Let’s not do lunch

(Upstart) - If you’ve got an afternoon appointment with a service provider partner of yours, now would be a good time to make sure the meeting’s still on. These days it seems service providers are cancelling more appointments than George W. Bush watching the Cartoon Network.

This morning, United Pan-Europe Communications announced it had called off further discussion with Excite@home concerning the creation of a European Internet access venture called Excite Chello. Though the company wasn’t specific about the entanglements that led to the venture’s dissolve, it comes at an unpleasant time for @Home, whose stock slid into the single digits last month.

It is also not the first time in recent memory that a telecom company has backed out of a widely publicized relationship. Last week, Verizon backed out of its DSL merger with NorthPoint in a classic yank-the-football-just-as-Charlie-Brown’s-about-to-kick-it move. AT&T and British Telecom backed out of merger talks in October. Time Warner backed out of buying GST’s assets before eventually buying them earlier this year.

The market’s current instability makes service providers even more nervous about whom they get in bed with. In the dog days of telecom, no one wants to be seen in public with anyone unsavory. Also this morning, Arkansas CLEC Alltel announced its selection of ICG Commerce to provide e-purchasing services. The top of the press release is emblazoned with a screaming disclaimer:

“***Important Notices related to ICG Commerce***”
“ICG Commerce is not in any way associated with ICG Communications.”

It’s not surprising they’d want the distinction clear, considering that ICG Communications, which filed for Chapter 11 last month, announced this morning that its top executives were resigning for the second time in two months. (In addition to the COO and CFO leaving, ICG’s “executive vice president of people services” resigned. As if having ICG on her resume isn’t bad enough, she has to live with that title.) It also isn’t surprising that telecom companies are nervous about being seen with the wrong crowd. After all, in today’s public slaughter of service providers, investors see all CLECs as guilty by association. The ones with solid management, growth and revenues are getting hammered right along with the riff-raff. In the eyes of Wall Street, every CLEC and ICP is wearing one of those “I’m With Stupid” T-shirts. And no one wants to be standing where the arrow points.

Senior Writer Ed Gubbins can be reached at ed_gubbins@intertec.com. He is moderator of the
Competitive Challenges discussion, and is with Stupid.