Last month's Pacific Telecommunications Council event in Honolulu was the first one I'd been to since 2003. At that time, the carrier sector was reeling from the aftermath of the bandwidth bubble meltdown. The chips were more or less done falling, and the survivors were looking for things to be optimistic about besides a more rational bandwidth business and generally having survived the worst.
Back then, despite the disruptions in the market, the topics at PTC were fairly predictable - wholesale subsea capacity, new builds, satellite capacity, etc.
What were they talking about last month?
The cloud.
Okay, yes, they also talked about wholesale subsea capacity, new builds, satellite capacity, etc. But the conference agenda was dominated by the theme of "disruption", and Pacnet chief Bill Barney kicked off the opening keynotes by pointing out just how much the telecom game has already changed. Evidence: the stocks of telecom companies, CDN providers and data center operators have been declining the past few years, while companies like Google and Facebook have quadrupled their market cap in the same time period. (Indeed, a few weeks after he said that, Facebook announced its IPO, which reportedly could fetch a market valuation as high as $100 billion.)
Barney predicted that the biggest industry sectors in the next decade will be social networks, mobile, search and telecom carriers - provided the latter can transform themselves to be integrated into that value chain.
"The data center guys, the CDN guys and the telecom guys will all be in the same business in ten years," he predicted. "We have to change the way we operate if we want to be key players in all this, and we can work together to make sure that happens."
In other words: it's not business-as-usual anymore.
Meanwhile, other CEOs onstage with Barney - including Equinix CEO Steve Smith, KVH chief Richard Warley and Alex Kazerani of EdgeCast (Pacnet's CDN partner) - backed up his statement, maintaining that carriers are in a better position now than they've ever been to work with the Facebooks and Amazons and Googles of the world because they not only have the bandwidth but the business relationships to add value to OTT services that no one else can deliver.
Whether that's true, of course, remains to be seen, and will depend on two things: carriers being able to reinvent themselves sufficiently to be optimum partners and convincing OTT players of the same thing. Either way, a key challenge for carriers is understanding not just that they have to change, but just how much change may be required of them.