Phone+ asks: what was the most significant development—positive or negative—in the competitive landscape in the last decade?
Originally published December 22, 2009
Greg Taylor
You know I am always going take a crack at surcharges when you ask me this question! Prices have fallen to the point where we have to sell two or three times as much as we did in the past just to make the same amount of money. So, prices fall and surcharges have gone up. But we don't get paid on surcharges.”
— Bill Leutzinger, President, TelecomMedic
“The most positive development was that most network service providers currently are embracing the indirect channel and providing the support necessary to enable the channel to grow. The most significant development [on the negative side] is that the positive did not happen sooner and that ALL the providers are not in support of the channel.”
— Geoffrey Shepstone, President, Telecom Brokerage Inc.
“The most significant development in the past decade was the consolidation that took place among ILECs which has changed the competitive landscape. As a result of the ILEC consolidation, CLECs began a move to consolidation and have also sought alternatives to the last mile including building their own fiber and using fixed wireless.”
— Adam Edwards, President, Telarus Inc.
“The ‘nuclear winter’ where the industry took a dive with financial scandals, etc. and had an incredibly bad name was the most negative and embarrassing thing that has happened to the industry. This put a black eye on the industry and all agents had to prove themselves. On the flip side, this was a good thing for those agencies who were able to execute their vision with efficiency, leading-edge technology and diverse portfolios due to providers having less support for customers.”
— Vince Bradley, CEO, World Telecom Group
“In the past decade, the most significant development in the competitive landscape of the communications industry was the end of the UNE-P framework. This altered the makeup of the industry’s competitive landscape and altered the direction of participants. The approval of the consolidation of large U.S. providers was significant, but the change in regulatory schematic impacted more industry participants.
— Philip Josephson, Founder, the Law Office of Philip Josephson
“The most significant development in the competitive landscape in the last decade, unfortunately, has been the failure to achieve the open competition envisioned by the Communications Act of 1996. When the act was signed into law, our industry experienced a boom that has yet to be repeated. In my opinion, the FCC moved too quickly in allowing the RBOCs into the long-distance market, instead of waiting until the IXCs had established a meaningful presence in the local service markets. In addition, the reconsolidation (though FCC-approved mergers) of the RBOCs has essentially undone Judge Greene’s order to ‘break up’ Ma Bell. Unfortunately, we seem to have come full circle.”
— Greg Taylor, Attorney, Technology Law Group LLC
I believe that the demise of MCI via WorldCom is one of the biggest negatives over the last decade. MCI provided a sense of balance to the telecommunications landscape prior to being acquired by WorldCom. I suppose greed got in the way and we all lost. On a more positive note, the channel is still here and has survived what many considered a telecom meltdown that took place in the beginning of the decade. In fact, today the channel is more mature than it was 10 years ago and, best of all, there is huge opportunity over the next decade. Just look at the type of businesses that use the channel today for telecom solutions. Their appetite for solutions will only increase over the next decade.”
— Brad Miehl, President & CEO, MicroCorp Inc.
“UNE-P. While started a tad more than a decade ago, and although it has faded away, it was less than 10 years ago that it truly started to be used for its relatively brief run. The wholesale component of The Telecommunications Act of 1996 was not viable for true competition. The margins were not enough to cover customer procurement, support and risk of bad debt. It was too costly for CLECs to build their own facilities and even when done, it was only viable in major metropolitan areas. UNE-P truly opened the 100-year-plus monopoly the Bells had. A handful of competitors became hundreds. By the time it was knocked down with a change of heart at the FCC, the competitive landscape opened up from the seeds it had sown. Wholesale came to compete with UNE-P. CLECs gained enough profit and cash to build facilities. When well-established enough, they worked hand-in-hand with new technology (such as VoIP) to overcome the limitations of UNE-P and to survive its demise.”
— Zachary Schechter, President, ZCS Enterprises
“I’ll give you two and you can decide whether they are positive or negative. First, the FCC’s decision to change the rules on UNE-P, which forced many of us to move our focus to more profitable areas at the expense of competition; and secondly, the consolidation of MCI-Worldcom and Verizon as well as AT&T and SBC, which have created two monopolies in our industry.”
— J. Sherman Henderson III, Founder, President & CEO, Lightyear Network Solutions LLC
“I think the bankruptcy of several large competitive providers, especially LDDS/MCI/WorldCom, was the most significant development for the channel. For example, even after WorldCom purchased MCI, it was still the last truly competitive communications company with significant scale. When WorldCom went under and was subsequently subsumed by Verizon, it significantly narrowed the competitive landscape for several years until other smaller competitive providers had an opportunity to grow and become more prominent.”
— Benjamin W. Bronston, Partner, Nowalsky, Bronston & Gothard, APLLC
“The acquisitions of AT&T by SBC and MCI by Verizon may have been positive events for these companies, but they have negatively impacted the industry and consumers because the consolidation eliminated the largest facilities-based competitors and created entities that wield excessive market power and control over both wireless and wireline facilities.”
— Jerry James, CEO, COMPTEL
“In the last decade, there has been a disturbing rise in the number of agents who simply forward Web traffic from their Web site to the vendors and expect to get paid residuals for the life of the deal. This has negatively impacted the full-service agents in the industry who really manage the full sales process of their clients and are actively involved throughout the sales cycle and beyond. What this has done is forced the vendors to protect themselves against such ‘lazy practices’ by developing all sorts of ominous clauses and caveats in their commission agreements. For many vendors, this has included the elimination of ‘true evergreen’ commissions, unfavorable termination for convenience language and daunting sales quotas and requirements. The vendor community has had to react to these types of agents with drastic action and now all we can hope for as an industry is that the pendulum will ultimately swing back and end up somewhere in the middle.”
— Dany Bouchedid, President, the Technology Channel Association (TCA)
“Internet-based telephony or voice over Internet Protocol. VoIP utilizes the efficiencies of the Internet and has largely fallen outside of the legacy regulatory framework, allowing it to be priced at highly competitive levels. The flip side of this development has been the gradual decline of PSTN-based telephony which remains fully subject to the legacy regulatory framework.”
— Thomas K. Crowe, Partner, Law Offices of Thomas K. Crowe, P.C.
“It is both positive and negative — I believe the consolidation that has occurred did so because we are fighting for pennies now instead of dollars. That said, those agents remaining and or growing had to become business people. Profit and loss is no longer a phrase used in the carrier world. Agents have to speak to their positive cash flows in addition to their product set. The money is still good and will remain so. But the agent now has to run a business as well, in some cases, possibly more profitably than the carriers they represent. (As an example, we judge our salespeople by net TelcoPro dollars not by the old way of doing it — I have found several of the carrier VPs we represent asking why they don't do the same).”
— Dan DiOrio, President, TelcoPro USA Inc.
