The Telecom Meltdown - Continued

20 February 2003

This nation has long had a highly regulated telecommunications industry. In spite of efforts to deregulate, particularly since 1996, the industry has become more difficult to deal with.

We recently had a consulting engagement in which we simply wanted to price DS-3 lines to multi-tenant office buildings on behalf of a group of investors who were contemplating a telecom aggregation business. Here are examples of what we heard from representatives of the key providers in the area:

  • A DS-3 will cost about $10,000 per month, but we’ll waive the installation fee if they contract with us for 3 years
  • Four emails and 3 phone calls and a second provider still hasn’t responded
  • One of the traditional phone companies has said ”approximately $3000 per month, but it could be more”
  • A next generation, all-fiber company has quoted less than $1000 per month for bandwidth equal to a DS-3

    What’s frustrating about each of these ”estimates” is how much uncertainty clouds them. Clearly, the provisioning times for a DS-3 will likely exceed 60 days for most of these providers. [We’re in a city where FedEx can accept packages as late as midnight and still have them delivered by 8:00 a.m. the next morning!]

    Another factor is the difficulty in ordering bandwidth. Between the arcane language, the acronyms and the bureaucracy that must be satisfied, no customer can possibly order such services in less than 4 or 5 phone calls.

    Nevermind the fact that you can place an order for a rather complex computer system via the Internet or by phone and have it in less than a week. Nevermind the fact that delivery times on many other ”distributed” products have been cut to less than 48 hours.

    The provisioning of bandwidth still requires an act of Congress and 10 years of experience in the telecommunications industry before the supplier will accept an order from the customer. This is one of those industries that is so ripe for a transformation that there is no doubt a new, next-generation supplier’s disruptive view of how this ought to work will win the day.

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