Telecom Back from the Dead, but Check the Pulse

CHICAGO — Sure, telecom is back from the dead. But for how long?

nxtcommlogo.jpgThat was the unanswered question floating around the opening day of the telecom industry’s big trade show here Tuesday, as exuberance over record revenues and booming bandwidth demand was tempered by the harsh realities facing the legacy telephone industry as it heads into an increasingly competitive digital-economy landscape.

Still, for an industry that went nuclear winter not too long ago, being back in a growth mode is probably reason enough for a few steak-dinner celebrations in this city’s shrines to red meat. “Telecom is not just back from the dead, it’s moving on to Phase II of the Internet,” proclaimed Cisco CEO John Chambers, in a typically upbeat keynote speech.

Easy for him to say, since his company is doing arms-merchant business selling big routers to service providers who need to keep up with the video-fueled demand for more bandwidth. But for the other 20,000 or so attendees of this week’s NXTcomm event who bought or read BusinessWeek’s cover story, there were plenty of hard-reality side dishes on hand — or maybe the remembered bitter taste of the still-recent telecom bust — to keep celebrations muted.

“This is definitely a moment for telecom, but is it a sustainable moment?” asked Stifel, Nicolaus telecom analyst Blair Levin, summing up the wariness. In addition to declining growth in wireless subscriber numbers, telecom players face increased competition from cable in both voice and video. And then there’s the unknown pressure coming from content controllers like Google who will be striving to keep the telecom pipes as dumb as possible, attacking telcos’ plans to bring new, billable services to market.

At the very least, the telcos are trying to innovate. There was a small bit of pizazz on hand Tuesday, as new AT&T CEO Randall Stephenson kicked off the morning keynotes with an iPhone update (just in case you hadn’t heard about it yet) as well as pricing and first availablility of the company’s previously announced video-share service, which will let you share video streams to another AT&T device starting at 35 cents a minute.

But how will such walled-garden initiatives — which require AT&T phones on both ends, as well as AT&T service in between — compete with Internet-based innovation, like the stream-your-video-anywhere beta program announced this week from upstart Neokast? Matt Bross, CTO of BT (who must have mainlined a quart of Red Bull for breakfast), took a poke at big-telco thinking with a funny audience-participation gig that asked people to hold up an arm or a leg for each type of voice-mail service they have, from cellular to land-line for both home and office use.

“Our focus on P&L has kept us distracted from the user experience,” said Bross, while keeping both hands and a leg in the air for effect. The lack of convergence in a simple area as voice mail, he said, is a clear sign that telco infrastructures “don’t move that fast.”

Holding up a copy of BusinessWeek before a panel discussion, Stifel, Nicolaus’ director of research Hugh Warns wondered out loud about flashbacks to the telecom boom of the late ’90s, and whether “this is déjà vu all over again… but it might not be.”

Back from the dead, at the very least. But keep checking the pulse.