Recently, industry experts sat down at Cili in Las Vegas to discuss Nevada’s telecommunications industry, including new legislation, workforce issues, competition and changing technology. Connie Brennan, publisher of Nevada Business Journal, served as the moderator for the event as part of the magazine’s monthly Industry Focus series, which brings industry leaders together to discuss issues pertinent to their professions. Following is a condensed version of the roundtable discussion.
Connie Brennan (Nevada Business Journal): Let’s talk about the bills recently passed in the legislature.
Leo Brennan: AB 526 is called the statewide media franchise bill. It’s unique because I think it’s the first time in the country that the telephone operators and the cable operators worked together. The whole concept is to provide a statewide framework where a provider of multiple channel video could get a franchise to serve areas throughout the state. Right now, if you want to provide multiple channel video, you have to go to every town and go through the long franchising process, which can take quite some time. With this bill, anybody that wants to offer multiple channel video can go right to the state. And, with the statewide franchise, you can franchise for a specific area in the state. It levels the playing field and at the same time, it continues to protect the local governments and the local municipalities. They still have control over the same things as they did when the franchise process was local and will continue to get all the franchise fees for providing services, as well as continue to have public access channels available. At the same time, it really cleans up the process and makes it much faster. I think it’s a benefit to all the providers.
Rob McCoy: I think this legislation is historical in nature: having four big players – Cox, Charter, AT&T and Embarq – actually agree on legislation like this. AB 518 was the telecom reform. The Telecom Act of 1996 was designed to jump start competition. Anyone could get into the game and compete with local companies and it worked. It worked so well, in fact, we said, “Wait a second. We’re not on a level playing field. There are certain things that need to be fixed.” As a result of 518, which was signed by the governor, incumbent telecom companies will no longer be required to file rate cases. Additionally, companies like Embarq, have always been required by law to build-out to any and all developments. If a developer has plans for a community 10 miles from the nearest development, and it’s in the Embarq service area, we’re required to extend facilities. With AB 518, the PUC (Public Utilities Commission) becomes the arbiter and we’ll be required to make a case for or against – does it make good business sense or doesn’t it?
L. Brennan: Nevada is one of leaders on these issues. There aren’t many states looking or talking about them yet.
C. Brennan: How competitive is this industry?
Mike Ballard: Extremely competitive. It’s a big market, and there are a lot of players out there.
Cheryl Hickman: We are an interconnect company and we have other carrier services that work in conjunction with us. They come to small companies such as ours to form relationships so we can help sell their services. I usually just focus on a couple of quality or key companies that I can work with, which is difficult, because there are so many companies out there to choose from.
L. Brennan: Well, it became much more competitive when everybody started providing every other type of business. I don’t think we have seen anything yet, based on how competitive it is going to get with everybody focusing on IT technology.
Jonathon Snyder: And there’s money in that. You couldn’t convince anyone that they needed anything telecom because they were just licking all their wounds five years ago.
McCoy: Well, when the tech bubble burst, it was big. An interesting development now is the emergence of pivotal equity. It seems to have taken a foothold in the gaming industry. Time will tell if PE becomes a player in the telecom world.
Snyder: Five years ago, you couldn’t talk to anyone about telecom. Now you are seeing all telecom being bought for whatever reason. Either way, there is so much money out there looking at telecom or private which is making the environment even more competitive because you have new agents.
Jack Huber: It’s a time issue as prime equity has fewer and fewer deals to fund and, at the same time, telecom is coming into its own light, that’s a good combination for telecom. There’s a lot of money available right now for this industry.
C. Brennan: With intense competition, how do you stand out of the crowd?
L. Brennan: Service and liability of your product.
Ballard: Those are the things driving your market today, service and quality.
McCoy: You can not overstate the importance of the hiring factor. The employees can make or break you. When we launched Embarq, we really focused on that. They play a key role in the service of our company.
C. Brennan: How great is the demand for technicians?
McCoy: There is a shortage of really good technicians. It’s a big issue for Embarq. We have partnered with the College of Southern Nevada (CSN) at the Cheyenne Campus because recruiting technicians, getting them qualified and retaining them is a big challenge.
L. Brennan: This is an issue for everybody. Technology is changing so quickly. It is really difficult to get quality people, and so much time is required for training.
Snyder: It’s hard to keep them. The university systems don’t do a good job training technicians. We have a big university. We have a growing environment. We have the technologies, but the talent pool is limited. You look at other regions in the country; half of those universities are feeding the San Francisco Bay area.
Hickman: It’s also the quality of the technicians, too. There are two types of technicians – technical technicians and network technicians – you need both to really make the person-to-person VoIP work well.
Ballard: CSN invested a huge effort over the last seven or eight years to build this Cisco school. It was the right time and place for the project but it just seems as if, in the last year and a half, they dismantled much of what they accomplished.
Huber: Well, CSN is geared better than any other school to come up with a curriculum quickly and stay current. I’m on the board of advisers for the college of engineering at UNLV. The big problem is the university wants to do a good job of bringing well-trained people into the community, but the accreditation requirements prevent them from staying current.
McCoy: The training process really depends on the individual involved and then it’s a matter of ongoing education. Job-hopping creates difficulties for all of us. Our goal is to retain the best and the brightest.
Ben Brimhall: You really have to look at the individual and discover his or her interest, and motivations then, put forth the effort into retaining him or her.
C. Brennan: Are business clients more sophisticated today?
Brimhall: I would say their needs are more sophisticated. The business owner himself is not necessarily sophisticated.
McCoy: Many have also retained consultants who drive the purchase decisions.
Snyder: There’s a lot more media attention about technology, too. So if they don’t know what they’re doing, they can certainly use the blurbs they get from the media.
Brimhall: When we started five years ago, it was a challenge at times to convince a small business they needed wireless Internet. Many of them were satisfied with what they had and didn’t see a need for high-speed Internet. Now, they’re much more aware of what is out there.
Hickman: VoIP stands for voice over Internet protocol. DCSI provides the application for companies that have more than one location, especially if they have out-of-town locations because, as of this point, they can call branch to branch for free. Businesses can eliminate a lot of long-distance expenses. Other applications must include local businesses that may have several branches. They might have a large location and then a few small branches. We mainly use an in-house PBX-type of server in one location and then a couple of phones at each of their branches. A company doesn’t have to have an actual phone system at each location. Those phones can be utilized as if they were in the main branch. Somebody can call the main number and ask for a specific extension and the person at that extension might be across town, but it’s as if they were in the same location. A business might have a lot of people who work outside of the office. Instead of utilizing space in the office, they can work from home, have an extension at home and utilize the voice application that way. Or, they can program the extension through their cell phone, and it’s as if they’re actually answering calls and working out of the office.
Snyder: With the new phone systems, an extension can be set up in a matter of seconds just by plugging in a phone and assigning them an IP address. It allows you to customize the way the calls get routed into the system and you can do things more efficiently and effectively.
Huber: Another big advantage with VoIP is the integration of the PC on the network with phone systems. Outlook can be used right on your desktop to call to and from voicemail. There’s a lot of advantage to that integration.
Brimhall: As businesses look at VoIP, they can choose how they want to communicate with their customers and how they want to communicate with each other in order to serve customer needs. There are a lot of advantages to the voice overwrite IP system and the way that e-mail messages are delivered and the way that you integrate your call center application with your voice system. You can have a PRM system automatically talk and bring up the exact relevant customer data when a call comes in. It gives you so much more customizable capabilities that you didn’t have with in-house PBX systems or it was very difficult to improvise. Now, rather than be tied into the box in the back of your office, you are on a leash to a whole new world of communication with your customers.
C. Brennan: Is it expensive for small businesses?
L. Brennan: No.
Hickman: It depends on what they want. If they request every service available, it can cost them. But the basic applications can be very cost effective.
Brimhall: I think it depends more on where they’re at in their life cycle of purchasing hardware. If the existing PBX system is aged and the company is looking to make a replacement or has grown past the PBX, the cost of switching to a VoIP system really isn’t that much. If you had specific business reasons for expanded communications, and if you had a lot of remote offices that you wanted to integrate into one system, you could probably put together a decent case for converting to VoIP.
McCoy: Speed and flexibility are the hallmarks of today’s communications industry. The customer demands it and we have to provide it, whether it’s voice or data.
Huber: VoIP has been around for a long time. But initially, providers had all kinds of trouble because the technology had not really arrived to make it a dependable service. Over the last year or so, some good equipment has come out – this is a prime time for VoIP technology.
Brimhall: It’s not necessarily just the hardware but your proximity – you, from a network perspective to the end user’s device, the IP phone, to the network head where it actually hits a solid land line and goes out – and the quality, whether it’s a local network or a wireless network. The network is important because it flows from the handset to the in-box with all the logic. It’s critical to understand how that communication flows and how solidly they system will work.
Brennan: Bundling is when a customer has the capability to buy a combination of services from one provider. Whether it’s your telephone service, your video service, or your data service, you get it all from one company.
Brimhall: By putting everything on one bill users need only call one company for all of their technology services – cable, phone, Internet.
Huber: Usually, the decision to bundle also involves costs, since the service may include more than one vendor. We are looking at partnerships with other companies to bundle services into one package, the sales and marketing of which a new, separate company will be set up to handle. That’s all happening behind the scenes. So it’s not just one company saying, “We’re going to give you this service and this service.” That’s not always possible. But with the partnerships we forge, we can offer a variety of services from different companies in one bundle.
McCoy: Partnerships have become a popular vehicle in our industry. We are leasing the wireless platform from Sprint and selling it under the Embarq label. Sprint is doing the same thing in the cable industry with Cox. These are strategic partnerships that make good business sense.
Ballard: Consumers are taking advantage of much more technology today. I mean, the services and capacities are expanding. Providers are thriving and market share is growing because the pie is getting bigger. I think that’s a trend that has allowed all of us to succeed. It’s being driven now by members of this younger generation who have demands for mobility. Many no longer have a land line, instead, they elect wireless service for both business and personal use.
McCoy: Wireless substitution is big and it’s growing. I think it’s probably bigger in the Las Vegas market than it is in any other market because of area growth and the somewhat transient nature of the market.
L. Brennan: It’s not a huge issue today, but I think that capabilities grow as time goes on and as technology continues to develop. It won’t be just telephone. It will be video technologies, as well.
Ballard: Only 12 to 15 percent of commercial builders today install the infrastructures for connections. It costs $120 a foot to lay fiber down, so it’s not inexpensive. Often, there’s not enough capital to install fiber optics. Wireless is the alternative for delivering the connection; as well as future technologies. For example, our company is positioned to deliver a high-speed connection that also has video.
C. Brennan: What will be the biggest challenge for this industry in the next five years?
L. Brennan: I would say just trying to stay one step ahead of technology and positioning your company to stay ahead is probably one of the biggest challenges our industry faces.
McCoy: I think it’s delivering what our customers want, when they want it and at the price they can afford.
Brimhall: We have seen a massive change in the last five years in the complexity of services that businesses are looking for, including keeping infrastructure tuned, as well as expanding to fill the rapidly growing needs of our customers.
Huber: Businesses already know they want it – we don’t have to sell the concept – so our jobs are much easier.
Snyder: The information penetration has increased probably 50 percent. Entertainment is being delivered more efficiently – You Tube, DVR, etc. Now consumers will spend the money for technology they wouldn’t have even considered purchasing a few years ago.
L. Brennan: And that’s just it. Once people get a taste of accessing shows whenever they want, they are hooked.
Snyder: Look at broadband, everyone was building business cases around the option in 1998. Now, broadband is everywhere because it allows businesses to do so much more, and there are so many more applications to provide.
Brimhall: Employee production continues to climb and it’s all because of technological advances in communications. Small businesses are able to do far more than they ever could and it’s all based on the technical services they’re utilizing. It’s kind of a cyclical process where you have technology serving customers, the customers demanding services from communication providers and communication providers are straining to deliver. I’m excited to see what happens in the next few years.
McCoy: We are really energized by the industry. And a lot of that excitement is due to progressive innovations in technology. We just love what we do. I grew up watching The Jetsons and now I’m living it. It’s what makes our industry so viable and exciting.