Bear On Business - Tracking the Telecom Industry

Posted by Dan Caruso
July 1, 2009

Inalienable Rights’ Staunchest Ally

Businessweek published an article titled Twitter Diplomacy. For the bearonbusiness crowd, it is timely. It feeds into the debate as to whether social networking is good for society.

The tag line on the Businessweek article is: “The U.S. State Dept. is enlisting Silicon Valley companies such as Google and Twitter to help bring high tech to Iraq and Afghanistan.” Then it provides the first ever Twitter post of Barham Salih, Iraq’s Deputy Prime Minister:

“Sorry, my first tweet not pleasant; dust storm in Baghdad today & yet another suicide bomb. awful reminder that it is not yet all fine here.”

Salih, with encouragement from Silicon Valley missionary’s, began using microblogging to publicize the inner workings of the Iraqi government. Twitter co-founder Jack Dorsey explained: “A technology like Twitter can bring access and transparency to government.” Salih now has nearly 1,500 people following his posts, and he tweets about twice a day.

The Iran turmoil is an incredible illustration of the power of social network. Twitter was the primary vehicle for protesters to communicate with one another and to reveal to the rest of the world what was transpiring.

To me, it is near certain that social networking will profoundly change the world. The Inalienable Rights that are so eloquently laid out in the U.S. Constitution will find its staunchest ally in Social Networking. The Right to Free Speech; the Right to Pursue Happiness; Democracy and Capitalism will be harder to contain.

Will the world be better off? You’re damn right it will.

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Rebutting Facebook Naysayers

Oh you naysayers. Yes, you know who you are. A few of you were brave enough to throw dirt on my Facebook post. The rest of you silently cheered on those brave few. Alfred E Einstein asked “Is Social networking really social or is it decidedly anti-social?”. Scott added, “I have found that social networking has created a minority group of young people (18-28) that cannot present a verbal idea”. Yes, you naysayers think Facebook and Twitter are just passing fads for, as Alfred put it, “another cry for attention”.

My retort is this: Warren Buffett.

Yes, you heard me. Warren Buffett.

To be fair, the Oracle of Omaha is my retort to just about everything. (Except when Bruce Springsteen is a better retort.)

What, you ponder, am I talking about? I went on Facebook just a minute ago. A few weeks back I responded to a Facebook suggestion to join a group called “Warren Buffett”. It took me 3 seconds.

Today, on my homepage, I get a Facebook “status” from a former collegue, Mike Knaisch, who apparently still has significant room for improvement in his golf game. Two below Mike’s status is a status from my venture capitalist friend Kirk Holland, who offered congrats to his portfolio company Rally for being named to SD Times 100 List for 3rd Consecutive Year.

Sandwiched between Mike’s and Kirk’s posts was a tidbit from none other than Warren Buffett:

Warren Buffett If I have any serious illness, or an operation or anything like that, I think the thing to do is just tell the Berkshire shareholders about it. I work for ‘em. Some people might think I’m important to the company. Certainly Steve Jobs is important to Apple. Whether he is facing serious surgery or not is a material fact. They’re going to find out about it anyway so I don’t see a big privacy issue…

Now, Naysayers, what do you think about the usefulness of Facebook?

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Retort to Scott

Comments are viewed by far less bearonbusiness readers than the posts themselves. With this in mind, I will focus this post on an important exchange between a reader named Scott and me.

My post from last Monday was Zayo Group Facebook Community. I asked for comments and here are excerpts from Scott’s:

Dan,
Instead of having facebook accounts, why not perform “real” social networking and have all Zayo employees engage in assisting Habitat for Humanity projects or other like minded “real” social networking causes.

I would have a very hard time working for a company that was mandating that I join facebook, twitter, linkedin, myspace or any other social networking club. I know you stated it was not forced, but I cannot fathom why it is so darn important or even relevant that an employee has to put ANY info on the grid, which is permanent , etc.

“Is the world better off because of Social Networking”

actually I have found that social networking has created a minority group of young people(18-28) that cannot present a verbal idea, give a verbal briefing, or interact maturely on a verbal interpersonal level period. Not to mention who cannot spell on emails, tune out the world due to their ipods and and fidget constantly when they are without any electronic, artificial stimulus.

There may be positives to social networking, but I find it to be a lazy replacement for getting out and actually physically networking and verbalizing ideas, thoughts, actions, etc.

Technology might have made our world easier, etc, but ti it has also made us dumber, less self reliant, and certainly have taught us there is no need for situational awareness in any realm of our lives.

Where do you stop, when do WE learn that not everything in your life has to be surrounded by technology?

I stay off the grid for a reason and that reason is a personal choice, because unlike others I do not feel like I need every facet of my life to be able to be called up with a set of keystrokes.

My comment back to Scott was as follows:

Scott, you are persuasive in your main point–though my opinions are vastly different than yours overall. At the end of the day, your perspective convinces me that you are right. Anything even remotely close to “strongly encouraging” is inappropriate until a social networking is more mainstream. My guess is a year or two from now, this will change. Now some specific responses:

I participated in building homes in Tijuana. It was a great experience and did result in a bonding between those who did the home building. In this regard, charity activities such as Habitat for Humanity could play a positive role in a company. However, this has little to do with the role Social Networking could play in helping employees get to know one another better. We have hundreds of employees in many states who interact together on business issues. Social networking would provide a platform for employees to share information with one another–but only info they are comfortable sharing. When the occasional opportunity presents itself for employees to meet in person, they are already more familiar with one another. I see this as a big positive.

Again, I agree with you major point. Mandating (or anything close) to participation would make some people uncomfortable.

You say “I cannot fathom why it is so darn important or even relevant that an employee has to put ANY info on the grid…”. Getting to know the people you work with is important. Social networking platforms provide a unique platform for facilitating this.

You ask “Is the world better off because of Social Networking?”. You then provide your answer: “actually I have found that social networking has created a minority group of young people(18-28) that cannot present a verbal idea, give a verbal briefing, or interact maturely on a verbal interpersonal level period. Not to mention who cannot spell on emails, tune out the world due to their ipods and and fidget constantly when they are without any electronic, artificial stimulus. There may be positives to social networking, but I find it to be a lazy replacement for getting out and actually physically networking and verbalizing ideas, thoughts, actions, etc”

Wasn’t the same said about TV? Cable TV? Mobile Phones? AOL? The Internet itself? My opinion is “yes, the world is a ton better”. And the next generation is going to accomplish things that we cannot even fathom.

You continued: “Technology might have made our world easier, etc, but ti it has also made us dumber, less self reliant, and certainly have taught us there is no need for situational awareness in any realm of our lives.” I disagree.

Later you added: “I stay off the grid for a reason and that reason is a personal choice, because unlike others I do not feel like I need every facet of my life to be able to be called up with a set of keystrokes.” I respect your choice.

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Teenage Memories

I was 13 when Charlies Angels debuted, the same age as my son is today. On the wall next to my bed was this poster. Thank you Farrah Fawcett. We miss you.

farrahfawecet

I was in college when Michael Jackson’s Thriller was released. MTV was still new and was a mainstay in dorm rooms around the country. The music video Thriller was promoted for weeks, and the anticipation of it’s release was incredible. Thriller did not disappoint. MTV must have played it multiple times an hour for weeks on end. Michael Jackson–thank you for the memories.

michael-jackson_thriller

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Don Gips: Ambassador to South Africa

Tuesday night, I attended an event for Tom Boasberg. Tom, now President of Denver Public Schools, is a long term friend and former Level 3 colleague of mine. Listening to Tom speak made me think about our mutual friend Don Gips.

Earlier in June, President Barack Obama nominated Don Gips to be the U.S. ambassador to the Republic of South Africa. How about that? Wow.

According to Don (as my memory is hazy), I was the first Level 3 person that Don met. In 1998, Don–fresh from a stint as Vice President Gore’s chief of Domestic Policy–heard of what we were up to in Boulder. He came by to meet me, Kevin O’Hara (I think), and likely a few others. Though I wasn’t sure what to make of him at the time, I could tell right away that he would be a great guy to work with. Before long, Jim Crowe hired him as head of Corporate Strategy. Every Level 3 executive changed jobs twice a year–except Don. He remained head of strategy until 2009, when he left to join President Obama’s White House. His role has been director of presidential personnel on Obama’s transition team.

Don met Obama long before the President decided to run for the presidency. He became part of Obama’s inner circle and, from the time Obama decided to run for the Office, Don was part of the team. Though I am a long term republican, Don convinced me to support Obama both with my pocket book and my vote. I’m glad I did, though in the absence of major policy changes, it will be the last democratic support from me for the foreseeable future.

Anyway, Don was the mentor of Tom Boasberg. As I watched Tom, I thought of how far both Don and Tom have come. Congratulations to them both and best of luck.

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Listening to Tom Boasberg

Last night, I attended a gathering in support of Tom Boasberg, the President of Denver Public Schools. Tom and I worked together at Level 3, where until about two years ago, Tom was head of Corporate Development. Level 3’s acquisition of ICG Communications was spearheaded by Tom–to this day, I am smarting over how Tom out-maneuvered both John Scarano and me.

With great fondness (and a sense of pride), I watched Tom speak to the group for about 45 minutes. I was there in support of Colorado Uplift, a charity that works closely with the Denver Public Schools in support of inner city youths. I have been involved with Uplift for several years and continue to be amazed at the impact it has on school children.

Tom was kind enough to recognize Colorado Uplift in his talk. This was appreciated by me and the other board members of Colorado Uplift that attended the event.

Seeing Tom made me think about our mutual friend Don Gips. What is Don doing now? (…tomorrow)

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Soon to Expire

Yesterday’s post presented a table from Zayo Group’s monthly management deck. It listed the larger Month to Month services, with comments provided by account executives on what is being done about them.

Back to Ian’s question: “wouldn’t I want to see how much of that revenue is set to expire in the near future?” Month to month, by definition, have already expired. What about those that are soon to move into the month to month category? Perhaps if we act while they are still under term, we could extend the term in a win/win solution with the customer.

Below is a table that captures large circuits with terms that are soon to expire.

expiring-in-2009

Note that it’s format is the same as the Month to Month table. We find that separating the soon-to-expire into their own table brings heightened attention to them. The same questions are considered for these services:

Should we let a sleeping dog lie?
Should we offer a modest price discount, perhaps effective prior to the expiration of the existing term, in exchange for a new term?
Should we suggest an upgrade to a higher speed service? Again, this could take place prior to the end of the term.
Should we announce a price raise effective upon term expiration unless customer is able to commit to re-terming the service?

This is a bit like negotiating with your baseball player while he is in the final year of his contract. How can you leverage the competitive advantage that the circuit is still under term to create a win/win for you and your customer?

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Month-to-Month

Over the past couple of weeks, I had several posts on the topic Revenue Under Contact. Telecom is a recurring revenue business. Most services are under 1-, 3-, or 5- year terms. The gist of the posts was that the amount of revenue under contract is an important metric–one that should be measured and tracked. I showed how Zayo uses Salesforce.com to capture the data.

How is the information used to improve the business? As an example, take a peek at the following table:

monthtomonth

This table gets published each month as part of our executive review deck. Month-to-month means that the original term has expired and the service is no longer under a longer term contract. At any point in time, the customer could decide they no longer need the service and send us a disconnect notice.

Ian Gilyeat posted a comment earlier in the series: “If I’m managing revenue under contract wouldn’t I want to see how much of that revenue is set to expire in the near future?” In a response to Ian’s comment, Jeremy foreshadowed “Something like an evaluation of ‘high risk’ circuits might be very appropriate. This evaluation could … tell you what large circuits would be coming out of term in the near future.”

The table above is one piece of the puzzle. It highlights–systematically–those large services that are no longer under longer-term contracts. It provides a subjective risk assessment and a comments column. No simple rule-of-thumb guides what to do with a “month-to-month” service. The great account executives are able to ascertain the best course of action through conversations with their customers. Should we let a sleeping dog lie? Should we offer a modest price discount in exchange for a new term? Should we suggest an upgrade to a higher speed service? Should we raise the price with an offer to reduce it if and when the customer is able to commit to a longer term service?

Depending on the circumstance, any of these might be the appropriate course of action. I applaud those account executives and product managers who, working in collaboration, show command of the detail and a knack for choosing a good path.

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Zayo Group Facebook Community

Not surprisingly, lots of Zayo employees are on Facebook. Like other companies, we keep a Zayo Group group site. We don’t do much with it though.

I had a thought. (Shocker, huh?)

Facebook (and other social media) threaten to cross the boundary between personal and professional lives. Some people prefer to keep their personal lives private. Others don’t.

I think Facebook is an ideal platform for letting employees learn about one another. As such, I’d like to see all Zayo employees use Facebook and be part of a Zayo Group community. However, I don’t want anyone to feel obliged to share personal information with co-workers. This creates a dilemma. How do you strongly encourage employees to use Facebook and become members of a Zayo group without the employees feeling pressured to to expose personal lives to co-workers?

Here is my thought (it is simple, so expect to be underwhelmed):

Strongly encourage Zayo Group employees to open a Facebook account. (But at the end of the day, it is up to each employee. It won’t be counted against them if they choose not to join.)
However, make it crystal clear that the account need not be the same Facebook account they use for personal networking.
In their Zayo Group Facebook account, we would ask that the following info be populated: name, photo, work location, job title, job description, and a little about your career background. Any additional information is 100% optional. Though it would be great to share interests, it is really up the individual.
We’d also ask that the Zayo Group Facebook account become a member of the Zayo Group community.
We’d do our best to only have current Zayo Group employees in the Zayo Group Facebook Community.
If an individual would like to use a dual personal/professional account, that is fine. If at anytime, a different employee complains that something they consider inappropriate was in someone’s account, we’d remove the individual from the Zayo Group Community and encourage them to open up a separate Zayo Facebook account.

Thoughts?

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Leftover Kool Aid

A recent post was a repeat of “Did We Learn Anything?“ This question was the central theme behind Bearonbusiness itself. Jot that down, as it might be important trivia to remember if “Who Wants to Be a Millionaire?” makes a comeback.

Simple Tennessee Country Boy posted the following comment on yesterday’s post:

Did We Learn Anything?” Yes we’re all to blame and yes…some of us did learn something. What we learned–I hope–is to think for ourselves and not get caught up in the hype. Two examples:

1) Remember the “fact” that everyone was stating back in the late 90s/early 2000s: Bandwidth demand is “doubling/tripling/quadrupling every month”…can’t put fiber in the ground fast enough to keep up. Turned out that “fact” was based on faulty statistical data from UUnet. And today the number of on-net devices and bandwidth-hog applications are legions greater than in 2000 and yet less than half the fiber laid remains unlit today.

2) Remember Mr. Crowe’s Level 3 mantra: “We’re going to bring silicon economics to telecommunications?” We all drank that kool-aid for awhile. Then it dawned on a few of us that silicon economics only works when your start-up overhead is a basement or a garage endeavor–HP and Apple come to mind. Silicon economics doesn’t work with a $6B up front investment.

So yes we did learn something…to use some common sense and if it sounds too good to be true…well, you know. And in our heart of hearts, we all knew those days would end. It was too good to be true.

I can’t fuss with many of the statements made by Country Boy. I must confess, though, that I might be sipping on leftover Kool Aid. I believe the basic premise of Silicon Economics is playing out.

The cost of bandwidth has gotten ridiculously less expensive. And it is a good thing that it has. For low cost bandwidth has been the essential fuel of the continued explosion of the Internet. Without exponential decreases in bandwidth pricing, video applications would be a pipe dream. No YouTube. No Telepresence. No massive multi-player online gaming. No Hulu. No MVaaS (Managed Video as a Service). Etc.

Silicon economics might not have sparked the need for extra conduits, but it does drive a thriving market for those who manufacture bandwidth. It inspires companies like Zayo to find innovative ways to drive down the cost of bandwidth so as to spur the growth of bandwidth intensive applications.

Part of the lesson of the great meltdown was that the fundamental theme was correct. The problem was hype and a lack of investor/management discipline caused a bubble.

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Inalienable Rights’ Staunchest Ally

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