Telcos Practice "Strategic Indifference"

People who like the idea of rapid service and applications innovation typically are frustrated by the glacial speed at which network services operators move. In fact, the thought often arises that "pipes" companies, especially those dealing with actual "first mile" connections to actual users, are incapable of understanding threats to their business models.

Well, they do move slowly, compared with anything in the software world. There is no Moore's Law at work with construction, trenching, installing drop wires and network interfaces. Which explains the attractiveness of wireless alternatives.

That said, it also is true that incumbents do practice "strategic indifference." That is to say, they will seemingly ignore a threat such as VoIP, just as they seemingly ignored the advent of broadband access, in the form of Digital Subscriber Line and cable modem services.

You might not remember, but North American carriers were slow to understand mobility as well. As awareness grew, carriers simply bought the whole wireless industry.

The point is that the indifference is quite planned. If an innovation will harm current revenues, it makes business sense to plan to lose some market share and revenue rather than embrace the trend fully and lose even more money. Up to a point, incumbents will let attackers take share, on purpose.

If the innovation reaches a tipping point, where there are strategic drivers, incumbents simply pile on in a massive way. That's why the VoIP activity on the part of North American incumbents is so different from that of European carriers. In Europe, VoIP is past the tipping point, and incumbents must play. That point hasn't yet been reached in North America.

When the tipping point is reached, they'll move, and aggressively. But this is a matter of maximizing total revenue. If revenue is maximized by delaying VoIP, that's what carriers will do. If revenue is maximizing by making POTS more attractive, that's what they'll do.

Such carrier behavior is not "dumb." It is planned. In fact, other industries have been "dumb."

In fact, the music industry seems not to have understood the threat or the changes posed by digital media.

You can be quite sure the video industry has learned from that experience and is anything but complacent. No serious video executive takes user-generated content lightly. Everybody is taking steps to participate in a broader media landscape, though nobody yet knows how the business models will play out.

Of course, that also means nobody is going to sneak up on video incumbents. They know exactly where to look for opportunities and threats, and are doing so. IP video will not be a replay of VoIP, in terms of executive denial, simply because tipping points might be somewhat clearer, and because change in the video software space will not entail the massive capital spending carriers must yet contend with in migrating to a broadband, all-IP future.

Video contestants will move faster than you might think.