Telecom’s Backward Business Plan

James Lockhart, President and CEO, Telecom Management Inc.

It comes every year like clockwork ― the annual “Happy Holidays! We Need More Money” letter from the insurance company. Actually, they don’t even bother with the Happy Holidays part anymore. They just say, “Since you didn’t sniff your already high deductible or cost us any money at all by using any of our services, then we will be happy to insure you (bill you) again next year and ONLY raise your rates 30 percent. Don’t thank us. It’s just our little Christmas gift to you.”

At first, I was pissed, because every insurance company does this every year and there’s really nothing we, the consumer, can do about it. Then I thought WOW! This is brilliant! It’s just a different business model that I’m not used to seeing.

Telecom has it backwards. We fight harder and harder to give the customer more and more for less and less. Whose plan was that? Electric, gas, cable and even the church got it right. Why not us?

So I have to ask, has deregulation gone too far? Is this current, faulty, industry-wide business plan killing us faster, rather than slower? Is it too late to fix it?

When you think about it, telecom is less than 140 years old, and in the past 25 years we’ve driven long-distance rates effectively to zero. And it looks like we’re doing the same with Internet access and other network filling services too.

Maybe we should apply the health insurance business model to telecom? (I didn’t even go to Harvard.) For customers who don’t require any support, we raise their rates ONLY 20-30 percent per year. For customers who actually bother to call us and need help, we should definitely raise their rates 50-70 percent per year.

I’m not on the carrier side, so I don’t know much about their profit margins. But I do know that if they don’t make a profit, then we’re either out of a job or we do our job and just don’t get paid (the old MCI comp plan). So instead of having multiple agents bidding one carrier against the other on the same project, we need the carriers to unite, be strong and hold some margin on their products and service. After all, our technology solutions allow the clients to conduct their business faster, easier and cheaper. When are the carriers going to try a little less hard to give these solutions away?

And if you have to give it away, then at least tell the customer, “The price is going up next year!”

James Lockhart is president and CEO of Telecom Management Inc. (TMi), a solution-based telecom consulting firm. He serves on the ACC Advisory Board and is a member of the 2008-09 PHONE+ Channel Partners Advisory Board.