Telecom Consolidation: Vendors Next
After five years of providers tantalizing customers with innovative services at low rates, the telecommunications industry is returning to an era of fewer providers and rising prices. Facing a dwindling pool of customers, however, telecom vendors are racing to ensure that the prevailing carriers sustain a level of innovation in the face of decreased competition.
With increasing frequency, telecom companies are working with carriers in cooperative forums to teach larger, slower-moving providers how to cultivate markets, many of which have been tapped by startups. At last weeks SuperComm conference here, manufacturers concentrated on showing the carriers how to become more responsive to users.
"Monopolies are back, and the CLECs [Competitive Local Exchange Carriers] are largely gone," said John Burnham, vice president of corporate communications at Unisphere Networks Inc., of Westford, Mass. "The only new service from the ILEC [Incumbent Local Exchange Carrier] has been an increased bill. American service providers have got to wake up. It is not about bandwidth anymore. Its about services."
"The real issue is who is going to figure out the right services to offer," said Tony Chen, founder and vice president of technology at Anda Networks Inc., in San Jose, Calif. Anda, which provides next-generation access infrastructure equipment, rolled out a platform to enable carriers to migrate from voice to converged voice/data networks.
To telco vendors, it is obvious that users want faster, more innovative services; more control over services; and tangible guarantees from carriers. Their goal at the show was to convince carriers of that, and many focused on explaining how IP networks will help providers create new revenue opportunities, now that networks with plentiful bandwidth are in place.
The DSL (digital subscriber line) sector is perhaps the best example of a technology brought to market by new entrants and now left largely to incumbents to cultivate. The DSL Forum is trying to undo the negative perceptions regarding the technologys deployment problems and the incumbents role. Encouraging the ILECs to incorporate best practices, last week the forum touted a technology that will let DSL reach beyond the 3-mile range traditionally seen as its limit.
One DSL Forum member, Catena Networks Inc., of Redwood Shores, Calif., builds hardware and software that lets carriers integrate POTS, or plain old telephone service, and DSL access on the same port to encourage the telcos to begin migrating to IP. "Were enabling a line-by-line migration to the packet network," said CEO Robert Machlin. "Its a phasing in of IP evolution as opposed to a forklift revolution."
Another vendor/carrier coalition, led by Nortel Networks Corp., Cisco Systems Inc., BellSouth Corp. and SBC Communications Inc., will launch this week to help providers overcome obstacles to widespread metropolitan Ethernet services.