Do we learn enough from past mistakes? Technology bubbles, real estate bubbles, oil price bubbles. A story on the wires refers to spiking farm prices as a “dot corn” bubble.
Let’s stick with telecom and take a moment to think back to the CLEC bubble of a decade ago.
I seem to recall that virtually every new entrant business plan said that their competitive edge was a lower cost structure based upon “next generation network architectures.” CLECs promised to compete with lower prices than incumbents could handle with those “legacy networks” and “inflexible business support systems”.
When one of the Canadian competitors introduced flat rate national long distance, they didn’t expect a nimble response from the big guys.
Surprise! The incumbents were able to lower their prices overnight because their billing systems weren’t quite as antiquated as the CLECs thought.
I suspect there was a fundamental confusion between the cost of delivering a service and the prices charged. Just because legacy network service providers charged more didn’t mean that their costs were higher.
Are there lessons for new entrant wireless providers?
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