Masque of the Red Death

It’s always painful to see the dismay and utter disbelief which greets the passing of an institution or an industry, especially in the reactions of those caught up in it. We are witnessing this in the case of Rover now in the UK, and the very idea that an institution like GM (or Ford, for that matter) could have wound up in such trouble probably inspires incredulity in many people, not least of all its employees. “I knew things were tough, but I never imagined things could go so wrong so quickly.” This seems to be a common response.

Several years ago, while in Tokyo on a marketing trip with a former employer, I met up with a Japanese colleague for a drink. Walking around in the financial district at night after one too many, we both stopped to behold the darkened gargantuan monolith which was the Yamaichi Securities building (this being not long after its calamitous bankruptcy and closure). My colleague stared in blank awe, and remarked “Iya, are wa rippa na biru datta na” (”Yeah, that sure was an amazing building.”). His use of the past tense was telling – the physical infrastructure was looming there before us, but the 100-year old institution (in a Japanese context probably as venerated as Goldman Sachs in the US) it served was not, so in his mind it was some phantom vision from the past, which no longer existed. As two members of a company about to be sold down the river, this was a chilling moment for us both, and I’ve never forgotten it.

Back to the present day, and poor old telecom. Today I presented at the Marcus Evans conference on Strategic Pricing for Telecom Content and Services in London. I agreed to it months ago, and as the date approached I found myself a bit uninspired. Then, a few weeks back, I saw the program, and noticed that there didn’t appear to be much in the way of disruptive stuff on the agenda. I got the sense that it was going to be largely business as usual, and this was just the inspiration I needed. I could have talked about a variety of issues (believe me, I wanted to), but in the end decided to try to hit the audience (and organizers) where they live, and devote my entire presentation to Skype.

My introduction included a statement of concern that too often the industry works from the premise of what it can deliver, or needs to deliver, rather than what the consumer actually wants/needs (and my final slide was Richard Stastny’s list of ten lessons from Skype, with special emphasis on “you can compete with everyone, but you can’t compete with your customer”). I also questioned whether perhaps players in the industry are too focused on killing one another, while ignoring some significant issues lurking in less obvious (to a telco) areas of the market. In other words, as I’ve been saying, for as long as I can remember to anyone who would listen, if you’re a telco, then your radar must be attuned not only to your competitors, but also to the agendas of Bill and Steve, Sergei and Larry, Terry and Jerry, Niklas and Janus, and even some single-name sources of anxiety.

One slide of my introduction contained a quote from Edgar Allan Poe’s “The Masque of the Red Death”. For those who haven’t read it, basically the idea is that a decadent regime is hiding behind thick castle walls from a plague which is devastating everyone outside, diverting itself by having a masqued ball. Just keep dancing and we’ll be fine. An interloper appears, and the king demands that he be unmasked, but the intruder (whether he is merely a carrier of the disease, or embodies some karmic revenge, is unclear) turns out to be the harbinger of doom, already among them. Okay, my use of it was partially tongue-in-cheek, but I had a serious point to make: your assassin is probably already inside the castle walls and you may not even know it.

Now, to be fair, my audience of around 50 marketing/strategy people from various European carriers were clearly very bright, successful people, undoubtedly very busy, and probably with heavy expectations upon them to deliver in very fluid markets. However, in my introduction, I asked for a show of hands in response to a series of questions, and was somewhat concerned by what I found:

How many of you read blogs? – (three out of 50)
How many of you feel you understand what RSS (I gave the long form name as well) is? – (none)
How many have heard of BitTorrent or eDonkey? – (Perhaps 5 – 7 hands)
How many have used BitTorrent or something like it? – (only one or two sheepish hands)
How many have heard of KaZaA? – (Almost everyone – I pointed out that this was the old school)
How many are acquainted with Skype? – (Just under half)
How many use Skype or have used it? – (Around a quarter)

I pointed out that the list I had just run through was a fair representation of some of the most popular activities of broadband users, and in every respect represented some threat to what the telcos are trying to do strategically. We had some laughs along the way, but there were also some long faces as the implications of my message sank in. For example, I related an anecdote from a friend within the European incumbent space, which goes like this:

Executives from the mobile unit of incumbent A arrange a Skype conference
call with executives from the mobile unit of incumbent B. Incumbent B decides it needs to include a colleague, also on Skype, and conferences him in. They thank him for agreeing to join, and ask him where he is and how he is connected to the internet. He responds, “I’m on the road, using our 3G data card on my laptop.” There follows an unstated Homer Simpson-esque “D’oh” and many seconds of silence as the participants absorb the implications.

I wouldn’t say that anything I said today would be new or unfamiliar to readers of this blog or others dealing with related issues. However, for my audience, the people formulating and guiding Euro telco pricing strategy, much of it seemed to be completely new. On the one hand, given my bearish view of Planet Telco as a world governed by silo mentality and overburdened with organizational complexity, this was hardly surprising. On the other hand, as a human being, I am more concerned than ever about the human implications of what lies ahead. Over to you, Mr. Darwin.

~ James Enck