A Telco That Recognizes It Needs To Eat Its Cash Cow?
from the it-happens... dept
While it seems like telcos are beginning to recognize what's happening in the world out there, it's still interesting to see a telco CEO so clearly recognize the need to cannibalize its own best businesses. Instead, we often hear how telcos are trying to slow down progress rather than push it forward. However, Bell Canada's CEO seems to be saying all the right things concerning the changing nature of the industry: "Are we going to be a player in VoIP? Absolutely. Are we going to be prepared to disrupt our own business? Absolutely, Why? Because if not, somebody else will." Later on, when talking about partnering with Virgin Mobile to create an MVNO (something some are afraid will put them in a position of competing with Virgin Mobile) he points out: "Are we going to sit like King Canute and try to roll back the waves? Or are we going to say: 'This is the way the world's going to be so let's get used to it'?" Clearly, he realizes that Virgin Mobile is going to compete with Bell Canada one way or the other -- and Bell Canada might as well benefit from getting some money out of the customers Virgin Mobile can score. Of course, saying all the right things and actually implementing them are two separate things -- but without the right vision, it's pretty tough to get anywhere. So, at the very least, this is a good first step.
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Bell
However, since having moved back up here, I'm really noticing a difference between our watchdogged monopoly-friendly business method up here. It seems that, when we render unto the government to-do list that shich should be on the list, it seems we can barely keep idiot monopolies from being idiots -- like Telus' recent order to start offering service.
Contrast this to my experience with BellAtlantic/Verizon in the East and Qwest in the west, and I'm really amazed that so many peopl ein the US are still so accepting. Your FTC - or a body swhose job IS to watch that dog - needs to worry more about quality of service and less about boobies and copying.
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Bell's "Innovation"
Sabia's conversion to a "damn the torpedos, innovate at any cost" philosphy rings very false if you consider the context. He sounds like he's saying the right things, but he's minting euphemisms. Bell Canada and their buddies (Telus & Aliant mostly) control 97% of the supposedly de-regulated local phone market. The cable companies are ready to strike by introducing cheaper VOIP through their own networks. A captive VOIP, if you will. Within six months, Bell will have to share the local phone cash cow with others. That stings, but worse, the CRTC (like your FCC, but more powerful) won't let Bell use cross subsidies to wreck the VOIP market. So poor Mr. Sabia has deep-pocket companies like Rogers and Shaw muscling in on his core market. Bell's attempts to muscle into their core markets make money, but have not hurt cable too much. They've failed to change the competitive equation.
The result of all these factors? Bell is looking at a stock-price meltdown. At some point, late this year or early next, Bell will report a disasterous quarter that will shake institutional confidence. This won't be the end of Bell by any means, but it will be the end of Bell as the bluest of blue chip stocks. Sabia is trying to condition the market, especially the hyper-conservative individuals and institutions that love Bell Canada Enterprises stock so much. He's less interested in cannibalizing his own business as he is in positing a comfy (though slightly less profitable) future where Bell still calls the shots.
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