The Woeful State of the Wholesale Telecommunications Industry - Part 1

Right now the industry's service performance is really bad. Much of the responsibility lies with the venture capital owners and senior management. In particular there is this prevalent dotcom era notion that fibre equals value. It does not. What generates value are well managed, high performance assets generating a lot of revenue with lean overhead and happy customers. As a result, we are seeing builds by carriers that should be focusing on achieving excellent customer service and network performance, including provisioning.

***One major European long provider is quoting three month delivery of terrestrial 100G waves. They are aggressively expand their network, but apparently their venture owners forgot that the market does not highly value empty networks. On-net circuit provisioning should take two weeks. In exceptional cases as little as one week. It is hard for me to see why provisioning should take longer. 

***Customer service in general is an abomination. If there were a telecom god, She would smite most service providers without hesitation into ashes. Pricing should be available upon request. But Lumen and Windstream are the only carriers that I know that have a real time quoting system. It is probably not a coincidence that they are American companies as customer service is an American strength. After all, we have Amazon and invented Western fast food. 😀 In contrast, I was waiting on a European spectrum quote that was outstanding for over 60 days. In the end the carrier no bid it. No apologies. No explanation. 

***Just in case it didn't sink in, customer service really is an abomination. Europe is a good example. Here salesmen have a huge amount of R&R and even refuse to even check their email during vacations and holidays. Face it, sales success means you must be available 24/7/365.

***Provisioning cycles limit revenue growth. The longer the provisioning cycle the slower the company grows. Most wholesale customers are ready to accept service within two weeks of signature. Any delays exceeding that represent irrecoverable revenue loss. It is water under the bridge. Yet there are carriers that have had long provisioning cycles for decades. Their management seems to be unable to recognize the problem or lack the will to solve it (hey, Bro, financial results are good enough!  Relax, let's party!). Furthermore, carriers carry out provisioning in sequential discrete steps even though much of the work could be done concurrently. 

***Pricing must to be reformed. For example, the modus operandi is to compare the proposed price to a rate of return threshold. But here's the reality. There is a lot of excess capacity in many geographical markets. And yes, it is better to generate revenue even if the rate of return threshold is not met because some revenue is better than nothing. The rate of return threshold makes perfect sense for investment decisions - incremental network capacity. It is irrelevant in most cases of excess capacity. Indeed, the rate of return gives managers an easy out of making necessary, hard decisions. 

A good example is Lumen's return to leasing metro dark fibre in some US metros. For a very long time Lumen refused to sell US metro dark fibre on the grounds that lit services enjoyed higher profitability. But management eventually realized that they were sitting on thousands of idle fibre pairs in some markets generating no revenue. No one was buying their metro waves. Instead the lost customers were leasing dark fibre from Lumen's competitors. In other words, the rate of return threshold was leaving significant cash flow on the table. All because the projected revenues were relatively to the sunk 2000 ear historical costs. So Lumen started leasing metro dark fibre again. And net operating cash flow rose.