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U.S. Gambles with Legacy Telecom Policies

TelecomTV has a very informative interview with Simon Torrance of STL Partners, on a topic entitled "The Web 2.0 Threat " -- discussing the results that uncovers globally, and across functional organizations, telco constituents are frustrated that they're (collectively) puzzled by what their customers want, and where their business should be heading.

The collective assessment exposes a major difference between how the telco sector will evolve in the European and U.S. markets. The implication: the U.S. government, specifically the Justice Department and the FCC, have essentially taken the approach of allowing industry consolidation that has recreated dominant monolithic companies -- AT&T and Verizon -- that are structurally best suited to the dynamics of a bygone era.

If you believe, as I do, that the forward-looking economic viability of a nation is undeniably tied to enabling an appropriately evolving presence within the global networked economy, then there's reasonable concern that the U.S. government has gambled with this country's future -- against the tide of informed professional opinion.

What's interesting about Mr. Torrance's commentary is they he is very careful in choosing his words to characterize the apparent crisis, both for telcos and national government policy, in a very diplomatic way. Clearly, it's difficult to deliver 'damning evidence' in a diplomatic way. Granted, he would prefer that the focus stays on the issues at hand, and not merely shooting the messenger.

While Mr. Torrance couched the focus of his study as "how do we make money in an IP-based world" -- I see this as a much bigger issue, which is "how can a nation ensure that it has both the IP infrastructure and e-commerce policies in place to remain globally competitive." Meaning, this issue is fundamentally much more significant than telco revenues and associated profit margins.

Again, the Internet is the underlying transport for e-commerce, in the same way that waterways, railways, highways and airports have been instrumental in national, regional and local economic development. That said, can the U.S. effectively compete with two large telecom players, who will be making choices that directly impact America's future role in the world?

Moreover, if it's true that the leadership and middle management of legacy telcos acknowledge that they're unaware of real customers needs, and therefore unable to decide how to meet those needs with products and services -- who is assessing that risk relative to the U.S. economy, and then guiding public policy accordingly?

It's not a rhetorical question, since I don't know the answer. We are left with that sinking feeling once again as Mr. Torrance concludes his remarks -- if hope isn't a strategy, then shouldn't the U.S. quickly develop a national telecom infrastructure policy, like other forward-looking nations?

When you place your bet on a couple of large contenders, shouldn't they understand their markets and be confident that they can sustain their business without regulatory protections. If that's simply not realistic, then wouldn't it be wise to spread the risk, and thereby ensure that the likelihood of sustainable competitiveness isn't such an unpredictable gamble?

What's to stop the U.S. government from forcing a structural separation, in anticipation and preparation that 'just in case' these monolithic U.S. companies make the wrong strategic choices, one or two misguided CEOs aren't in a position to unduly handicap the national economy?

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