Corrections or additions?
This article by Kathleen McGinn Spring & Bart Jackson was prepared for the April 30, 2003 edition of U.S. 1 Newspaper. All rights reserved.
In the l960s — the decade that saw the rise of the
"unisex" hair salon — the big marketing idea was universal
appeal. Have your store or product offer something for everyone and
it will sell. During the 1970s, marketing trends shifted to specialization:
Put a deli in that supermarket. Then, in the 1980s, marketers became
more sophisticated and began to play with segmentation: Define and
target your customers; carve up your demographics and serve each segment
the very thing it craves. The 1990s took the trend a step further.
It was not enough to know who your customers were. You had to develop
relationships with them, and make them your friends.
So far, the new century has featured a new, if unimproved, tactic:
Hunker down & survive.
Surely we can do better, and techniques revealed by
in "Driving Success Through 2005" may provide a roadmap. The
seminar is one of many taking place at the annual conference of the
New Jersey Association of Women Business Owners (NJAWBO): The Road
to Success, which runs from Thursday through Saturday, May 1 through
3, at the Ocean Place Conference Center in Long Branch. Register online
at www.njawbo.com or call 732-683-0092.
Nunno, founder of Wayne-based marketing firm Business Boomers (www.businessboomers.com),
discusses new marketing trends and offers specific ideas for businesses
of all sizes.
"Watch the big boys if you want to know today’s marketing trends,"
advises Roque. McDonalds, for example, is moving toward efficiency
by simplifying its menu, and individualizing its restaurants with
regional decor. Toys R Us has abandoned its former "grab and go"
layout, designed to move customers in and out quickly, and replaced
it with a attractions — including a giant ferris wheel in its
flagship Times Square store — that are enticing enough to make
customers linger, and even make a special trip just for the fun of
it. Another new Toys R Us tactic is the creation of multi-sensory
mazes where the customers seeking, for instance, a car seat, must
first pass by all the toys associated with that seat, along with any
other toy a child in the car seat years might crave.
For the past 13 years, Roque has been not only tracking such trends,
but also helping to create them for clients. Born and raised in Bergen
County, Roque attended Rowan University, where she studied marketing
and communications. In l988, she moved to Wayne and founded Business
Boomers, assembling a team that has launched promotions for DeBeers
Diamonds, Motorola, Met Life, Quaker Oats, the Infinity automobile,
and the U.N. She recently obtained her M.B.A. online from Thomas Edison.
She praises the university’s alternative learning options, saying
"it’s the only way a person like me could do it."
While small businesses can learn from the trends and tricks of massive
corporations, Roque cautions that customization is the key to successful
marketing. Each business owner must choose the tools that are going
to bring in and keep the most customers:
trend is a shift toward targeting the consumer for all the purchases
he is likely to make. Each potential customer has 10 to 25 variable
buying habits that, Roque insists, can be determined just by the fact
that he has walked through your door — or visited your website.
For example, if you have sold a middle-age man a bicycle, you know
that this individual is probably interested in health. Stocking energy
bars and food supplements becomes an option, as does offering dietary
Age, marital status, shopping and travel habits can all be discerned
from his questions, purchases, and answers on the questionnaire you
have him fill out. These will help you customize an array of offerings,
possibly including trips, accessories, outdoor clothing, and free
bike route maps. By becoming a partner in his biking adventures, your
shop becomes a destination for all his athletic and outdoor needs
— throughout the whole year. "Don’t forget seasons," reminds
Roque. In winter we burrow in, repair summer sports equipment, consider
trying a new winter sport, buy comfort food, and crave anything made
of wool or Gortex. We also pine for the next warm season. How can
your products satisfy these natural cravings?
your business, you may be able to sell through a partner’s business.
You may own a health spa, but know nothing about preparing sushi.
Knowing that your customers see sushi as a healthy, tasty, and trendy
food, you might link with a nearby Japanese restaurant with whom you
can work out a short take-out menu for your many time-pressed customers.
Yoga wear and accessories could be sold on consignment from a local
boutique. Expanded offerings makes your shop a hub.
Another type of alliance Roque encourages owners to seek out is with
customer groups. What sort of clubs or businesses might use your product,
and what groups would enhance your business? In the case of the spa,
giving a discount to the local police and sheriff’s departments would
not only broaden interest from the patrol people themselves, but might
result in equipment purchases for the local station. Also, having
a gym full of law enforcement folk certainly adds to customer security.
publicity promotions to linked online newsletters. Proximity can turn
your strip mall into a destination shopping place, suggests Roque.
Gather the other vendors and set up an reciprocal coupon system that
offers, for example, free dry cleaning delivery for all you pizza
shop customers spending $25 or more. In turn the dry cleaner could
offer his customers coupons for $5 off on a four-topping pizza.
Cross-product links can even give your business an image boost. Invite
the Rolls Royce dealer or high-end jeweler to display his goods at
your spa opening and you position yourself as a business with cache.
Another type of link, and a valuable one for time-starved customers,
involves giving them an easy way to evaluate purchase options. A furniture
store, selling relatively complex products, might provide your customers
with chat rooms where they could speak with upholsterers, finishers,
restorers, and repair shops.
"Just because a business idea is sound," says Roque, "it
does not mean people will automatically think of it. You have to reach
a little into your creative imagination." A while ago, Roque needed
to explain the value of membership clubs, participant offers, E-newsletters,
and other marketing tools to a lecture-weary audience of business
people. They filed politely into their chairs, where they were bombarded
by strobe lights and the theme song from Rocky. As the music reached
a crescendo, Roque bounced out, wearing a massive pair of red boxing
gloves and hurling questions — written questions — at her
audience, and giving prizes for their answers. Hokey, outlandish,
and undignified, sure, but also clever — and her audience hung
on every word.
— Bart Jackson
They just don’t come by any more. All those old customers
have vanished behind the curtain of hard economic times. A typical
response? Get out there and hustle up some new ones. While admirable,
unearthing new customers rates high on labor and comparatively low
on profit. If you doubt this, think how you personally respond to
a call from the insurance agent who has seen you through hurricane
damage and banged bumpers as opposed to those dinner-time cold calls
from a stranger.
"A Sleeping Giant: Reactivating Old Customers," led by
Davidson, is another one of many topics on tap for discussion at
the annual NJAWBO conference. (See story above for contact information.)
Davidson is the founder of the Davidson Team (www.davidsonteam.com),
a business advisory group in Aberdeen. She is an entrepreneur who
learned the art of growing a business by example. Her father, an electrical
contractor, ran a business out of his home, as did each of his five
entrepreneurial children. Even Davidson’s husband was a home-based
businessman until he became an employee — in her firm.
Shortly after arriving in New Jersey in l977, Davidson earned business
administration degrees from Brookdale Community College and then from
Rutgers. In l983, she founded Davidson’s Bookkeeping and Tax Service.
Within five years she had gathered a team to offer business consulting
services ranging from financial planning to marketing. And while her
website, www.Davidsonteam.com, lists plenty of major corporate clients,
she still favors her small business specialty.
"It’s a tried and very true rule," says Davidson, "80
percent of your business will come from 20 percent of your clients."
So any business owner’s efforts are best directed toward trying to
make the most of every customer. This strategy is not only cost effective
in near term, but it also leads to a service reputation that attracts
to be resentful of customers who have abruptly stopped buying,"
says Davidson. "There’s always a feeling that they’ve betrayed
you by consorting with some other firm." But that may not be the
case at all. The disappearing act could be connected to a death in
the family or to tax woes. Make a personal call — not an E-mail
or voice message — and inquire how your old client has been.
"Calls to known customers net an average of an 8 percent return,"
states Davidson, "as opposed to a .05 per cent return on cold
calls — if you are lucky." Have some new products on hand
to discuss, but make the primary purpose of this renewal call the
client’s welfare — not the product pitch.
in America has costed out the service factor and decided it is not
worth it. Most will now go to any length to keep a customer from placing
a call to a live human. Any number of companies provide no phone number
on their websites, forcing customers to fill in an E-mail form and
send it into the ether. Automated phone answering systems force customers
to endure multiple, multi-branched menus before being granted permission
to leave a message in voicemail. The tacit motto has become: Real
customer service is too costly, give ’em lip service instead.
"This provides you with an excellent chance to distinguish yourself,"
says Davidson. Access 24/7 is primary. Customers have to know that
they can wake you at 3 a.m. and you will link them right back to the
manufacturer for parts, repair, or any need. Lyndon Johnson, who was
never supposed to win his first Congressional seat, made one rule
while in office: "This shop does not close up until everybody
who has called today has gotten an answer — this day." The
result? Landslide victories.
strictly business, clients will view you as merely a product pipeline,
rather than a destination provider or problem solver. All business
is personal, with people seeking to purchase from friends, or at least
interested acquaintances. Davidson suggests getting the local paper,
and also papers serving clients’ home towns. Scan the obituaries,
wedding announcements, and graduations. Look for some bit of news
involving your client. A simple card congratulating a longtime customer
on his son’s graduation shows that you are not only concerned, but
startlingly on the ball.
Nothing is as gracious as a personal note, and nothing so annoys as
a form response letter. Customizing cards from a boilerplate letter
elevates your communication beyond the realm of a standardized junk
mail, yet offers a little efficiency. Hint: In order to avoid getting
lost in the Christmas mail crunch, Davidson opts to mail Thanksgiving
cards. They’re more unexpected and arrive at a less frenetic time.
has provided you with a marketing profile offering some clues as to
what else he buys. If not, a questionnaire may fill in the gaps. It
is an old and effective trick to discover where else the customers
does business, and then to forge links with these establishments.
Establishing links via website, promotions, or contracts with other
firms takes time, as does creating customer profiles. What makes most
small business people balk at this challenge is the time required.
"But if you can systematize a procedure, it is amazing how much
of it can be performed by $15 an hour outsourced labor," says
Davidson. If one person can perform 80 percent of a procedure that
doubles 100 clients’ sales, he has more than paid his way.
Old clients, like old friendships, will die from neglect. Yet, as
the most fertile source of business expansion, they are the most worth
— Bart Jackson
Bill Clinton’s participation in Renaissance weekends
was a big help in winning him an eight-year tenure in Washington’s
most imposing mansion. Begun in 1980 by Phil Lader — attorney,
land developer, former ambassador, and one-time candidate for the
governorship of South Carolina — and his wife, Linda, the weekends
started out as the Laders’ attempt to bring together friends, and
their families, for a New Year’s weekend featuring serious discussion
of the events of the day and of important trends on the horizon.
Clinton became a regular, and the event, which is held on Hilton Head
Island, has attracted hundreds of other luminaries, including at least
seven presidential candidates, Oscar winners, high-profile journalists,
foreign dignitaries, astronauts, writers, and a number of CEOs. Family
and outdoor activity — lots of golf — were woven into the
Renaissance weekends from the start.
Now New Jersey is starting its own version of the Renaissance weekend.
Sponsored by the New Jersey Chamber of Commerce, the first annual
Cornerstone New Jersey Weekend takes place on Friday and Saturday,
May 2 and 3, at newly-restored Congress Hall in Cape May. Members
of Cornerstone New Jersey, organizations that pay $10,000 to join,
are invited to attend at no charge and to bring a significant other
or a guest. Invitations also have been extended to Governor McGreevey,
to state commissioners, the state’s Congressional delegation, and
to state legislative leaders.
Accommodations at Congress Hall, a colonnaded structure dating to
1816, which has played host to four American presidents, are approximately
$200 a night for participants. Call 609-989-7888 for more information
or get complete details at www.cornerstonenewjersey.com
Members of Cornerstone New Jersey include AT&T, Bristol-Myers Squibb,
Fleet Union/Wachovia, Johnson & Johnson, the New Jersey Institute
of Technology, Rutgers, Silver Line Building Products, and the University
of Medicine and Dentistry of New Jersey.
The program for the first Cornerstone weekend is centered on four
Business School Life Science Project, speaks on "As the Future
Catches You: How Genomics and Other Forces Are Changing Your Life,
Work, Health, and Wealth;"
of books, including Lessons from the Future and Blur, speaks on "It’s
Alive: The Coming Convergence of Information, Biology, and Business;"
regional development strategies, speaks on "Positioning New Jersey
for the 21st Century."
in BridgeWorks (www.generations.com), a company consulting on generational
issues in the workplace, speak on "Understanding How Generational
Differences and Diversity Affect Your Workplace." (See excerpt,
In a phone conversation from her office in the Sonoma Valley, Lancaster
recounted how she and Stillman formed their partnership. "I was
doing speech consulting," she recalls. "He was a client."
She was a Baby Boomer, and he was a Gen Xer. A multimedia producer,
he had come to her because he was preparing to give an important presentation
to a group of CEOs. "He was wearing a ponytail," she says.
"He told me he wanted to start off his presentation by loosening
up the crowd by having them play a game of Jeopardy." She thought
conservative attire, a hair cut, and an opener establishing his credibility
and laying out the foundation of his pitch would be a better idea.
"We butted heads immediately," Lancaster says. "We didn’t
like each other very much."
In a compromise, Stillman kept the ponytail, but wore a suit to his
presentation. He did get his audience playing Jeopardy, but only after
he had established credibility. Clashing on a number of points, Lancaster
and Stillman gradually came to like what they saw behind each other’s
generational facade. They realized that each could teach the other
a thing or two.
Then a light came on. If this was true for them, was it not also true
for any number of cross-generational workplace pairings? Realizing
they had hit upon a phenomenon with myriad implications, the two formed
a consulting company, BridgeWorks, which is based both in Minneapolis,
Stillman’s home town, and San Francisco, Lancaster’s home town. They
also wrote a book, When Generations Collide: Who They Are. Why They
Clash. How to Solve the Generational Puzzle at Work (HarperBusiness).
Lancaster, a young-looking graduate of the University of Minnesota
(Class of 1982), says that she and Stillman, a 34-year-old graduate
of the University of Wisconsin, are sometimes mistaken for a romantic
item. But no. "We’re both happily married," she says, "but
not to each other." Lancaster’s husband, formerly an HR executive,
is newly retired, and she is stepmother to his two GenX sons. This
gives her in-depth insight into three of the four generations she
and Stillman have identified as having significantly different values
and work styles.
The first, like her husband, are traditionalists. Born prior to 1946,
their work ethic was shaped by the Great Depression. There is no fooling
around for this group. Loyalty is supreme, sick days are for wimps,
and the company is rarely wrong. The next group is the great population
bulge, the Baby Boomers. Born between 1946 and 1964, they are, says
Lancaster, "defined by their work." No sacrifice has been
too great for the furtherance of their careers. Eighty-hour weeks,
travel to Hong Kong on an hour’s notice, weekends in the office, an
executive MBA at night; nothing was too much to ask.
Then come the GenXers, like Stillman and her stepsons, they were born
between 1965 and 1981. "I was shocked at their cynicism,"
says Lancaster. This is not a generation, she discovered, that puts
its employers on a pedestal — or even expects that they will be
around tomorrow. She finds that GenXers also question the ways that
work is done. Raised on technology, they have no patience for "face
time." While Baby Boomers believe it is important that their superiors
see them working, and like to be the last out of the parking lot,
GenXers, realizing that work can be done anywhere, want the freedom
of a flexible schedule.
Seeing GenXers exiting early in the afternoon, Boomers may think they
are slackers. This is not true, says Lancaster, who finds that the
GenXers are every bit as willing to work as hard as their elders.
The perception does give rise to bad feelings in at work, though,
and can hinder advancement for the GenXers.
Lancaster sees the millenials, young workers born after 1982, as the
generation with perhaps the highest expectations from their careers.
The Boomer’s traditionalist parents, she points out, urged them to
"get an education and get a good job." For the traditionalists,
often first generation immigrants, putting their children through
school was a major accomplishment.
Many of the millenials, raised by financially comfortable Boomer parents,
have been urged to find fulfilling work. At the same time, they have
a front-row-seat perspective on the homelife of parents who have given
their all to their careers.
They wouldn’t mind having the lifestyle their parents have earned,
says Lancaster, but they don’t want to kill themselves to get it.
A sturdy fireproof robot wheels into a burning building.
Its prime directive: Pick up the trapped child indicated on its heat
sensor, and then, using the building’s blueprint, work its way out
of the maze. Yet, halfway in, a heavy fiery beam collapses across
the robot’s path. Without hesitation, the robot scans around and searches
out a new route. It will save the child if possible, but it may abandon
that goal in favor of a higher goal — self preservation. A computer
"thinking" like a man, employing layers of prioritized goals,
which it reshuffles within a dynamic environment?
Is this possible? Can we program machines to follow the human thought
process? Should we? "The Cognitive Question: Human and Computer
Thought" addresses these questions on Saturday, May 3, at 3:40
p.m. at the Trenton Computer Festival at the New Jersey Convention
Center in Edison. The speaker is cutting-edge artificial intelligence
expert and roboteer
links between human and computer thought processing strategies, and
provides insight into what cyber creatures will greet us in the not
too distant future.
If your mother gave you your first Commodore computer at age 8, and
by age 9 you had totally filled it with programs of your own invention,
where would you be today? Well, if you were Wetterling, you would
have spent the last several years as an engineer at Cherry Hill-based
Lockheed Martin Advanced Technology Labs creating ultimate artificial
intelligence (AI) prototypes and placing them in remarkably humanoid
Born in Hamilton, Wetterling earned computer science degrees from
Mercer County Community College and Rowan University. A self-confessed
tinkerer and inventor, Wetterling is now turning his high-tech talents
toward opening his own training and consulting firm in Moorestown.
"We are the God of computers," says Wetterling simply. "And
like any creation, we must model them after ourselves; for we have
no other model at hand." Thus the flow of even the most basic
computer process follows humanity’s own patterns. Our desktops categorize
items by mimicking man’s thought bundles. The concept of long and
short-term memory programmed into all computers is a method that is
more emulative than mechanical.
We are the Pygmalions, and we have fallen fearfully in love with our
cyber creation, worrying what would happen if computers truly took
on lives of their own. To these fears, Wetterling responds that "while
we bestow on computers all of our own seemingly limitless endowments,
they must always remain lower on the creative tree. It is our psychological
processes that are original." We can always infuse new corrective
decision making processes in any program. Yet computers cannot reach
back to their creators and tweak their cognitive processes and judgments.
We are the masters, and yet through the artificial intelligence we
have programmed into our little gray boxes, we can learn quite a bit
about the workings of our own little gray cells.
immediate in our lives. "All I did today was put out fires,"
we complain. We seek desperately to recast our lives, moving toward
lofty goals, pausing briefly at only the most interesting and important
immediacies, while eschewing the unnecessary. Our cognitive process
wants to keep moving. Alas, our environment invariably foils these
carefully crafted plans.
Ah, but we can fulfill this fantasy perfection through our computers.
Search engines seek and retrieve data, prioritizing long and short-
range goals constantly. Wetterling’s mobile search and rescue robot
is based on algorithms that break its moves down into small goals
to deal with its changing environment. The robot, which all of us
would gladly sacrifice for the life of a child, must still contain
enough self-preservation programing so it (he?) won’t ignore the beam
crashing in its path. In other words, the robot rescuer has to be
imbued with sufficient heroism, but this heroism can’t make it foolhardy.
inspires one individual who finds food to report back this benefit
to the hive, rather than just satisfy his own needs. The advantages
of such behavior are obvious, and when transferred into software they
provide amazing hive dexterity. Robotic swarms can "analyze"
a damaged instrument’s circuitry, laboriously tracing each line. When
one machine finds a break, infrared signals go out to his mechanical
welding buddies, each of whom rolls to the spot and begins re-welding
the breaks within that area. Such a smart technique saves time and
energy — both in society and in its tools.
the voice in the chat room. The despondent lost soul, grieving for
a lost friend, speaks his answer. Then the respondent encourages him
to go on. The griever is seeking comfort from a totally electronic
pre-programmed piece of therapy software. Some argue that the software
is capable of offering at least as much sympathy and feeling as their
last homo sapiens psychiatrist. In a study, this program was furtively
introduced into workplace computers. Even after the computers’ owners
learned that no human being was at the other end, over 70 percent
continued logging on to obtain comfort.
"Here again," notes Wetterling, "it is merely a case of
human cognitive modeling." Linguists analyze the natural patterns
of human language, blend in the semantics, and list the appropriate
responses. For example, upon being told about the death of a loved
one, the computer is fed the proper obligatory noises of sympathy.
Compassion, concern, even anger can be simulated.
science fiction, is that computers will become smarter than their
masters. Will this happen? "Never smarter," Wetterling says,
"only faster." The computer’s ability to calculate so swiftly,
to such fine extremes, makes possible tasks far beyond our capabilities.
Life is not long enough for even the most agile of mathematicians
to trace satellite GPS signals or to calculate the distance to the
farthest stars. But while they undeniably can be blazingly fast, computers
operate according to a set of rules imposed by a programmer, and they
demand the constant hand of man to keep functioning. Artificial intelligence
can be very clever, but yet not creative.
featured in the futuristic film "Minority Report" turn up
any time soon, making retina scans in accordance with Patriot’s Act
IV? "Well, the technology is to a large extent in place,"
says Wetterling. He himself has designed two palm-sized robots with
Ingram hive swarming capabilities. The retinal scan soon will be ready
to implant. "And believe it or not," he says, "the navigation
of such creatures is relatively near at hand."
However, much more valuable — and more likely — are virtual
reality improvements. The next step, Wetterling predicts, will be
the addition of touch and hearing to the graphics of computer interfacing.
The computer screen across which Minority Report’s Tom Cruise sweeps
images, sounds, and tactile feelings is on the horizon. Imagine the
victim of a Manhattan hit-and-run receiving a virtual examination
and diagnosis from a Swedish specialist while the doctor sits in his
Stockholm study and the victim races uptown toward a hospital.
As to how these high tech changes will effect our daily living, Wetterling
places the reins solely in our hands. We do not have to destroy our
privacy, just because we have means to do it. "The upside of computers
is that they will do whatever you ask of them," he says. "The
downside is the same thing."
— Bart Jackson
For how long do you prop up a bad king, just because
you need government? For how long do we prop up the teetering regional
Baby Bell phone companies, just because we need telecommunications?
If judgment on these questions gives you pause, you are not alone.
The FCC is still waffling over this latter quandary. Such variables
as old-versus-new technology, fair competition, consumer cost issues,
satellites, and an ever-broadening band of wireless possibilities
have further muddied telecommunications’ waters — which haven’t
been all that clear in decades, ever since the breakup of AT&T.
To find what will become of this high-potential, poorly-managed industry,
tune in to "Macbeth, the FCC, and the Future of Telecommunications"
on Saturday, May 3, at 11:20 a.m. at the Trenton Computer Festival
in the New Jersey Convention Center, Raritan Center in Edison. Presenter
(www.ieee.spectrum.org) and past president of the New York Amateur
In an industry heavily affected by computer issues, Cherry points
out that what should be one of our nation’s richest and most stable
industries is currently marked "by greed, scandals, misguided
deregulation, and poor business models." He predicts that "it
is not going to remain as it is for very long."
Cherry’s unusual training has allowed him to track the progress of
the telecom industry with more than a casual eye. Son of a mechanical
engineer, Cherry grew up in Queens and attended the State University
of New York at Genesco, studying philosophy and mathematics. After
doing graduate work in philosophy, Cherry began an editorial career,
joining American Computing Machines (ACM), where he founded NetWorking
magazine. His work has appeared in Internet World and Computer Shopper.
At Spectrum, he specializes in Internet Protocol (IP) and telecommunications.
When AT&T was ordered to end its monopoly, seven regional phone companies
sprung up, and became known as the "Baby Bells," or sometimes
as the "Seven Dwarfs." A major goal of divestiture was greater
competition for telecom dollars. In point of fact, Cherry notes, the
break up has in no way promoted local competition. Instead, in the
footsteps of their parent company, these firms have basked in the
full advantage of selected Federal Communications Commission (FCC)
regulations, and have resisted all new firms and innovation.
RBOX, DSL, and other Internet-based technologies, Verizon and the
other Baby Bells have depended on voice and local communications as
their sacred cash cow, says Cherry. These Incumbent Local Exchange
Carriers (ILECs) have the wires — and the satellite augmentation.
Granted, the Telecommunications Act of 1996 insists that any legitimate
competitor, referred to as a CLEC, a competitive local exchange carrier,
is allowed to tap into the network at any point, thereby, for example,
allowing a Sprint customer to make a call from mid-Manhattan to Montana.
The rates for this line rental are regulated by the FCC, not by the
Baby Bells, which are renting the wires.
Cherry says the Baby Bells are not thrilled with this system. Their
competitive plan, says Cherry, has been to make the switching process
so outlandishly complex — for both the CLEC and its customers
— that they will buzz off in disgust. Meanwhile, the Baby Bells
have been lobbying the FCC, complaining that the rental rates are
so low they are bankrupting the line owners. Cherry reviews their
complaints wryly: "If truly the FCC’s rates were below the actual
cost, why didn’t the Seven Dwarfs start renting from each other?"
off from AT&T, only Verizon, Bell South, SBC, and Qwest remain. "And
Qwest," notes Cherry, "is very much on its deathbed."
The main reason he gives is that voiceover’s days as the cash cow
of the communications industry are over. Free telephony and Internet
communication have caused any number of consumers to leave their phone
handsets parked in their cradles. Meanwhile the old regional phone
companies are seeing their most profitable types of calls go away.
Just as the first class, one-page letter carrying a 37-cent stamp
is the profit leader for the Post Office, so too are the quick local
call and the oft-relayed international call — think Princeton
to Tanzania — the profit leaders for the regional phone companies.
Take these calls away, and the wired lines are left with only the
most expensive of transactions.
New technology has whacked more than a dent in the old systems. Cable
modems and Digital Subscriber Lines (DSL) have moved strongly into
the U.S. market, and DSL has become the norm for most other heavily-phone-dependent
nations. AOL, Yahoo, and similar firms are handling 70 million instant
messaging units at any given moment. The trouble has been bringing
DSL and cable into the home. The last mile has been the most difficult.
Tens of millions of households still have no access to either DSL
or high-speed Internet.
But even these families soon will have a broadband option. For a one-time
cost, customer will be able to buy a link and an approximately eight-foot
antenna to point at a communications hub. Radio waves will connect
both his voice and his Internet messages point-to-point via the same
flow of electrons.
FCC reworked the 1996 Telecommunications regulations in a move that
offered both crutch and rabbit punch to the remaining Baby Bells.
The good news (for them) was that tapping into the existent wire system
became more difficult and expensive. Now, the CLECs may tap in only
at major points in the wire system, and they must contract for the
entire data bundle. Further, the rates for this access are deregulated,
and the ILECs get to set the rates.
But not all the candy went to AT&T’s desperate children. In the same
revision, the FCC allows inter-exchange carriers, like MCI-Neighborhood
and other long distance companies, to enter the local loop and openly
compete for an individual’s full phone service.
"In the short run," says Cherry, "the four remaining ILECs
can look forward to a great flush of cash. But in the long run, these
new long distance firms may topple them. Certainly the strictly local
firms will definitely go under."
to retain customers by offering attractive flat-fee rates. "This
is just a stopgap," says Cherry. "Verizon is offering $55
(for all local and long distance calls), while broadband company Vonage
offers the same package for $40."
Cherry insists that plenty of gold remains in selling telecom services,
but he does not think it is likely to be prospected by the current
companies. Broadband, DSL, cable, and evensatellite service will take
over copper wire voice technology sooner than foreseen. He picks companies
that can combine broadband with cellular service, Motorola for example,
as the best bets in the coming decades.
regional phone companies? "Anyone can make money by pooling the
power of the grid," he says. Are the regional companies clever
enough to capitalize on fiber optic technology in the next five years.
Maybe, maybe not. But, Cherry says, their very existence depends on
— Bart Jackson
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