Non-linear logic

Try to make sense of this collective assessment of the latest round of earnings reports: Cable TV firms are gaining telephony subscribers like never before, VoIP players are hanging there and getting support from the Internet giants, mobile substitution is well-established trend and yet the largest telcos are seeing fewer access line losses. It's true that the total U.S. population recently cruised past 300 million people, but I don't think we've seen a change in the rate at which new Americans are subscribing to telephone service.

Anyone at a major telco is likely to say this is a rerun of the CLEC effect, in which competitive market penetration grows little by little for several years, but on the cusp of seemingly larger growth, it hits a wall. But as analyst John Celentano points out in Carol Wilson's story on the mystery of declining line loss, telcos are not likely to escape the cable, VoIP and mobile threats so easily. Cable TV companies, in particular, still have a ways to go in expanding voice availability, and the inch backward in access line losses probably shouldn't be taken too seriously.

At the same time, Qwest CEO Richard Notebaert notes in the same story that access line losses don't always mean lost customers, as customers who cut the voice cord still could be DSL customers. If access line losses or gains no longer easily translate to the effect competition is having, you have to wonder why we still make such a big deal out of the access line metric. Ever since telcos started losing access lines, they have been trying to get the media and investors to look elsewhere for ground-level indicators of their competitive and financial health. Maybe we should finally start paying more attention to average revenue per user.

Also is this issue, I take a look at how the latest acquisition by Oracle (MetaSolv Software) formalizes what is sizing up to be a clash of the titans in the OSS market. MetaSolv has been juggern aut and market darling, but that might not have been enough. Is the concept of the OSS start-up dead or just extremely sleepy?

Elsewhere on pages 12, 16 and 18, we have three separate stories (two by Ed Gubbins and one by Tim McElligott) on three separate CEOs all standing on different rungs of the success ladder. I could tell you now who's poised for profit, who has challenges to face and who has been shamed, but I won't spoil the surprise for you. On page 19, Kevin Fitchard tells us what Sprint's CDMA EV-DO Rev. A rollout might mean for the future of 3G network applications.

And please keep an eye out for an alternative to access line losses as a metric of telco health.

Well, maybe we should wait another quarter just to be sure.