Skyping the Telecoms

Some are probably shocked an upstart could "ruin" major communications monopolies. Others applaud. I'm in the second group. Do telecom execs spend all their time on the phone, or what? It's hard to sympathize with companies that have been exploiting monopolies and ripping off consumers unmercilessly for a hundred years.

Dinosaur phone companies have a shabby tradition as innovators. They have no idea when it's staring them in the face. I used call back systems in the early 80's from Brazil, where 60 companies sprang up overnight. The response from the Brazilian telephone monopoly EMBRATEL was weak. It tried blocking calls to "certain area codes" in the USA (those where call back computer were at work.) That didn't last long: Congressmen couldn't get through to associates who happened to live in the blocked area code. EMBRATEL backed off.

Stodginess is typical of heavily regulated industries like telecommunications. Shipping, transportation, airline companies, insurance, etc, come to mind. Typically, executives in these sectors were, prior to deregulation, hired to do little more than administer within narrow public interest boundaries set by governments. While creative businessmen are hired by marketing companies for unregulated market segments where decision making, rather than paper shuffling, is prized.

"Skype is a good company," said independent telecom analyst and commentator Jeff Kagan. "But Skype is never going to catch up to the major service providers," the large telephone and cable companies that increasingly are offering bundles of services, including local and long-distance calling, wireless, high-speed Internet access and digital television.

This is what they said when telephone companies were being deregulated, and AT&T talked of offering a 'one stop communication shop'. I told an exec at an ATT seminar lots of people would prefer "cheap phone calls" to well packaged billing, thank you. I'm unsure how, but they seem to have gotten over that hurdle.

Until Skype...

http://www.washingtonpost.com/wp-dyn/content/article/2005/06/03/AR2005060301520.html