The Market Keeps Shifting – Where do you find stability and growth?

So, apparently CenturyLink will not buy Sprint for their wireless network and services.  The CFO of CentryLink says that it is much more important to continue to integrate their recent acquisitions (i.e., Qwest and Savvis) than to continue their buying spree:

http://www.fiercetelecom.com/story/centurylink-wont-buy-sprint-will-focus-business-broadband-opportunities/2011-08-11

This is probably good news for local customers as CenturyLink will have to improve their broadband Internet service offerings to attract new customers.  With a drive to higher speeds and IPTV services, what could go wrong?

Well, in this economy and the shifts in technology and social activity, there are a couple I can think of immediately:

1. Adding new areas to the broadband footprint is expensive
2.  Subscribers to Pay TV services took their largest decline in history.

In the above Fierce Telecom article, Qwest was quoted that it added only 12,000 net broadband subscribers for all of second quarter 2011.  I am pretty confident that there were many more traditional voice (read POTS) customers that cut the cord completely.

As for adding IPTV Pay services, competition, new Internet-based services, broadband wireless, new Internet-based social activities, and the economy are causing record number of customers to leave Cable and Satellite TV services:

http://www.washingtonpost.com/business/pay-tv-faces-toxic-mix-as-subscribers-cancel-in-record-numbers/2011/08/10/gIQAH6Vk7I_story.html

So, for traditional telecom companies that do not have wireless services, the pressure is on to find the formula to stabilize revenue and find customer and revenue growth:

1. Wireless 4G services.  A few more customers that cut the cord at home,
2. Streaming and Downloaded Internet Video.  Even if it does not kill wired to the home video, it certainly reduces the likely revenue per customer (i.e., fewer OnDemand and premium channel purchases)
3. Price Competition.  Satellite TV may continue to drive to very competitive and tailored packages.  Hard to fund wired infrastructure builds in an area where you can get the right share to make the numbers work.
4. It’s the economy, stupid.  We are all starting to cut back.  People are apparently much more likely to trade Pay TV, POTS, and maybe even wired broadband services to keep their ever increasing in capability mobile device.
5. Business Services.  Customers are using the Internet-based VPN services as opposed to MPLS/VPN services to save dollars (reduced dedicated access costs, more competitive pricing, etc.).

So, can these traditional telecom companies find stability without wireless services?   If I can figure something out, it will be the topic of a future post.

Government Data Center Consolidation - The Wrong Metric?

A recent article in Information Week Government : Federal IT Pros Question Data Center Consolidation Benefits indicates that data from the Office of Management and Budget (OMB) says that agencies are expecting to close 195 data centers this year and a total of 800 or more by 2015.

Wow, this is quite amazing, but what the heck is a "data center" in this context.  Could it be that agencies are finding the proverbial "server under someone's desk" and moving that into a more consolidated infrastructure and calling that the elimination of a "data center"?

Statistics can lie, but so can definitions.  Does anyone really think that there are 195 data center buildings that are going to close this year?  Does GSA have a fire-sale going on for leased data center space that is no longer being used?

The problem here is that the directive and OMB are measuring the wrong thing.  By measuring data center closures as a measure of success, I am pretty confident that agencies are taking a good deal of liberty in the definition and their resulting activities to make the numbers look pretty.  A better measure might be to measure IT overhead in an organization and measure it against a benchmark of commercial companies for like services.

The drive for IT efficiency is not going to be arrived at by shuffling "data centers" and consolidating into fewer rooms.  Common infrastructure at an agency, managed by an Infrastructure Service Provider (ISP), drives two essential behaviors:

• It stops IT development organizations from running out and buying a new set of hardware and software every time they deploy a new application
• It drives efficiency in the operations of the ISP 

There are many facets it getting an ISP really operating (maybe a subject of future posts), but there are several essential elements that the CIO of an agency must drive:

• The ISP must be efficiently run, very responsive to its customer set, and provide highly available services
• The developers (which in many cases are contractors), must have in their contracts that they are developing applications for execution within the ISP environment and not a new standalone "data center"

This first step will consolidate within an agency, but it also sets the stage for multiple agencies to start thinking about sharing and consolidating their ISP infrastructure.  This is there the real savings will develop.

The good news, is that there are government CIOs that see this big picture.  Wouldn't it be great if we had a metric that talked about efficiency and sharing rather than some artificial count of data centers?