The Telcos' Salad Days Are Over, but They Still Have a Lot on Their Plates


The details are interesting, but there isn't anything conceptually new in this New York Times piece anticipating AT&T and Verizon quarterly reports. Indeed, the tale already is getting a bit old: Landlines are fading antique curios and the cellular market is saturated. To survive, phone companies must move aggressively with fiber, 3G and 4G wireless while grabbing revenue from video and advanced wireless applications.


To say that the phone companies have a less protected position than they did a generation ago is an understatement. Much of what legislators and regulators wanted has come to pass. Of course, they didn't anticipate how quickly technology would evolve and how competition would manifest itself. But they were smart enough to know that dramatic things would happen.


The job is not complete, however. Depending on one's point of view, what remains to be done is either fine-tuning or establishing the next set of fundamental building blocks. Almost all the issues on the table can be seen through one of these lenses.


For instance, the industry must settle the ongoing battle between carriers -- mostly Comcast and the other cable operators -- and regulators over how deeply they can peer into packets and under what conditions they can throttle down an application's access to resources.


Comcast says this is legitimate network management. Others say it is an unfair attempt to put the screws to competitors. The way this issue is settled will affect the market share between the facilities-based cable and phone companies and those who lease capacity on that infrastructure. In this sense, it's no different than the original mandate for carriers to open their networks.


Other issues are equally important in building the new landscape. For instance, in how many states will video providers have to meander from town to town, and in how many will they be able to apply for statewide franchises? The way that issue is settled certainly will influence how much and, in particular, where investments are made in fiber networks such as FiOS and U-Verse.


On the cellular front, how will open access play out? Are announcements saying that any device will be able to hook to any network real or PR? Will such rights be codified into law or implemented by each carrier? In such an environment, what will it take for the Open Handset Alliance's Android, Apple's iPhone, the LiMo Foundation and other approaches to draw the best and brightest developers?


History doesn't matter to savvy telco executives. Most weren't even decision-makers during the monopoly era. Those salad days are over, but the companies still have a lot on their plates. The issues above and others will be played out on the legislative, regulatory and market fronts and are vital. How each hashes out will influence something even bigger: The ongoing evolution of American telecommunications.