Too cheap to meter
Youve seen funny lists of wrong predictions made long ago by famous people, such
as IBM Corp.s Thomas Watsons on how few computers the world would need.
One of my favorites is that of a champion of nuclear power whosaid in the 1950s that
electricity so generated would be too cheap to meter.
Wrong again. Well see what happens, though, when the electric industry
deregulates and people can choose from whom they buy power. The telecommunications
industry already is adapting to the market pressures that the utility powers will face.
What a contrast the two industries make. One word characterizes the changes in telecom:
breathtaking. The other night, I was reading about the companies going after the
high-speed local communications market. They are using technologies and strategies from
wireless to digital subscriber lines, the latter built on a wing and a prayer considering
the conditions of wiring in some areas. I had to read the story twice to make sense of it.
For federal agencies, the FTS 2001 contracts recently awarded to Sprint Corp. and MCI
WorldCom Inc. are fresh evidence of a new world order in telecom.
AT&T Corp. isnt there.
More striking is that the winners are basically giving away voice services.
Four-cent-a-minute prices will shrink to 1 cent over the life of the contracts. I predict
flat per-line monthly fees before that happens. At a penny or less a minute, vendors
wont want to bother generating detailed bills.
Its the value-added data services that are driving the communications revolution.
A growing number of companies dont even use switched-circuit telephone lines for
long distance any more. Voice traffic rides free over IP networks.
MCIs federal honcho, Jerry Edgerton, made a telling observation [GCN, Jan. 25, Page 1]. Because of local-carrier access
charges, he said, companies such as MCI dont control a good portion of their costs.
The Telecommunications Reform Act of 1996 was supposed to change that. So far, it
hasnt. But local competition is inevitable.
The early morning line: The General Services Administration has negotiated some good
deals. Although they are nonmandatory, they could be more popular than the mandatory
contracts they replace.
When it arrives, expect even lower rates for all communications.
Thomas R. Temin