Ah, the year 2000 – when money was plentiful and telecoms was king. Remember that world? Stateside, AT&T, MCI Worldcom and Sprint held about 70% of the nearly $100 billion exchange market after riding the long-distance industry’s 6% compound annual growth rate from 1984 to 2000. During those years, small players captured healthy chunks of that expanding revenue, with annual growth in double digits. Regional Bell operating companies (RBOCs) were entering the long-distance space as fast as regulatory, lobbying and other legal means allowed, while ILECs as a whole held over 90% of local access revenues. Emerging CLECs were growing as fast as they could resell or build network, spending the remains of the plentiful and easily-acquired capital of the 1990s.
Internationally, competition had spread first via callback, then via deregulation, with many countries seeking their own versions of the economic and innovation forces our industry had unleashed stateside. And statesiders jumped into foreign markets as advisers, operators and investors, eager to leverage their knowledge to ride new waves on new shores. At one European Competitive conference, a clever bloke called this the “Mayflower return,” because so many American entrepreneurs brought ideas back across the pond.
This was the world in which Capacity mailed its first thick-stocked, British-sized magazine in November 2000. Capacity followed this with conferences, holding its first US event in March 2001 in Atlanta, amid this new world of global opportunity. Ironically, this also was the month that the world of telecoms, led by CLEC declines and bursting internet bubbles, began to lose value in the stock markets.
I first met the Capacity team in the fall of that year, following a moving ceremony in honour of telecoms salespeople who acted with heroism on 9/11 when they found a handicapped woman abandoned in the stairways of the World Trade Center and carried her down dozens of flights of stairs, saving her life. This was a dark time for our country and our industry, with the thick shadows of terrorism and long shadows of overbuilds, overvaluation and financial scandals stripping the industry of momentum and its players of enthusiasm. It was as if Darwin himself was reaching up from his grave to squeeze our industry with his grip, daring every company to just try and slip through his fingers.
Yet Capacity forged ahead, while I contemplated what it must cost to print and mail this oversized (by US standards) magazine and the odds of successfully swimming upstream against forces crushing all print publishers in the internet age – never mind one serving an industry experiencing a merciless shakeout. When asked to contribute a monthly column, how could I refuse? It is said that all entrepreneurs need a little crazy in them to do what they do. This crew was loaded with it. This could be fun, I thought – and fun it has been.
Re-reading my first Stateside article from 2002 reminds me of how many of our friends have left the industry, as well as the skill with which today’s managers have led their companies. Not only have managers and strategists in carriers struggled, but those working across the entire industry – in the software, hardware and service firms that support the carriers as well. Very few industry publishing firms have survived. Few firms like mine have survived and fewer continue to cover wholesale. Maybe we all put enough of our crazy on to be here today, more experienced and battle scarred but hungry for more.
It is without question that today’s wholesalers are better at what they do now. Looking at our Report Card surveys from 2000, I am amazed at how low the satisfaction scores were at the time. Average overall scores – taking into account the highest for ‘Voice and data products’ and the lowest for ‘Provisioning’ – averaged at only 5.5 out of 10. Ten years later, average scores are all at least 10% higher. Product satisfaction remains the highest rated, but the weak spot – provisioning – has improved by 20% over the past decade. Clearly, today’s carriers are a different class, even if many operate under the same names.
Wholesale telecoms is shrinking now as the latest consolidations drive traffic on-net. Wholesale industry growth, as shown in our latest sizing and share study, indicated that severe shrinkage in circuit-switched voice has, and will, continue at a rate of -9.5% from 2009 to 2015. Fortunately, Ethernet, IP and other data products supporting wireless backhaul will flatten out this revenue contraction as the competitive landscape continues its evolution. Right now, if you blink, you might miss a merger or product launch. It sounds like just enough chaos for Capacity to make something of it.
Congratulations, Capacity team, for a decade well managed. And thank you for supporting entrepreneurs and incumbents alike. Happy double-digits and best wishes from the Atlantic-ACM stateside team for many decades more.
Judy Reed Smith is CEO of Atlantic-ACM. She can be contacted at: judyrsmith@atalntic-acm.com
