This year’s 2011 US Wholesale Carrier Report Card revealed a mixed bag of insight for Stateside wholesalers. While operations scores remained relatively constant year-on-year, and price remained the top driver of wholesale purchasing for the 16th year of this research, overall data product quality scores fell for the third straight year.
When looking at macro trending, we often focus on the components that drive value – price competitiveness and quality. It’s no secret that it’s nearly impossible to separate the perception of value from overall economic conditions, but price competitive ratings from our 2009, 2010 and 2011 US Long Haul Carrier Report Cards (with customers rating carriers on performance in the years 2008, 2009 and 2010) are textbook examples of how economic pressures have rolled through the value chains of the Stateside telecoms industry.
Individually measured products in the report cards include 800 termination; outbound (1+); VoIP interconnection; VoIP termination; intercity Ethernet; intercity wavelengths; IP-based WAN; and LH private line high cap. Across all these products, price competitiveness ratings dipped considerably in the 2009 service period (as measured and reported in the 2010 Report Card), triggered as the US simultaneously reached a 10-year high unemployment rate and a 10-year low consumer confidence index. All of these ratings rebounded somewhat as the leading economic indicators inched forward, but not all the way back to where they were before employment and confidence bottomed out.
Similarly, the customers that delivered these economically sensitive ratings also tend to tilt their purchasing activities towards products they perceive to be the most price competitive. In the current cycle, the three highest-scoring products in price competitiveness – VoIP termination, intercity wavelengths and VoIP interconnection – also represent three of the four products with the highest anticipated spending increases in the 2011 to 2012 timeframe, even though intercity wavelength quality ratings were down year-on-year. It should be noted, however, that the two VoIP products (termination and interconnection) achieved the highest gains in quality.
Overall, this sustained combination of the external forces of economic pressure and uncertainty and the internal forces of technology migration will continue to make revenue growth a challenge for wholesalers.
Judy Reed Smith is CEO of Atlantic-ACM. She can be contacted at: judyrsmith@atalntic-acm.com
