Teleco Transitions And The Law Of Incumbency

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Teleco Transitions And The Law Of Incumbency

By Dwayne Hines II
Sept. 15, 2005

The telecommunications industry is roiled as the dynamics of change sweep through. Alan Farley states in his TheStreet.com column that “the explosion of wireless technologies is mind-boggling, and more entrepreneurial companies may be in a better position to capitalize on changing industry paradigms.” Speaking of changing industry paradigms, that is just what is going on. Last night the ClearWire crew hit the neighborhood, selling ClearWire high-speed Internet service right and left from their lime green Humvee. ClearWire’s price for service was similar to the incumbent’s (Qwest) and they offered a better package as the service includes mobile wireless. In fact the ClearWire crew had the Internet running in their Humvee to show how portable it is. The ClearWire sales rep indicated that phone service, a modem no bigger than a gum pack, and TV service will be part of the package for next year. Neighbors on all sides dropped their DSL lines and purchased ClearWire – right on the spot. This made me think a bit, and I came up with Hines Law of Incumbency. Where prices are equal, the advantage lies with the incumbent. Where prices are equal but the incumbent is short on service, the incumbent may lose out if the added features of the newcomer are higher than the cost and effort to change. It sounds to me like ClearWire has the added features to bring about that change. And that gets back to Farley’s statement that more entrepreneurial companies are better able to capitalize on the changing industry paradigm. What is going on in the area of telecommunications – data service, voice, television, etc, as they all converge, is astounding. And the rate of change is picking up at an accelerating rate. The coming year will be quite interesting.

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About the author: Dwayne Hines currently has 12 books selling in major bookstores and writes for major magazines such as Physical and FitnessRX. Email Dwayne Hines: dhines@cpu-net.net

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