A break in the action

A strange quiet has settled on the telecom industry as 1998 has progressed. After a furious period of activity involving bold new products and new companies following the ratification of the Telecommunications Act of 1996, the level of such activity seems to have leveled off in the first half of this year.

Of course some major deals are still happening-Bell Atlantic/GTE, and SBC/Ameritech, just to name two. But those deals are mergers, and not guaranteed approval from regulators who will, in the end, determine if those agreements will be allowed to stand.

What's missing lately are the "holy cow, Mildred" stories-the kind that give you a jolt when you first read about them. The ones that announce new start-ups led by a group of prominent industry veterans. The ones that promise a wonderful new device or system or a vast improvement on existing technology. Everyone seems content, for now, to let the events of the last two years settle in a bit.

Rather than so many start-ups, we're seeing more merger activity. Just last week, Level 3 Communications announced an agreement to buy GeoNet, a 4-year-old Internet service provider that had been shopping itself for acquisition since last fall (see story on page 7). The flood of new products and technologies that filled the market has been replaced with efforts by the companies that have those products to develop mass markets. Rather than continuing to push the envelope, they're working on standards, partnering with other equipment vendors to build solution sets and working with carriers to make sure what they come up with will be palatable in both price and performance.

The lull is good for the industry. So much has happened that it's difficult for anyone to see clearly how all the elements will play in the network. The vendors need time to put solutions together; the carriers need time to evaluate how to use those solutions. Things have become bogged down by the sheer volume of new ideas out there.

But it won't last too long. By the end of this year or the early part of 1999, we'll see the activity level pick up again. Telecommunications, especially the technology, has evolved at an astonishing rate since 1996, and a lot of venture capitalists would still love to sink some money into the industry.

The entire industry, including the press, is just digesting a large first serving of change. We can hardly wait for seconds.