Swimming amongst the flotsam,or
When is a Bubble not a Bubble? By Steve Wells and Ian Fletcher As our northern hemisphere turns to spring, and the quiet icy wastes transform into buzzing green pastures, it seems appropriate to look for signs of life in our industry. The chaos and mayhem have been well documented and we will not repeat that analysis, however it would be a good time to try to draw together some general patterns, to do the scientists job of formulating predictive rules, so that we can assist those who follow in avoiding our mistakes.
Yes, I said our mistakes. It was us, the industry and the players. Was it greed or a collective masshallucination that allowed us to believe that there was no practical limit to growth curves that led to suicidal over-supply of capacity on several benchmark routes? How did a dream drive prices and revenues so low, that even ‘creative’ accounting could not prevent the crash and burn of innocents along with the guilty? Thousands have lost their jobs and share prices have crashed, wiping billions off the stock market. Those who
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have survived are treading water amongst the flotsam, hanging on in the hope that it will get better. Soon. Understandably, the financial investors are insisting that assets be sweated to the maximum, and they expect to see “co-opetition”, a combination of co-operation with competition, as a strategy for survival. Technology allows the cake to be cut many ways. Why light a fibre if we can sell bandwidth in that fibre and let someone else bear the cost of equipping it? Why put in a dedicated new cable when we can purchase capacity on another cable or upgrade existing ones? Why have lit capacity sitting idle if we can swap it, or offer this as a service to a third, or even a competitive, party? Inevitably this will mean that there is more consolidation within the industry, and reduced sales of new networks, but this will be worthwhile if the ship as a whole remains afloat. Some suppliers took the route of vertical integration, offering everything from network design and build to installation and maintenance. Along the way the business model changed as realities overtook predictions. Demand vanished, forcing radical strategy changes, new ships came off the slipway to find the tide was out, and factory closures became the norm. Over the past few years we have read and heard many ‘experts’ talk about recovery, most with differing views with different focus and