Unexpected Lessons from the Telecom Gold Rush

I am writing this from the 2009 "Leveraging Technology for Community Development" being produced by the City of Moncton, a Top Seven Intelligent Community of 2009.  Moncton organized it to continue advocating for progress in the areas key to economic growth and social development.  It has attracted 250 people from local and regional government, institutions and business.  And after delivering the keynote, I have had a welcome chance to listen to people actually working the problems in the field. 

One presentation, by a local entrepreneur, was a window into bets placed by the telecom carriers of North America over the past twenty years - and which ones turned out to be right.  Neri Basque runs strategy for Virtual Agent Services, which is headquartered in Schaumberg, Illinois in the USA but runs its operations from Moncton.  He attributes his company's success in part to decisions by the CEO of New Brunswick Telecom (now Bell Aliant) during the decade when carriers around the world were rolling out optical fiber as the backbone of their networks.  This rush to fiber became the telecom boom as MCI Worldcom forecast that Internet demand would double every year for the foreseeable future.  Doubling demand?  My God, can we build fast enough to handle it?  Let's go public, let's borrow money!  Putting fiber into the ground is like planting your own gold mine!  Go, baby, go!

Well, it all ended unhappy, as we know.  The yearly doubling of Internet demand turned out to be a myth - at about the same time that a technology called wave-division multiplexing multiplied the capacity of existing fiber capacity by a factor of ten.  Fiber transmission prices plummeted, companies went bust at a total price to shareholders and bondholders of tens of billions of US dollars, and the entire ICT industry seemed to go on hold for a period of years. 

Contrast this well-known story to what went on in New Brunswick.  NBTel also rolled out a lot of fiber, but made the decision to run a little bit of fiber everywhere.  Tiny towns in the midst of woodlands and little ports on the Bay of Fundy got fiber as well as the provincial capital in Fredericton and midsize cities like St. John's and Moncton.  Why?  A different philosophy, perhaps. A focus on public service, or just on the longer term.  For whatever reason, it created a unique broadband landscape. 

Enter Virtual Agent Services, which was founded in 1999.  The company runs small inbound call centers - with tens of work stations - in small rural communities throughout New Brunswick.  They typically open them in disused buildings they can get for practically nothing.  All the call centers are connected into one virtual center over the fiber circuits, to which the company provides centralized training, human resources, sales and finance.  Virtual Agent Services has been on the Inc. 500 fast-growing companies list and won awards for quality of customer service.  The secret to their success is that their employees work in their local communities.  These are good-paying, knowledge-worker jobs in places where such employment is scarce.  Employee churn is a fraction of what is typical for the big "factory" call centers.  And as Mr. Basque said to me, "Where else but New Brunswick could we do this?"

Clearly, NBTel's decision-making was better for New Brunswick than the decisions made by the stars of the telecom gold rush.  What strikes me is that, over the long term, it was probably better for NBTel as well.  It took courage not to fall in with the crowd during that time but profits are seldom to be made by copying the business plans of your peers.  When everybody has the same plan for profit, it's usually time to get into another line of business.