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| | The Telecom Network for Professionals and Users Network is not currently active and cannot accept new posts | | What's behind the mergers? | Views: 634 | | Jan 14, 2007 2:55 pm | | What's behind the mergers? | # | 
Ken Hilving | |
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The thread on AT&T purchasing Bell South has been interesting. With the
merging technologies, those of us involved in technology tend to think in terms
of leveraged networks and economies of scale. I don't think that, however, is
the objective behind these mergers.
I believe what companies like AT&T are looking for today is leveraged
services. The market is not being driven so much by the latest technology as by
the packages. To the average consumer, the technology itself is not a factor.
Consider the US market in cellular. Nextel is pushing bundled minutes shared by
a family, and trying to make the idea of a cell phone for every child the normal
state of affairs. Vontage is pushing free calls to Canada and Europe. Cingular
may have scored the biggest coup by providing the service to Apple's new iPhone.
In other areas, the latest AT&T market drive is digital TV, broadband
Internet, telephone, and cellular all on a single bill.
This is typical in a mature market space. There is little growth remaining in
new users, so now its competition over the existing users. Fueling the battle
are the revenue sources - the actual users and the advertising dollars that the
users represent. Those ad dollars have the higher market cap, so market share is
becoming more critical to the long term profitability of the providers.
The good news is that this drives down the direct cost to users. The
communications services cease to be the primary business, and become merely a
vehicle to deliver advertising. In the case of printed advertising, this has led
to free periodicals in many areas. The Internet service providers have run the
same model since the World Wide Web began. The actual price paid for services
ceases to be cost based, and instead becomes revenue based. Maximizing profit
per user is no longer the objective. Maximizing the advertising revenue is the
new objective.
The bad news is that being free of all those ads becomes a premium service.
Instead of paying for service, users will pay to keep ads off their devices. The
price will be based on the ad dollars lost.
In this environment, the monopoly concerns are much lower. The breakup of
AT&T was necessary when in the world where the service was the product, and a
monopoly would squeeze users to increase profits. That world has ceased for
telecommunications.
Private Reply to Ken Hilving | | Jan 14, 2007 5:08 pm | | re: What's behind the mergers? | # | 
April Diehl | | I agree. The product itself is not as important as the services that come with it. It is not enough to provide a customer with phone and internet access anymore. Now customer's also want these lines to be managed and monitored. Another new trend is line cost tracking. Verizon Business offeres a service called Professional Services
http://www.verizonbusiness.com/us/managed/professional/
Another example is the ITEMS product (Integrated Telecom Expense Management Service)
http://www.verizonbusiness.com/us/about/news/releases/release.xml?newsid=19513&mode=vzlong&lang=en&width=530&root=/us/about/news/releases/&subroot=release.xmlPrivate Reply to April Diehl | | Jan 14, 2007 10:47 pm | | re: re: What's behind the mergers? | # | 
Mike Olszewski | | Call me crazy (you wouldn't be the first) but, as an independent telecom consultant, looking to a LEC to provide TEM services is a bit like letting the fox guard the hen house.
The TEM maketplace is full of a wide range of products, each with their own features/functions. Only through the development of the client's requirements can you determine what TEM products fit their needs. As consultants we should not be touting (and I'm not saying you are) any TEM product offered by a LEC. Just my opinion.
MikeO Private Reply to Mike Olszewski | | Jan 15, 2007 12:03 am | | Not crazy, but perhaps biased? | # |
Ken Hilving | |
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In the case of Verizon, the offering is actually a third party product. You
can register and download information about the products at
SymphonySMS.
An independent perspective is always worth considering. The reason is that an
independent perspective brings a different knowledge set to the discussion, just
as technologists tend to think in terms of technology, accountants in terms of
financial costs, and sales in terms of market values.
Of course, in addition to knowledge and experience, we bring our prejudices
and biases to the discussion.
With such things as Enron and WorldCom scandals, it may seem like no large
corporation is capable of ethical behavior. Yet when I consider my own
experiences I cannot recall a single case of blatant fraud or deceit that went
beyond a particular individual. I would not discount a capability simply because
it is offered by a corporation.
Goodwill is a significant corporate asset, and not risked lightly. I know I
consider the aggregate of values offered, not simply the price. Offering honest
and effective TEM even when it may move business to a competitor might actually
generate more revenue based on the goodwill it creates.
Private Reply to Ken Hilving | | Jan 15, 2007 2:11 am | | re: Not crazy, but perhaps biased? | # |
Mike Olszewski | | I realize that this is a thrid party product, but the mere fact that it is being offered by a LEC as a product offering is suspect. Why would a LEC be offering a TEM product except to drive their base into a product that they have endorsed and will use to foster their own agenda? Again, as an independent consultant, I would not recommend any TEM product to my clients until I have had the opportunity to define what requirements and goals my client may want to achieve.
MikeO Private Reply to Mike Olszewski | | Jan 16, 2007 3:20 pm | | re: re: Not crazy, but perhaps biased? | # | 
Ira Stoller | | "Why would a LEC be offering a TEM product except to drive their base into a product that they have endorsed and will use to foster their own agenda?"
It's called "upselling," and why do you think this practice is limited to LECs? What organization do you know of that doesn't try to upsell? It's how companies grow.
Be careful: eliminating LECs from consideration is a SUBJECTIVE rather than an objective decision. A wonderful line I read many years ago may be relevant: "You can never be objective about your own objectivity."
"I would not recommend any TEM product to my clients until I have had the opportunity to define what requirements and goals my client may want to achieve."
That's absolutely the only way to fly and if you truly live by those words you cannot arbitrarily eliminate any source unless of and by itself it does not meet your client's criteria.Private Reply to Ira Stoller | | Jan 26, 2007 5:39 am | | re: re: re: Not crazy, but perhaps biased? | # |
April Diehl | | First Verizon Business is not a LEC. Verizon Business is one of three operating units of Verizon Communications Inc. , which is the LEC. Verizon Business is an IXC at best. The differences could probably be debated in a seperate thread.
Second I personally do not sell this product at Verizon Business. I am just a PM that installs what is sold to the customer. But from what I can see, it is a fascinating product for the customer and yes, it can help Verizon Business upsell.
"Why would a LEC be offering a TEM product except to drive their base into a product that they have endorsed and will use to foster their own agenda? "
Loyalty. If you had services with a company and they came to you and said.. you know you do not really need all this stuff, if you do A, B, and C, you can save 20%, wouldn't you be more inclined to give this company more business??? I would.
"I would not recommend any TEM product to my clients until I have had the opportunity to define what requirements and goals my client may want to achieve."
If I understand the product, this is customizable to an extent for each customer.Private Reply to April Diehl | | |
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