Visualize swimming upstream. As the current picks up, you will have a harder and harder time making progress. At some point, you begin to move backwards. So you try to swim harder. As you get tired, the current eventually overtakes you.

Disconnects are the Achilles’ heal in a recurring services business like Telecom. Disconnects are the current you are swimming against. If disconnects are high, it becomes increasingly difficult to grow top line revenue. If, in the face of high disconnects, you attempt to overcome them by selling more and more, you will eventually be overtaken by the Disconnect Inferno.

If you wonder what it felt like to be in the eye of the telecom meltdown, think about swimming upstream against a strong current. If you are still unsure, give a ring to Vonage employee and ask them how they are sleeping at night. Not well is my guess, as they are in the middle of a disconnect inferno of their own making.

Remember, bandwidth demand was still growing rapidly throughout the meltdown. Internet penetration was rising rapidly, consumers were switching from dial-up to broadband, and businesses were upgrading to DS3s and VoIP. Internet leaders such as YouTube, Myspace and Envysion were only then being invented.

The problem wasn’t lack of new bandwidth demand. The problem was how quickly the installed base was shrinking. The problem was the disconnect inferno. We should have seen this coming given the Trammps thinly-veiled message from the early 1970’s.

So Now What?

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