Turbulence ahead!

I’m sitting here with a stack of 15 research reports on the telecommunications industry, and I’m going to save you some time by boiling it all down to 260 words. But it’s an ugly picture.

North American telecom carriers, some of which are reorganizing under bankruptcy proceedings, face several years of turmoil and will recover only after the market consolidates and the economy recovers. In the meantime, corporate network managers will see price instability and service declines. They’ll need multiple carriers, in case one goes belly-up, and they’ll need backup plans for their backup plans.

Anyone hoping that 2003 would be better than last year’s telecom disaster will be disappointed. There will be additional bankruptcies. Some telecom companies now in bankruptcy will emerge, but they probably shouldn’t bother (because they’re just delaying the inevitable).

The problem isn’t a glut of fibre; it’s a glut of companies competing for too few customers, and the related overspending to establish these companies and their networks, says TeleChoice Inc. By 2005, the 10 largest carriers will be reduced to eight, and the next 20 secondary carriers will be reduced to 10, Gartner Inc. predicts.

Is it any wonder that IT managers are looking carefully at making the Internet their WAN? No, it’s not as reliable or secure as a private network. But IP networks are “good enough” for many business applications – and the price is right. As a recent Gartner title put it: “Don’t Wait for Perfection: Internet Is Business-Class Now.”

Betts ([email protected]) is director of Computerworld’s Knowledge Centers.

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