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Storm warnings fly over outsourcing, market competition.

Among the many storms which sweep across our association community, there are two--outsourcing and competition/liberalization--which are major threats and should be addressed by the association community.

Let it be known that these two have been around a long time: for me, at least 35 years; for many of my peers, much longer. In any event, the warnings are up again and the educational programs within the association community should start making the membership aware of these threats. In addition, the programs should provide guidance, wisdom and comfort.


In regard to competition/liberalization, the association community can not rest on its laurels. Obviously, we have come a long way since the days when you could not put your own cover on the phone directory or devices such as Hush-A-Phone were illegal. Today, forbidding a cradle to hold the phone on your shoulder appears a strange and weird example of a monopoly at work--but that's the way it was just a few years ago.

The association community in the USA and the United Kingdom have been the models to the rest of the community regarding competition and liberalization, but the storm warnings are still up.

ICA's "window on the regulatory world" office in Washington, D.C., as well as legal attorneys from other associations are heavily involved in issues which are most complex and subtle and require constant monitoring and follow-up.

On the international scene, indications from INTUG (International Telecomm Users Group) are that in the U.K., liberalization is being revised.

INTUG News says, "After the United States, the U.K. has led the way toward liberalized telecommunications. Its experience for good or ill is a beacon light that other countries look to in their consideration of future policy."

Put plainly, INTUG says that after seven years of opening up the market and privatization in the U.K., liberalization has not proved unwise. On the contrary, the lesson has been that moving away from a well-entrenched monopoly system into a competitive environment is much more difficult to achieve than had been thought.

INTUG says that after seven years, BT has 95% market share. Mercury handles two million calls a day, BT 85 million. Of Mercury's 230,000 customers, only a third have direct access to its network. None of Mercury's 35,100 residential customers has direct access.

Mercury has 1300 pay phones, BT 400,000.

"In summary," INTUG says, "after seven years of liberalization, BT still has 95% market share. Mercury has developed a profitable enterprise concentrated on big city business customers. In national terms, U.K. telecomm is thus still largely on a one horse affair--hence press headlines saying duopoly 'in need of a jolt.'"

Farming out telecomm

Outsourcing--which I prefer to call farming out the telecomm function--is only a new name, not a new concept.

In fact, the concept has been around for about 30 or more years. My experience, like that of my telecomm manager peers, goes back to the monopoly days of the Bell System when the National Account Manager would try to "go around" or "go in the back door" and contact upper management. The message was that they, The Bell System, could handle our telecomm needs and requirements, thus reducing and/or eliminating the telecomm staff.

Back then, and especially now with the economic downturn, this concept is quite appealing to upper management.

Again, this is another storm warning for the association community and should be addressed through the educational programs of our associations.

In the March 1991 issue of Contact, the publication of CBTA (Canadian Business Telecomm Alliance), there is an excellent chart, reproduced here, which helps explain the advantages and disadvantages of outsourcing.

This may be helpful in setting up a seminar or program for the membership of your association.

I like what Peter Smith, chairman of INTUG, wrote about the subject. "There will be no hard and fast rule to demonstrate that managing the telecomm resource oneself is always going to be the most efficient way for every company right across the spectrum of small, medium and large enterprises. It is, however, all too easy to be caught up in a fashionable cycle to do things differently and it is up to telecomm managers to make sure that what appears to be an attractive offer is properly evaluated.

"If we have been doing our job efficiently, it is unlikely there will be a better substitute."
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Copyright 1991 Gale, Cengage Learning. All rights reserved.

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Title Annotation:On Associations
Author:Underwood, Roger
Publication:Communications News
Article Type:column
Date:Jul 1, 1991
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