The Customer Service Survey
VocaLabs' weblog providing news and commentary on the challenges of providing good customer service.
Putting Humpty Dumpty Together Again
Wednesday - March 08, 2006 02:53 PM in
To follow on Peter's comments from yesterday, it isn't a good time to be a traditional telephone company/public utility.
I was a "bellhead" myself with a decent career that ended when the breakup of the old AT&T (Ma Bell) took place 22 years ago.
The logic of breaking the Bell System into 15 smaller telcos and an unregulated entity eventually called AT&T was, at the time, based on the belief that stodgy old Ma Bell was stifling innovation in communications because it had a stranglehold on the market. Sounded good, but the facts were different.
The beginning of the end really started in 1956 when the Bell "consent decree" was hashed out between AT&T, IBM and the courts. As I remember, the deal was that so long as a transmission carried voice traffic and didn't "massage" the content, it was the sole provenance of the telco utility to carry the call. (No one was listening that digital transmission was already emerging and when even a voice was digitized that meant it was open to competition.) That opened the door for long distance carriers such as MCI to cream skim Ma's high margin long distance traffic. Then when an oil wildcatter from Gun Barrel, Texas was sued by Ma because he was hanging field radios on the end of phone lines to communicate with his crews. In a variation of "Don't mess with Texas" (or Texans), he sued back and the Carterphone Decision by the Supreme Court ruled it legal to hang non-Ma owed gear onto the public switched network (PSTN).
Double whammy. Now anybody could hang any device (there was a silly "certification" process) on Ma's network, and bite into the phone rental income while stealing the most profitable long distance customers. That left Ma as the provider of last resort stuck serving high cost/low revenue subscribers and regulated as to the prices she could charge while her lunch was being eaten by the new guys.
So here we are 22 years later. Those 15 original Baby Bells have now re-merged into just three (if the latest is approved), The breakup unregulated AT&T was gobbled back into SBC becoming the new AT&T. Wireless technology, and cable tv telephone service keep sucking the remaining revenues from the telcos (thus the need for economies of scale) Long distance is about as close to "free" as it is likely to get, and the cost of local phone service is roughly 300% more than it was 22 years ago.
Poor Qwest is a merger orphan because of high service costs (there are more phones in Verizon served Manhattan than in several Qwest served states combined, and many of those are still being served by hundreds of mom & pop telcos and Co-Ops with names like The Sleepy Eye Telephone Company or the East Ottertail phone company) And the "New", new, new AT&T has everything else in the country. As Yogi says, its deja-vu all over again.
Posted by Rick Rappe'
The logic of breaking the Bell System into 15 smaller telcos and an unregulated entity eventually called AT&T was, at the time, based on the belief that stodgy old Ma Bell was stifling innovation in communications because it had a stranglehold on the market. Sounded good, but the facts were different.
The beginning of the end really started in 1956 when the Bell "consent decree" was hashed out between AT&T, IBM and the courts. As I remember, the deal was that so long as a transmission carried voice traffic and didn't "massage" the content, it was the sole provenance of the telco utility to carry the call. (No one was listening that digital transmission was already emerging and when even a voice was digitized that meant it was open to competition.) That opened the door for long distance carriers such as MCI to cream skim Ma's high margin long distance traffic. Then when an oil wildcatter from Gun Barrel, Texas was sued by Ma because he was hanging field radios on the end of phone lines to communicate with his crews. In a variation of "Don't mess with Texas" (or Texans), he sued back and the Carterphone Decision by the Supreme Court ruled it legal to hang non-Ma owed gear onto the public switched network (PSTN).
Double whammy. Now anybody could hang any device (there was a silly "certification" process) on Ma's network, and bite into the phone rental income while stealing the most profitable long distance customers. That left Ma as the provider of last resort stuck serving high cost/low revenue subscribers and regulated as to the prices she could charge while her lunch was being eaten by the new guys.
So here we are 22 years later. Those 15 original Baby Bells have now re-merged into just three (if the latest is approved), The breakup unregulated AT&T was gobbled back into SBC becoming the new AT&T. Wireless technology, and cable tv telephone service keep sucking the remaining revenues from the telcos (thus the need for economies of scale) Long distance is about as close to "free" as it is likely to get, and the cost of local phone service is roughly 300% more than it was 22 years ago.
Poor Qwest is a merger orphan because of high service costs (there are more phones in Verizon served Manhattan than in several Qwest served states combined, and many of those are still being served by hundreds of mom & pop telcos and Co-Ops with names like The Sleepy Eye Telephone Company or the East Ottertail phone company) And the "New", new, new AT&T has everything else in the country. As Yogi says, its deja-vu all over again.
Posted by Rick Rappe'
Posted at 02:53 PM by | | | |