I knew the Alcatel-Lucent merger would be a disaster, and I was right. I’m not always right, as previous posts on this blog will attest, but I was on the money when it came to that particular French-American telecommunications-equipment train wreck. It was like shooting virtual fish in a Second Life barrel.
In addition to company-specific issues — and nobody can tell me that Patricia Russo has a strategic handle on what Alcatel-Lucent should be doing and where it to be going — the entire telecommunications-equipment market is in a profound funk. Wireless operators, in particular, are disinclined to spend money on major infrastructure upgrades, as echoed by this BusinessWeek article.
As it turns out, there’s good reason for the wireless operators’ reluctance to purchase new gear. There really is no need for sweeping overhauls because subscribers aren’t interested in doing much more than they are already doing with their cell phones on operators’ networks.
But whose fault might that be? The telco community, in its self-imposed obliviousness, would like to blame it on the subscribers themselves, allegedly bereft of the imagination to envision the transformative power of bandwidth-intensive data and rich-media applications.
The truth is, the telecommunications community itself, and the wireless operators especially, have hurt themselves with atavistic business models and convoluted pricing structures that serve only to dissuade their clientele from trying new services. A little marketing creativity and enlightened self-interest on the part of the telecommunications industry could have led to a greater adoption rate for revenue-generating, higher-margin services. Instead, the wireless operators chose to scare off customers with prohibitive pricing and confusing service packages.
Telecommunications-equipment vendors are paying some of the price for those decisions now. It’s hard to feel sorry for them, though. They should have seen this mess coming and pursued contingency plans accordingly.