REQUIEM FOR A DOWNTURN

None of the executives interviewed for this issue's special report on the future of telecom would go so far as to call the bottom of the industry's economic slump, so I won't either. But there are a growing number of signs that what Allegiance Telecom's Royce Holland called telecom's “nuclear winter” is finally coming to an end — and that the leaders of this industry are readying their companies for the very different environment it has wrought.

What telecom will look like on the other side of economic crisis is precisely what Telephony's staff talked about with 31 carrier and technology vendor executives. For our editors, the experience of compiling this report (which begins on page 30) was enlightening in and of itself: We discovered which of the industry's leaders are willing to wax futuristic, and which are still too shell-shocked to emerge from their bunkers. We heard everything from nagging pessimism about capex spending and regulatory quagmires to wary optimism about imminent recovery. And we confirmed that pragmatism still tempers all.

Lucent's Pat Russo, for example, would go so far as to call conditions improved, but she stopped short of labeling that improvement a recovery. “It's better,” she said, “but still not good enough.” SBC's Edward Whitacre is “more encouraged than discouraged” but said momentum won't resume until incumbent carriers get relief from regulations for unbundled network element platforms. That sentiment was echoed by Alltel's Scott Ford, who called UNE-P a “dangerous precedent” that “took capital out of this industry by the truckload.”

Telcordia's Matt Desch, meanwhile, is one of many industry leaders who believe far more consolidation is necessary to speed recovery. “The fire's been raging,” he said, “and very little of the dead wood has gone away.” Ditto Alcatel's Mike Quigley, who said there are “just too many players and not enough business to go around,” and U.S. Cellular's Jack Rooney, who said, “The time to do deals is when there's blood in the street.”

Many of our discussions about the industry's future focused on what technologies will be at its center. AT&T's Hossein Eslambolchi, for example, said “Software is the battleground for the 21st century, and IP will eat everything — like Pac Man.” Cisco's Roland Acra concurred, calling IP “the single biggest technology that will be at our core in two years.”

Perhaps most important, our discussion with industry survivors validated our belief that telecom is a vital and sustainable industry that will be restored, as difficult as that restoration will continue to be. As ADC's Rick Roscitt put it, “First you need water, then you need electricity, then you need telecom.”