Confidence problems

In case we weren’t depressed, bewildered and frustrated enough by the still-declining condition of the telecom industry and the state of the overall economy, the Conference Board said yesterday that its consumer confidence measurement has plunged to a nine-year low. As we gear up for the holiday season, that’s obviously bad news for the economy as a whole, and--as ever--it is particularly bad for telecom.

The jury’s still out (or, more accurately, multiple juries are locked in debate with one another) on what form of shock treatment could incite new investment in the telecom sector, which could in turn spark more innovation and perhaps even restore moderate levels of growth--whether or not it’s some kind of government intervention (either in the form of investment incentives, or through regulatory adjustments that would alter or eliminate the heavily disputed provisions of the Telecom Act). But one thing is irrefutable: Telecom will see no form of recovery until it regains the confidence of consumers.

That’s a tall order, particularly when there is little to no investment in the networks that carry the services in which consumers theoretically would be confident. Watching telecom industry executives raise their right hands to testify at Congressional hearings, reading about SEC investigations into alleged book-cooking at telecom companies, and witnessing first-hand what appears to be a service level and capability plateau on which telecom carriers are content to perch for a while not only won’t instill confidence in this industry’s consumer audience--it will foster even more doubt and anxiety.

I am occasionally criticized by readers (and colleagues) for being anti-RBOC and/or a CLEC sympathizer. The fact is that I am neither. I am, however, pro-competition, because I believe competition promotes innovation and improves service quality, even if the motivation for that improvement is fear--or even greed.

I also understand the tremendous economic constraints on everyone involved in this industry right now, as well as the regulatory entanglements that were intended to create competitive opportunity but were poorly thought out and are at times unfairly executed. The point is that I am not so unrealistic as to believe that telecom carriers are simply not investing in their networks--I do realize that complex economic and regulatory reasons are preventing them from doing so at the levels they formerly did. And for those who would argue that there is ongoing network and service enhancement activity, my retort would be that it is still not enough to restore consumer confidence in telecom.

All that said, yesterday’s awful consumer confidence figures represent even more incontrovertible evidence that the telecom industry--with or without the help of the government--must work more quickly than ever find its way out of this malaise. If something doesn’t happen soon, the once vibrant and innovative telecom sector will be reduced--possibly irreversibly--to nothing more than a necessary evil in the minds of consumers: The industry that everyone hates but has to shell out money to anyway if they want to be able to communicate.

E-mail me at jmeyers@primediabusiness.com.