Duck and cover
At the height of the cold war, when the U.S. was facing the Great Red Menace and Nikita Khrushchev was debating Richard Nixon over which country's kitchens were more advanced, a public safety film was produced that was supposed to teach schoolchildren how to survive a nuclear attack.
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The film's advice, repeated over and over to a catchy little tune, was for kids to “duck and cover” under their desks. The message was simple. No pinko Commie bomb could penetrate the strength of a good old-fashioned desk forged of pine and a few scraps of steel from America's heartland. The film even demonstrated how children should sit on the floor, put their heads between their knees and cover up with their hands.
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The metro players are in deeper trouble than anyone would admit. Emblematic of the problems: MFN has been given a two-week reprieve by one of its major lenders, but only if the company can draw others into the fray and spread out its risk. |
Had an actual bomb been falling from the totalitarian-toting planes above, the only reason people would have to put their heads below their waists would be to pucker up and kiss their butts goodbye.
The film, while not offering the most practical advice, provided a measure of reassurance to a society that was often reminded that today could be their last day.
If only someone could produce the same movie for today's telecom world. Instead of the Soviet Union's bombs, kids could be pointing up at quarterly reports falling from the heavens and CEOs announcing yet another round of layoffs. After the last two weeks, though, the desks that were supposed to protect everyone from the storm and provide the industry with a beacon of hope have fallen apart.
Late last year, when start-up vendors were slapped with the reality that they would be required to produce profits, the big incumbent vendors like Lucent, Nortel, Alcatel, Siemens and Ericsson suddenly didn't look so bad. Sure, they didn't dole out options like methadone at the local clinic, but they were safe and stable. In April, I sat down with Mike Quigley, president of Alcatel Americas, to discuss the state of the industry. Despite having announced a small number of layoffs himself, Quigley seemed a bit smug that a number of former Alcatel executives that had bolted for dotcoms and optical start-ups were appearing prostrate in his doorway, asking for their jobs back.
The other big vendors used their perceived safety as a marketing and sales asset. In casual conversation, Lucent, Nortel and the rest often liked to mention the financial instability of venture-financed competitors. At the same time, incumbent local carriers pointed to the shaky balance sheets of CLECs. The message was the same: In the sea of uncertainty that telecom has become, come to us and we'll protect you from the storm.
Fast-forward to this week and the safe harbors have been pulverized. Combined, the same five vendors have announced about 70,000 layoffs this year.
On the carrier side, the outlook isn't quite so bleak, but storm clouds are looming over what were once thought to be safe operators. During June's Supercomm show, the most fashionable equipment manufacturers were boasting about client lists that included metro optical players and ILECs. A company that could claim Telseon, Yipes, XO, Metromedia Fiber Network and any of the four RBOCs as customers could also claim it had buyers positioned to weather a telecom downturn that is turning into an industrywide bloodbath.
Try again.
The metro players are in deeper trouble than anyone would admit. Emblematic of the problems: MFN has been given a two-week reprieve by one of its major lenders, but only if the company can draw others into the fray and spread out its risk (see related special section) .
Even the big ILECs are lowering expectations while simultaneously reporting numbers on services like DSL that fall far short of projections from earlier in the year.
The best bet? Duck and cover.
Contact Vince Vittore at vvittore@primediabusiness.com.
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© 2012 Penton Media Inc.
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