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Darwin And The Big Telcos

For a telecom and Web conference, the Emerging Communications Conference at the Computer History Museum in Silicon Valley this week had a lot of talk of death and extinction. Most of it was related to the big telecom carriers.

"Voice is simply a commodity, like oil, corn, soybeans, and oats," said Thomas McCarthy-Howe, head of teleco consultancy the Thomas Howe Co. "Unfortunately the carriers have not come to this simple conclusion."

McCarthy-Howe was speaking to a roomful of Web 2.0-style application developers for telecom services, many of whom used to work for big telcos and virtually all of whom agreed with his bleak outlook for those companies.

"What's going to happen is the service providers will continue to be the dominant model for the next several years," McCarthy-Howe said. "They're not going to change, and they'll die a horrible death.

"Darwin works," he added, "but it takes 1,000 years."

Michael Roth, an executive with BT's North American division, disagreed with that assessment, naturally, but only for his own U.K.-based company -- not the big U.S. carriers like Verizon and AT&T. "It's hard for Americans to realize that there's a different model for carriers" responding to the tectonic shifts occurring in the telecom business, Roth said.

Many of those shifts were on display at the conference, like Web-based telephony services for small and medium-sized businesses, open-source mobile software platforms, and phone-based P2P mesh networks. And the conference was markedly free of representatives from American carriers, who you'd think might be interested in topics like "Emerging Communications."

David Isenberg, author of the influential 1997 paper "The Rise of the Stupid Network," gave an impassioned talk on the rise of the new oligopoly in the U.S. telecom industry, and how it threatens the creators of innovative third-party apps like those on display at the conference.

"As a result of political decisions made in Washington, D.C., the notion of competition at the physical layer disappeared," said Isenberg.

For Rich Miner, group manager for mobile platforms at Google, the big wireless carriers will be forced, if only for marketing reasons, to open up their networks to some degree.

"Once you start talking about openness, it's hard to retreat from that message," Miner told me after his presentation on Thursday morning.

Right now, with revenue for the two largest U.S. wireless carriers rising and with choice in landline providers actually diminishing in many markets, it's hard to envision the big carriers going the way of buggy-whip makers. But that's not the message of the speakers at the eComm conference.

"The dinosaurs didn't evolve," BT's Roth told me. "They died out."

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