Warm fuzzy types may tell you that all babies are beautiful, but I've spent enough time at parks and Gymboree classes in the past two and a half years to know that ain't true. Baby New Year is a classic example.
It's not pretty, but industry analysts say 2003 is expected to bring more of the same of what we saw last year -- a least for a few months. "I don't think we're going to see any big turnaround just because we turn the page of the calendar," says Nancy Bedard, director of business communications services at the Yankee Group. "First the economy needs to turn around."
Clearly, that's going to take time. And, signs of when that may happen are mixed, says Probe Research Inc. COO Allan M. Tumolillo, who notes on the upside consumer spending hasn't collapsed "yet," and home sales are rising, even as personal bankruptcies and foreclosures are on the upswing. The threat of more terrorism in the U.S. and a war with Iraq, he adds, are economic wild cards.
Even when things start to improve with the economy overall, however, there will be a lag between that and a telecom industry recovery. Melanie Swan, director at RHK Inc., says service providers won't feel the effects of a macroeconomic recovery until about six months later, and it will take several more months on top of that until service provider capital expenditures reflect any improvement.
In the meantime, analysts foresee more suffering and consolidation (or more outright failures) among both vendors and service providers.
Perhaps the best-positioned service providers to survive the storm are the RBOCs. Probe's Tumolillo says unless the Bells shoot themselves in the collective foot, they will be in the market this year with national long-distance services. As noted in xchange's November 2002 cover story, "Are the RBOCs in as Bad a Shape as They Say They Are?," prospects also look good for the government to in some way weaken the Bells' unbundling requirements.
So, as another parent advised me after I had experienced the early days of my daughter's "terrible twos": hold on to your chair. Baby New Year will still be a handful for at least a few months into 2003, but it's just a phase that we can all learn from and eventually will move beyond.
Until next time,
Paula Bernier
Editor in Chief
