December 2002
Telecom Recovery tops STARTRAX Agenda
Over 500 senior telecom executives took part in three days of debate about the shape of the anticipated telecom recovery last week. RHK's annual STARTRAX conference in Phoenix, Arizona drew attendees from all players in the public telecom network, including service providers, systems and software vendors, component suppliers and financial institutions.
RHK's Chief Analyst, Dr. John Ryan opened proceedings with the theme of the conference: What should service providers do after one of the most abysmal years in the industry's history? Dr. Ryan argued that telecom's woes grew out of a 5-year macroeconomic bubble in the US economy. Post-bubble, network traffic continues to grow, while revenues are resolutely flat. Service providers must therefore urgently add value to their business if they are to thrive in the new competitive environment, he argued.
According to Melanie Swan, director of RHK's telecom economics program, the industry is poised to enter a low-growth phase in 2003, although service provider CAPEX spending is expected to dip slightly from 2002 levels, especially in the first half of the year. "A low growth curve is not necessarily good or necessarily bad, but the challenge is in finding ways to respond," she said. The normal Q4 uptick or backend loading that the industry has seen the past few years also is expected to be lower when the books are closed on Q4 2002, Swan said.
Hossein Eslambolchi, President, AT&T Labs, and CIO and CTO of AT&T, described his vision for the company after telecom's "perfect storm" has passed. Eslambolchi sees removal of the human touch to create a flow-through "neural system" of automated operations. Eslambolchi made several provocative statements about the future of the industry, and described IP as "the Pac-man that will eat everything by the end of the decade", adding, "the sooner we move to MPLS the better."
Eslambolchi's comments continued to generate debate throughout the conference, with many participants questioning whether this was a realistic goal given current economic conditions. "We'd all love to be in that utopia," said Mark Loyd Jones, chief architect, optical, for Sprint's Technology Planning and Integration unit. "The reality of the next several years is that we'll probably be closer to where we are now than to what Mr. Eslambolchi described."
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