Every so often in the computing business, you hear people saying that the telecoms industry does things so much better than we do. Frequently, this is phrased as a warning. In this version of the refrain, the telecoms industry is about to demonstrate its superiority by striding onto the computer industry's patch and eating our breakfast, lunch and dinner.
After almost two decades in the business, I'm no longer impressed by these scare stories. They may sound plausible to begin with, but they never stand up to scrutiny. Let's look at the evidence.
For one thing, we are always being told how wonderful dialtone is. Dialtone is what you hear whenever you pick up a phone, and the fact that you always hear it is held up as a demonstration of the impeccable reliability, dependability and maturity of the telecoms industry. Scott McNealy of Sun Microsystems is particularly fond of citing dialtone, in comparison to, say, a Windows desktop running on a local area network, where as we all know the only thing you can rely on when you open an application is that it will crash sooner or later.
Praying for dialtone
Why can't computers be as reliable as dialtone, asks McNealy, with that innocent choirboy face of his. At this point, it is well worth reminding yourself that the telecoms industry makes up a very significant proportion of Sun Microsystems' customer base, and that the company's CEO may therefore be pursuing a hidden agenda when sucking up to the industry.
In reality, the only reason that dialtone is as predictable as it is today is that the telecoms industry has locked down our expectations to very specific, controlled environments. We don't expect dialtone when we unhook our mobile phones; we pray for it. When we connect to a three-way conference call, nine times out of ten we expect to get cut off. We only expect dialtone when we pick up a fixed-line telephone; and we expect a reliable connection only when placing a simple point-to-point call within the same country.
After more than a hundred years of developing your offering, how difficult can that be? It's hardly something to make a song and dance about. Let them try something complicated like access the Internet from a mobile phone, and telecoms vendors end up making a laughing stock of themselves.
Hardly rocket science
Another thing that telecoms companies are supposed to be good at is billing systems. They have invested millions in huge, powerful systems that can track, itemise and invoice customer activity to unprecedented levels of detail and accuracy for millions of accounts.
High-end computer systems companies such as Sun, IBM, HP and the former DEC and Tandem (both now part of Compaq) find themselves particularly impressed by these huge billing systems. Mainly because they were the ones that sold them in the first place, and they know how much they cost. Before the telecoms industry came along, no-one had attempted billing on such a scale.
But impressive though these systems are, they're hardly rocket science. They bill for destination and time, plus one or two extra charges. They don't adjust for quality of service, and it's a major undertaking to have them differentiate between different types of calls made to the same number. In other words, they're inflexible, single-dimensional systems. OK, they're big, but when you consider how little they actually do, how difficult can that be?
The next thing we hear is that telecoms companies are good at customer relationships. Well excuse me, but it's not difficult to hold onto your customers when you're a monopoly and they have no choice where else to go. The customer relationship myth should have been exploded as soon as the mobile networks started revealing the extent of customer churn they were experiencing.
Telecoms companies have managed customers the same way sheepdogs manage flocks. They have signally failed to manage relationships. Take away the monopoly and the customer relationship is revealed as simply inertia from customers who can't be bothered with the hassle of moving - as BT is discovering now that competition is finally stirring in the broadband Internet access market in Britain.
Disappearing billions
But we should still be scared of the telcos, we are often told, because they have the deepest pockets. If they decide to own a market, they will invest in it tenaciously until they have won, so the story goes.
Up until last year, this one still rang true. Now we know differently. Not even the telcos have had the resources to withstand the financial shocks of the past couple of years. They spent billions building a global IP telecoms infrastructure that now has massively more operating capacity than the world is going to need for several more years to come. Just when it seemed they couldn't get any more committed, the British chancellor Gordon Brown kicked off a concerted effort by Europe's finance ministries to drain them of their remaining cash in auctions for 3G wireless licences.
At the time, it seemed like a good idea. Now it's revealed as a strategic error that leaves the majority penniless and some virtually bankrupt. The deep pockets of the telcos have been turned inside out, and although they still generate massive cash flows from their customers, increasing competition is hitting margins like never before.
In retrospect, it looks as though the telecoms industry believed in its own propaganda too much for its own good. Now it has missed whatever chance it had to dominate computing, and will have to negotiate for its place at the table with everyone else.
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