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Managing business networks

Also known as Regional Bell Operating Companies (RBOC), the original seven Baby Bells after the anti-trust decision in 1984 are Ameritech, Bell Atlantic, Bell South, Nynex, Pacific Telesis, Southwestern Bell and US West.  In early 2006, the number of Baby Bells is reduced to three; namely Qwest, Verizon Communications and AT&T due to restructure and consolidation.  The three companies provide telephone, wireless, broadband, television and internet services in the United States.  The history of the Baby Bells shows that the boundaries of the products/ services they can offer are largely loose.  For example, upon their divestment, they are allowed by authorities to offer Internet servic...

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...es.  The ability to pull or push innovation makes them capable to act as monopolists and dictate the phase of introducing new and cost-efficient technologies.

The goal of deregulating the Telcos is not met.  First, increased competition did not result.  Few companies introduced innovation into the industry which is largely initiated by a single Telco, US West.  Big corporations are also provided with special business model in service delivery compared amid lack of mass customization to residential and small businesses.  These are symptoms that the expected improvement of facilities and strategies did not take effect.  Baby Bells acted as if they are in collusion to delay technological advancement which presents a problem of oligopoly in the industry.  Second, as evidenced in increasing sales and declining costs and innovation, the aim of lowering the price of Telco services is a failure.  Small companies are also deprived of the cost advantage of large firms as the latter enjoys economies of scale and strong bargaining power.

Wireless infrastructure allows voice and data services similar to current Telco capabilities.  In the case of satellite, competition is largely for lower price and convenience as new entrants are confronted with cheaper investment and fixed lines are not required.  In the case of local loop, competition is for lower price compared to wire line.  Currently, intensive improvement in wireless technology enables operation in both rural and urban areas which make local loop both reliable and cost-friendly.  CATV can provide multiple-services to customers which enable bulk-product offering that can pull-down costs.  However, the setback is the lower level of performance of CATV platform and weak acceptance from current CATV providers.  Today, CATV is largely involved in television and cable services and the challenge for multi-service is still underway.

Wireless communication technology in the US compared to other counties particularly developed nations are arguably in comparative proportions.  The greatest barrier for the US is that it is ranked in the world as top market for patents exceeding any European countries or Japan.  In effect, the spontaneity of wireless development is restricted because US only grants patent rights to natural persons and legal entities such as corporations.  Other countries may enjoy corporate patents which is appropriate for their financial and structural capabilities.  The US has a globally-cooperative agency called Center for Wireless Communications.  As a cost-effective solution to Telcos, US is on the verge of developing 4G mobile technology which is said to enhance spectrum efficiency, increase data-rate and optimize network resources.

With increased mobility and more demanding customers, current Telcos are obligated to provide newer technologies.  The Internet has VoIP abilities which provide voice and data services in high-speed format contrary to wire-line.  Voice calls also include real-time viewing capabilities to the caller which is an additional and breakthrough advantage of Internet VoIP.  With respect to wireless technologies, cellular phones such as Smart Phones are Internet-enabled which means they can acquire VoIP capabilities in portable and more mobile devices compared to computer or notebooks.  Today’s telecommunication environment is high-dependent on the capabilities of the Internet especially for cost-effective seeking companies and technical-savvy individuals.  However, the reliability and traditional appeal of wire-line is the ultimate barrier for people to fully-embraced the Internet communication.

The article predicted collapse of the local loop monopoly as early as 2002.  The 2005 merger of AT&T Corporation and SBC Communications that created the largest telephone company in the US showed that margin for the local loop is decreasing.  This is caused by customer shifting to cost-effective and innovative alternatives and Telcos are left with the option to downsize and divest to profit.  Before their merger in 2006, BellSouth and AT&T have stakes in Cingular Wireless and Yellowpages.com.  A couple of valuable business is integrated to AT&T after BellSouth combination which is wireless and DSL/ Dial-up Internet Services.  Compared to SBC merger, AT&T acquired product differentiation and innovation in the later strategy.  Merger strategy is the same route applied by Verizon.  It is implied that the contemporary users, which is predicted in the article, have became proactive in terms of negotiation.  Telcos approached this development by combining resources to acquire efficiency, faster innovation and amassing market power.

 

References

Pitasi, C. (1998). Telco Services: Perpetual Motion or Mirage. Compass Article. Virginia.

Rowe, B. (2000). Strategies to Promote Advanced Telecommunications Capabilities. Federal Communications Law Journal. 52 (2), p. 381.

US Center for Wireless Communication (2008), viewed on April 25, 2008, <http://www.b3g.org/>

Whalley, J. & Curwen, P. (2007). Whatever Happened to the Baby Bells? Internationalization and Deinternationalization in the Telecommunications Industry. Minn., J.L. Science and Technology. 8 (1). <http://mjlst.umn.edu/pdfs/81_whalley.pdf>

 

 

 

 

 

 

 

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