Today, the Federal Communications Commission is expected to vote its approval of two sweeping telecom mergers – the pairing of local carriers SBC and Verizon with former long haul types AT&T and MCI, respectively.

The mergers radically reshape the rapidly reshaping telecom landscape, and would have been “unthinkable” as recently as two years ago (if indeed also prior to this time frame), when both sides were locked in vicious battles over anything and everything, it seems, and at extraordinary cost: by one estimate one carrier spent $400 million in public relations-related messaging during the course of the unbundling fight.

Pretty rich little pricing dispute, eh?

So instead of the family feud between local and long distance, now laid to rest, in the future we may come to expect… other disagreements. Which brings me to this conclusion: there’s really nothing like a good Darwinian battle between the Old Way of doing business in telecom versus the New to make things interesting. The real equalizer in all this, of course, is the Internet.

Under the new rules, concepts like “bundling” – as in services – will replace outdated and disavowed notions like “unbundling.” A sales rep once remarked to me that she “hated” that word, that it made no sense to her; I was incapable of offering her any solace, since not only did I find the term a mouthful and completely devoid of any common meaning, but that I hated it too.  

Since I see no real benefit in picking a fight with anyone in particular at this time, I will simply note that absolutely no one in communications (and in related areas like content) has any right to rely in perpetuity upon what they consider today to be a good business model. Bank in the present, but don’t count upon the future. Consider that in this shifting of tectonic plates, which occur with lightning quickness, laws of physics, such as time and distance, are seemingly thrown out the window, along with the rule book itself.

Even concepts such as price mean nothing, if you consider that some of the bigger leveling plays over the past decade or so have been software plays. Napster. Google. Skype. Of course, there may be some price involved, just not one which fits within previously accepted norms. Even this caveat is not universal however. One of the rallying cries of the Internet Crowd might be characterized as “get it for free or die” – to loosely paraphrase a saying on one state’s license plate.  

In fact, under Internet Rules, there is no pre-existing business model that is not ripe for the disrupting, whatever the consequences. Said another way, the larger the mass of people reached at greater speeds practically assumes the death of an existing business model. This theme led the music and film industries to do their best “deer in the headlights” imitation for quite some time. Their “conservative” approach could not change the stakes or the consequences of their actions/inaction, it may simply have re-ordered the alignment or timing of events. Thus, Hollywood comes off one its worst box office summers ever just as the DVD business catches a cold, meaning that the industry’s go-to cash cow may be getting a little long in the tooth. Both these outcomes were unavoidable, and they now simultaneously occur, as eyeballs turn elsewhere.

Wrapped up in all this mumbo jumbo are some onsumer concepts that have a way of taking on a life of their own. This is where the regulators are asked to wrap business ideas in consumer clothing.

“Naked DSL” is such an example, and refers to an incumbent Local Exchange Carrier, or ILEC, providing a broadband only line to the consumer. In the beginning, in Line Sharing days (way back in late 1999), an ILEC was not required to be the data carrier where it was no longer the voice provider. The rationale behind this is that the ILEC might not know where a CLEC’s (or Competitive Local Exchange Carrier’s) actual switch was located for purposes of achieving a voice/data combination.

“Morph One” occurred in when CLECs using “virtual” switches (which sort of belonged to the ILEC) wanted the same outcome, namely, that the RBOC continue to be the data provider where it no longer was the voice carrier. Request again denied by the FCC in early 2001.

“Morph Two” is where the states got into the act, with admittedly well-intentioned notions of their own, and which varied from state to state (subject to importation across state lines as a “good idea” for consumers with little additional consideration besides). The states have been called a laboratory for consumer ideas, and this is quite true, with quite a number of interpretations possible in this there line of thinking.

“Morph Three” took place when the FCC cleared away the state activity, earlier this year, only by then Voice Over Internet Protocol or VoIP was gaining momentum, so what started out as a quasi-technical provisioning issue with one set of consumer stripes had changed these stripes a number of times, to end up being reported by the business and mainstream press as anti-VoIP.

In reality, by the time things were resolved, “naked DSL” was simply lousy marketing stance by one segment of the industry: an ILEC that chooses not to provide a broadband only loop for a consumer to use wireless or VoIP (over the broadband connection) runs the risk of chasing that consumer straight to cable, otherwise known as the ILEC’s major competitor.

Brilliant!

Actually, things haven’t really been fully resolved, yet, and are the subject of some debate for today’s vote at the FCC. What amazes me, though, is how this issue is teed up by a series of competitors with always changing “storm the walls” business plans. At some point, though, the tide changes and no one can hold back the tide.

 

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