Fergie's Tech Blog

Why Telcos Hate Innovation

Via BusinessWeek.

Welcome to Telco Land, a strange country where the biggest players talk more and more about innovation yet approach new ideas with baby steps, build little themselves, and when they think about technology are apt to believe it's a threat they have to fight.

In case you haven't been keeping score, after the original phone company, American Telephone & Telegraph, was broken up in 1984, the country was left with eight major regional telcos. Over the past decade these companies proceeded to gobble one another up. Now there are four: AT&T, Verizon, BellSouth, and Qwest.

Just keeping track of the mergers and names is an endless challenge: The "new" AT&T is actually the rechristened SBC, based in Austin, Tex., which acquired the venerable name last year -- and it's in the process of buying BellSouth. That will leave two phone giants, Verizon and AT&T, and the much smaller Qwest. The biggest wireless carriers are Verizon Wireless, majority owned by Verizon, and Cingular, which is soon to be wholly owned by AT&T. It's not exactly the return of the old Ma Bell monopoly -- the world has gotten way too complicated for that -- but that's a lot of power in the hands of just two companies.

One way in which these companies are very different from the old phone monopoly is that while the original AT&T had a world-class research operation, its successors don't.

posted by Fergie @ 7/21/2006 07:34:00 AM