“With the exception of the instinct for self preservation, the propensity for emulation is probably the strongest and most alert and most persistent of the economic motives”. In today’s parlance this statement by Veblen in 1899 roughly translates to “if you see a bandwagon, jump on it”! In these simple statements lie the source of our current woes. In January 2000, when it seemed that the litany of our industry was ‘Explosive
growth’ I wrote an article that at the time was almost a heretical treatise. Among other things it said, “In these magical times …such unprecedented and explosive growth contains the seeds of our future destruction…”and “…where [players] misread the market, miss the peak or are just plain over optimistic the results can be catastrophic…” During the second half of 2001, as our industry crumpled into the buffers, numerous luminaries persisted in making 33
statements like “a cyclical business …we are just in a down trend…”, or “…we have seen this sort of downturn before…” and “…This sort of thing happens every 5 or 6 years….” We are now all aware that the telecom industry is not going through a ‘down’ cycle. What we are experiencing is a sector ‘crash’ that is unique in the telecoms industry and outside anyone’s experience in this market. The structure and economics of our industry have fundamentally changed - and will continue to do so. The purpose of this article touches on two elements of interest given the current state of the market. One is the potential short-term effect on delivery and service in the submarine sector. The second is the more macro view of ‘what happens next?’
Short Term Impacts – and how to deal with them For submarine system contractors the short term really refers to the next eighteen to twenty-four months - and the prognosis is distinctly unfavourable. With overcapacity and debt plaguing purchasers top-level demand will be minimal and customers will