It’s night and a guy loses his watch and so he starts looking for it under the nearest lamp post. His friend says to him, “Why are you looking over here for your watch?”. The guy replies “I am looking over here because the light is better”. So too is Brian McConnell’s lament over on Gigaom titled Take This Job And Shove It — Why I Retired From Telecom. His argument is this, there is no innovation in telecom so he left this part of the industry. This of course is rubbish, it is not even true even if you narrowly define telecom as voice (which is it most certainly not anymore).
Most of the profitable niches in telecom are now gone. Home phone service, long distance, small business phone service, conference calling, mobile — all have become low-margin commodity markets dominated by established companies. The capital costs of prototyping new phone services have declined, but not nearly as much as retail pricing, and hence, the margins are near zero. The liquidity and exit opportunities for small telecom companies are also not good. You either need massive amounts of capital, or you need to be bought by a phone company (the stereotypes about phone companies exist for a reason).
Telecom companies are now about application services and how to deliver a communications platform, NOT about toll calls and add moves and changes. There is plenty of new opportunity in building out services for telecom service providers if you are willing as a vendor to get on board with them. Conference capabilities, hosted contact center, IVR systems, voicemail, notification systems and monitoring systems are all currently being re-engineered for this new world and over the next 5 years there is going to be an explosion of new functionality for firstly the business consumer then the consumer themselves. I would stop looking under the lamp post at jajah et al and look for those that are adding the next layer of application value.
