Uncle Sam doesn’t like monopolies, theoretically. So in 1984, he broke up Ma Bell into small pieces after she became too big and too controlling over a century of operation. The result was seven regional “Baby Bells” plus AT&T. Uncle Sam, wanting more competition, also kicked the door open for new comers in the industry with the idea that more is better, and we witnessed long distance companies like MCI and Sprint become large corporations over night. In 1996, he was at it again by prying open the local exchange (dial tone service) to competition, which gave rise to a new breed of carrier – the CLEC (competitive local exchange carrier), like TCG and MFS. To keep the Baby Bells whole, Uncle Sam let them play in the long distance industry, and he let the cable companies play in all of it. Around the same time, wireless companies were building their cells throughout the US, exceeding all subscriber growth projections. Shortly, there were thousands of telecom companies in the US providing some type of voice, data or video service.
From then to now, many of these companies – wireline and wireless, voice and data, including all of the Baby Bells and AT&T, have consolidated, resulting in the majority of the US telecom services market, once again, being controlled by a few, like Verizon and AT&T. Ironically, all of these large mergers and acquisitions were sanctioned by yours truly – Uncle Sam. The regional, mid-size carriers have become virtually extinct, leaving mainly the smaller ones that have managed to survive. The telecom industry has come full circle and, no doubt, it’s healthier today than a quarter-century ago.
However, as much as size has worked to the competitive advantage of the industry giants, in many ways it has also encumbered them. With consolidations come large scale integration of systems and processes, employees and corporate cultures, networks and technologies, which can take many years and lots of resources to complete. At the same time, a faltering economy hasn’t helped them to keep stride with competitive pressures as well as the demands of an increasingly cost-conscious consumer and tech-savvy enterprise. In addition, the monolithic bureaucracies that have emerged to help structure these large organizations have also weighted them down. As we learned from the Ma Bell phenomenon, size and muscle come with a price, and it’s often the small business and consumer that ultimately pay.
By contrast, many small carriers have not only survived the industry consolidations over the past several years but have thrived because of them. The sheer force of the large competition has compelled the small carrier to fine tune its internal and external strengths, cut costs and increase efficiencies, pay closer attention to the customer, enhance its value proposition and competitiveness, and ultimately capitalize on its smallness. And as Mark Twain once said, “It’s not the size of the dog in the fight but the size of the fight in the dog.”
The fact is there are many advantages in doing business with a small carrier. Below are the major ones:
- Great Prices – Unburdened by huge overhead and capital requirements, the small carrier is usually able to offer the most competitive prices to its customers.
- Highest Quality – This is, perhaps, the most misunderstood claim. After all, how can a small carrier offer the highest quality of service, equal to that of a capital-rich telecom giant? It’s simple: Small carriers buy “best-in-class” network services from the largest carriers on a wholesale basis and then resell them to businesses. In this way, the quality playing field is kept level.
- Responsiveness – With minimal departmental layers and red tape, the small carrier can usually address customer needs on a real time basis.
- Flexibility & Customization – Smaller carriers are generally not shackled by systems or processes. How many times have you been told by a large telecom, “I’m sorry but the system won’t let me change this price.” Or “I can’t add that service feature because it’s not in the system.” Small carriers are more apt to customize prices or services or both.
- Personal Touch – A small carrier often knows its customers on a first name basis. Doing business with a small carrier, therefore, takes on more of a personal dimension.
Like everything else, the telecom industry will continue to morph, and small carriers will need to adjust. With the proliferation of IP (internet protocol), new IP network technology, now offered at affordable prices for small carriers, is making it easier than ever before for a small carrier to differentiate itself with value added services, like those in unified communications, and be all-the-more competitive with the industry giants. For those of us with a few gray hairs who have been in the industry for awhile, it looks a little like 1984 all over again!