Crisis requires change of habit

It's no secret that the  service providers are having problems. We've not seen the last of the big  bankruptcies. Most of their business customers are sitting it out, rechecking their own strategies in light of the telecom mess and waiting for it to be resolved.

It's not going to get resolved without your help. We're not talking about a bailout or donations. Nor are we talking about buying stuff you don't need. We're talking about changing your habits.

The root of today's problem comes at the very core of what drives most businesses - Wall Street. According to conventional wisdom and a number of new reports, there's a glut of capacity in metropolitan markets and anyone investing in building fiber deeper into the local loop would have to be crazy. That's because the pundits analyzing telephone companies have declared that you have enough bandwidth to all of your business locations. There's no need for any additional investment by carriers for building out infrastructure to bring new high-bandwidth options to your doorstep. Too much bandwidth was built.

Obviously, the majority of users will disagree with this logic because fiber-based options reach a small percentage of business locations in the U.S. But, given Wall Street's iron rule over corporate spending practices, combined with the general shortage of capital, the investment community's belief that too much money has been spent building out capacity is likely to doom you to bandwidth shortages for years to come.

Does this scare you? It should.

For the past several years, corporate America has enjoyed the promise of more and more bandwidth at the same price. Although the cost of building out bandwidth has fallen dramatically, service providers' pricing has fallen even faster in the hypercompetitive environment launched by the Telecommunications Act of 1996.

As is often the case, Wall Street has looked at the symptoms and jumped to a wrong diagnosis. The problem isn't that carriers and service providers spent too much money building out unneeded capacity. The problem is that these companies spent too much money and didn't collect enough revenue. Have you visited the headquarters of any of the start-up service providers that have raised a ton of money? Have you looked at their organizational charts and read their executive compensation plans in their annual reports? Go ahead, Wall Street, punish these companies for spending too much money. But don't tell us they've built too much capacity.

So how can you help - and what's this got to do with your habits?

We hope a few service providers will be brave enough to spend money to bring more bandwidth to your doorstep in the face of Wall Street's ignorant threats. But we also hope they will do so with a rational business plan. That means spending money only on the right things to ensure they can deliver a quality service to you.

It also means establishing rational pricing. That means user companies will have to change some of their ways, because the all-you-can-eat, anytime-of-day approach won't make for profitable carriers - and certainly not in this competitive marketplace.

Are you willing to pay more for more capacity? If not, then you must be prepared to help the carriers smooth out their traffic requirements so they can operate more efficiently and therefore more profitably. Today's networks sit idle most of the time, waiting for that rare instant when you demand the full capacity you've been promised. Are you willing to mark packets carrying e-mail and other delay-sensitive information as low priority so your carrier has the opportunity to shift traffic slightly to achieve more optimal fill rates? Are you willing to pay a premium price for packets requiring premium service?

Times are a changin'. You're already seeing more usage-based pricing in the form of tiered pricing on cable modems and DSL lines. Expect to see application-based and priority-based pricing, too.

But for it to work, you have to make that step, too. We hope, this time, the economic disincentives will help you along that path.

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