TELECOM 99: Inside the Big Top

Telecom 99, the world's largest telecommunications trade show, kicked off Monday, and participants confronted a far different landscape than the one they saw four years ago, when the event was last held.

The show started, appropriately enough, with a forum on the regulatory environment around the world, featuring industry heavyweights such as Mike Armstrong, chief executive officer (CEO) of AT&T, and Serge Tchuruk, CEO of France's Alcatel.

"Four years ago, there was a lot to argue about, whether we should privatize or not, whether we should deregulate or not," says Eli Noam, a professor from Columbia University. "Now there's no debate. Now it's time to measure the effect this has all had on the world."

While deregulation has ended the rule of many telecom monopolies, the greatest effect has been a rash of incredible mergers - culminating in last week's MCI WorldCom-Sprint deal. But while the telecom giants boast over the global benefits of deregulation, telecom officials from smaller countries are less satisfied. "More than one-half of the world's people don't even have access to a line," says Josefina Trinidad-Lichauco, a government telecommunications official from the Philippines. "These guys with the big phone companies can talk all they want, but the fact is ... there is no incentive for them to build new international infrastructures. And without more outside investment, the Third World will languish."

A number of industry observers at the show also seemed to be somewhat disillusioned with the state of the industry, especially following the MCI-Sprint merger. One panel discussion focused on the notion that consolidation would leave the world with only five to six major telecommunications companies. Armstrong disagreed. "I've got to say that seven, eight, nine or 10 years from now, I think there will be more than five or seven major operators," he said during a question-and-answer session. "Consolidation has been more aggressive than I might have anticipated, but in the U.S. alone, there are three to four strong players. I think people are being pessimistic."

Outside the shadow of consolidation fears, the shows offers a chance to see many new products and services. AT&T formally introduced Concert, its joint venture with British Telecom to the world here. According to the group's leader, Dave Dorman, Concert is to be a new, global, Internet-protocol-based network built from the ground up and projected to reach 80 percent of business markets in the next few years.

But the big talk of the show is mobile and wireless access. Microsoft said it is exploring investment opportunities in next-generation wireless operators, and Sonera, the Finnish phone company, demonstrated software that enables e-commerce on a cellular phone, with the cost being added onto the phone bill. The show also marks the first time wireless application protocol phones are being widely deployed. WAP lets applications, like Sonera's e-commerce applications, run on mobile phones.

Still, not everyone was impressed by the industry's progress. "I was very disappointed by how little things have changed, really," says Johannes Cornelis van Niewkerk, an independent consultant from Hungary. "All it looks like is the phones have gotten a lot smaller and cheaper, but where are all the great services we heard about? I hear the same talk I did four years ago, but little progress."

Though telecom giants dominated the show, a large number of interesting startups showed up, too. One is Floware from Israel, a company offering wireless broadband access to the home, which could compete with cable broadband services. It has 20 installations, mostly in Germany and Eastern Europe. "We didn't come here to outdo the incumbents," says Irit Porat, marketing manager for Floware. "But we did come here to let people know they have an alternative to the incumbents."

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