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Quick Jump Menu to this Issue’s Articles May 12th, 2004 Overview CTA’s Supplier’s Showcase – Something New in Sacramento Small Company Caucus Gambles on Sacramento: VoIP – The Quadruple Play?
Small Company Caucus Gambles on Sacramento:
by Ken Pyle ([email protected])
May 12th, 2004 Issue
The USTA Small Company Caucus provided a snapshot of the regulatory, financial and independent telcos’ viewpoints as to the current state of the telecom market. It is impossible to capture all of the good tidbits in one article, so I encourage you to get the CD-ROM when it is available. One thing I won’t be able to adequately describe is the dinner event that USTA arranged. It was a great networking opportunity and a welcome break from the normal reception, as it was aboard an old fashioned riverboat on the Sacramento River. I did not prove to be a modern day Maverick with my gambling skills, but I had fun none-the-less and learned a few subtle things about black jack.
Brian Strom, the CEO of SureWest and current Chairman of USTA welcomed the attendees. Mike Conrad, Chairman of CT Communications in Urbana, Ohio and Chair of USTA’s Small Company Caucus, provided set the stage for the meeting. Walter McCormick, President of USTA, gave a good overview of the current climate in Washington as it relates to independent telcos.
McCormick called Uncle Sam, the telcos’ “silent partner”. He stated that it was very important to educate this partner and that that progress is being made. He said that USTA is, “fighting in Washington for the right to compete.” USTA has a campaign aimed at, “catching up the laws with our lives.” This campaign clearly is aimed at lobbying congress to rewrite the telecom act to give clarity and remove uncertainty. He applauded President Bush’s comments regarding the need to simplify regulation.
Rudi Baca of the Precursor Group had some interesting insight, as he suggested that regulatory and technological trends are starting to chip away at telcos’ protected status. He cited substitution of other products, such as wireless and VoIP, as evidence of telcos’ vulnerability. He pointed out that the second and third largest telcos in California are cable MSOs. Baca indicated that telcos have to be aggressive and provide a, “Panopoly of services that are attractive to customers and that are profitable.”
The financial viewpoint was provided by Frank Gallagher of Legg Mason. He reinforced Baca’s point by saying that the Triple Play is required as both a defensive and offensive move. He gave some interesting evidence of how the market values wireless substitution by stating that wireless stocks have increased by 150% while wireline stocks have only increased in the 15% in the same time period.
Further, he called VoIP a disruptive technology as the Capital Expenditure is only $250 per line as compared to $500 to $700 for circuit switched telephony. Further, VoIP is cost effective in smaller deployments than is circuit switched telephony. He predicts 2005 will be the year when MSOs and the big telcos “duke it out” for telephony in the bigger markets.
Tom Soroka of USTA had some good advice for independent telcos – he termed it a 12 step program – for telcos transitioning to a market that is fully competitive and engulfed in regulatory uncertainty. He used the saying, “the best time to look for a job is when you have one” as an analogy to spur independent telcos to aggressively look at how they are going to compete in an unregulated world. His 12 steps encouraged independent telcos to think outside of the box and to begin changing their mode of operation today.
A very informative operator’s panel was next on the agenda. The tidbits and insight from this panel will be covered in an upcoming issue.
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