Fear and self-loathing

With recent attempts to distance themselves from the past, it seems as if many established carriers are in the midst of an identity crisis. Their self-hatred at being labeled "telcos" is transparent and, frankly, to those of us covering the industry, a bit embarrassing.

For me, the apotheosis came on April 13, with a newsless release called "MCI WorldCom fuels the new digital economy." The 800-word manifesto was as intellectually devoid as your average Hallmark card. The announcement was supposedly about a "fundamental shift" in MCI WorldCom's corporate strategy. But neither the release nor the following conference call contained a scintilla of detail about MCI WorldCom's master plan to become a provider of end-to-end services for e-businesses.

Sprinkled throughout the release were gems like "e-capabilities," "e-companies," "e-supplier," "generation d" (a new one to me) and the following quote from Bernie Ebbers: "We're blazing a broadband trail to make our customers more successful in today's data-centric information age."

Not to pick on MCI WorldCom; it's only the latest and most egregious violator. The desire of the telcos to "rebrand" themselves as major players in e-business and the Internet is strong. BellSouth, AT&T, GTE and even major wireless carriers have been getting into the act. I'm all for juicing up the marketing tactics of carriers and dragging them into the data age as fast as possible - even spinning off a unit or two to unlock value - but there has to be some steak behind the sizzle.

On the other hand, it's hard to fully blame the executive management of these companies when they jump the gun on announcing e-strategies. Consultants are crawling out of the swamp to convince them of their imminent displacement or marginalization from the Yahoo!'s, the AOL's, and the Exodus's, not to mention the CLECs and ICPs.

When incumbents' stock prices lag or dive, it only confirms their fears that they're eroding shareholder value - not to mention the value of employees' stock options - and robbing themselves of valuable acquisition currency. Who wouldn't occasionally panic in such an environment?

However, as the recent NASDAQ correction proved, the old guard hasn't lost its appeal. While issues like Red Hat, Amazon.com, VerticalNet and CMGI tanked during the past two weeks, the RBOCs held up well, in particular BellSouth, SBC Communications and Bell Atlantic. That's because investors recognize that there's still a solid business in transporting data and voice minutes and in owning a large customer base that can be leveraged to sell application services on top of a carrier's network. How many dot-com companies have the household name recognition of the RBOCs or the major long-distance carriers?

So what's the lesson? Carriers with household names should be holding onto their core brand identity and trying to translate it for the post-Internet era, not apologizing for being the progeny of the old Bell network. The trick will be to straddle both worlds during this period of upheaval, and not take on too many dot-com traits just to appease Wall Street and the numerous commentators (myself included) who can become overexuberant in their criticism of stodgy old service providers.

In a time when carriers want to be dot-coms, cable TV companies want to be carriers and dot-coms want to be... well, your guess is as good as mine, it's not bad to have a cash cow like local or long-distance voice service to fall back on. Just ask any e-commerce executive who's had to suffer through the past two weeks.