The truth will set us free

The telecom industry needs to get back to selling on its merits, selling where it belongs, selling what it has now and working to rebuild a sense of reasonable expectations in the market. People have said this over and over, but I’m just not sure it’s sinking in.

John Chambers has made a big issue over the past year of re-establishing trust in the telecom marketplace. The rise and fall of the telecom sector has been blamed substantially on the hype perpetrated on everyone by, well, everyone. We simply don’t know who knows the “truth,” and we’re still living a lot of lies in our industry.

Nevertheless, there are six truths about our industry, and the sooner we acknowledge them, the faster we can get back on track:

• All the rules for projecting sales have gone out the window. Internal projection processes were built during times when you could project. People have to start thinking of future projections as a series of potential outcomes and not the expected outcome. What happens if the telecom industry has another really big downturn? What happens if your company simply does not meet internal goals by 20%? By 40%?

• Now more than ever, we’re in “rob Peter to pay Paul” mode. Budgets being what they are, if you’ve got an emergency on one side of the network, you “find” the money. While that’s always been the case, in the past you had special project budgets to pull money from. These days, it’s not uncommon that there are no special projects funded, and so hidden slush funds can’t be dipped into.

• I’m constantly asked, “When will capital expenditure spending return?” The fact is, it never stopped. The typical telephone company has a long list of capital spending that is matched with available funds, with a moving cutoff of what gets funded. If demand is high for one service, expect spending in that area to continue; if not, it won’t. Vendors should be asking, “What more can we do to prove that our products will drive better results to the bottom line, sooner, than other items on the telcos’ lists?” We call this “market acceleration,” and any firm not focused on market acceleration activities is going to be spinning its wheels. Video on demand is a good example of a technology that has been marketed proactively to the telcos.

• Revenues are not reliable. Whether it’s your revenue or that of your customers, you can’t count on steady and stable growth. I got into a heated exchange with one equipment vendor’s board of directors about the stability of the regional Bell operating companies’ revenues regarding their new bundling initiatives. My take is that bundling historically favors those instances where the value proposition of the bundle substantially exceeds the individual parts. However, if you take four or five generic services, and bundle them together and discount the bundle – and everyone else does the same – then all you have done is create another generic offering. Just because new products are available does not mean they will sell.

• Don’t confuse the natural evolution of products or services with strategy. People say that the lower DSL prices mark some strategic stroke of genius. Prices decline with deployment in every services group. Yes, more customers will sign up, but the existing customers get a price break, too. Cable will respond in kind, as will alternative service categories. This is the natural evolution of services.

• Those who differentiate themselves will get sales. The areas of growth in the industry are subject now to massive herding. Each day someone is launching a new multiservice capability or some SONET enhancer. Everyone is starting to look the same again. Dare to be different. Figure out your unique strengths, build market acceleration tools to support them, and communicate them concisely. Think you already are doing this? Recheck. If you can substitute a competitor’s name on your slides and have it sound the same, you’re not unique.

The industry needs to get back to selling on its merits, selling where it belongs, selling what it has now and working to rebuild a sense of reasonable expectations in the market. People have said this over and over, but I’m just not sure it’s sinking in.