The numbers don't lie

Earnings reports are a study in spin — read a press release announcing even the most dire earnings, and you'll be hard-pressed to find the gloom and doom among the highlighted statistics. There's a bit of sport in reading between the lines to uncover what's really going on, but there's also a bit of frustration.

Because the truth is, numbers may not lie, but they can be used to disguise, distort and distract. The telecom industry is all too painfully aware of this — there are one-time distinguished industry leaders in prison because they distorted numbers in a way that cheated investors.

I'm not suggesting anything like the high jinks of the past are at work today, but there does seem to be a concerted effort to avoid talking about one trend that the numbers definitely show: the rapid decline of wireline voice and even, at Verizon, copper-based broadband.

Both AT&T and Verizon reported a sharper decline in wireline displacement than many expected, and Verizon also showed anemic DSL numbers. AT&T didn't break down its broadband sales, but because the company is doing fiber-to-the-premises only in greenfield deployments, it's safe to say it is still doing well in DSL. Embarq also reported a sharp drop in access lines as well as lower revenue, which it offset by lowering costs.

Not all analysts are convinced that broadband and video subscriptions can offset the wireline voice losses, leaving both AT&T and Verizon relying heavily on their wireless growth.

Meanwhile, the telecom industry continues its public dialogue about building average revenue per user, delivering bundles and selling a better video product.

There seems to be a basic disconnect here.

The first step toward solving a problem is always admitting that a problem exists. I don't doubt that telecom service providers are doing that, at least internally, if not in the public eye.

This could well be the year when we are able to see if the measures being taken to address this major market shift are going to take, or if wireline displacement is also going to significantly erode the ability of telecom service providers to sell advanced video and to be the broadband pipe that carries virtually everything in the home.

That may seem like an overly dramatic statement, but if you look at the numbers — without the spin — there is something significant happening here.