Are Telcos Toast?

There is a sentiment in some quarters that the telecommunications industry is too inflexible, slow moving and unimaginative to transform itself. Those criticisms are well taken. They could be right. But look at matters a different way. If executives know what business they really are in, they won't make the proverbial mistake the railroad industry made: thinking it was in the "railroad" business instead of the "transportation" business. 

In fact, a quick review of technology underpinnings of the communication industry should tell the story. AT&T once meant "American Telephone & Telegraph."

The telegraph, and the business it created was an 1840s invention. The telephone was a 1870s invention. AT&T made the transition. Wireless was invented in the 1890s. And though they were slow to enter the business, large "landline" providers now lead the wireless business. 

Radio broadcasting was invented in the 1920s, television in the 1950s. Telcos and cable companies now are distributors of audio and television programming, on both a "tethered" and "mobile" basis, and this role will grow. The geostationary satellite industry was created in the 1960s. AT&T remains a big player in the satellite communications busines.s 

Computer communications began in the 1970s. Large telcos pretty much failed at their first efforts to enter the "computing" industry. But in different ways, they now are re-entering the computing services market, as integrators, content delivery networks and, someday, players in "cloud computing" infrastructure.

Optical communications began in the 1980s and telcos and cable companies are major end users of optical communications.

The Internet originated in the 1990s and now Internet access is almost a "legacy" product for telcos and cable companies. The next wave of IP-enabled next generation networks has barely begun. But I am hard pressed, looking at history, to worry too much about ability to finesse the latest waves of technology advance.