to take a step back and remember what the telecom industry was like before the Internet and before the Telecom Act of 1996. It was a solid, steady-growing, strong-performing industry that continually invested in technology and network infrastructure in order to expand and improve its services. And, despite the heavy spending, companies were profitable because they invested wisely for the future.
Christine Heckart, president of Telechoice Inc., summed it up best at a recent press conference, "Telecom has been boring for the last 100 years. It's geeky."
Not that there's anything wrong with that.
Once telecom became "cool," the problems started. "The humogous greed and appetite for telecom stock created a largely fake market...there was too much money going to the wrong places, driving bad decisionmaking," Heckart correctly noted. "Companies are largely still making bad business decisions to pander to Wall Street."
Under pressure from Wall Street to live up to bloated projections that are not based in reality, many service providers have been forced to cut capital expenditures to the detriment of rolling out advanced services.
For example, a recent Wall Street Journal article reported that it takes a phone company about two years to recover the investment it makes in installing a consumer DSL line and providing service. So what? Once that investment is made, consumers most definitely will want to use that broadband access for many years after the telco breaks even.
If investors in the original public switched telephone network had this same shortsighted mentality more than a century ago, there's no doubt that today we'd be relying on the Pony Express for all communications.
It makes me wonder...has the "dot com," get-rich-quick mindset so fundamentally flawed business decisions that only infrastructure investments that can make money within a few weeks are funded? Are CEOs now so beholden to Wall Street that they can't make their own decisions regarding what's right for their company in the long-run, rather than what will make a quick penny for fickle investors tomorrow? So, Santa, in lieu of some fancy, beribboned present this year, I just ask that you please stop the insanity.
GAIL LAWYER
EDITOR IN CHIEF
