Vyatta gives Nortel the half-Nelson

Vyatta vice president of market and strategy Dave Roberts administered the "ha" on his blog, Opensourcejuicer:

It was very clear when I was there that anybody who wanted a long term career in Nortel had to be associated with the carrier group, preferably an optical product line. That was where all the momentum was within the company. If you were an employee working on other things (enterprise products in my case), it was clear that you weren't going to get any of the investment, attention, or promotions. In contrast, the optical management teams were masters of the universe.

Now I want to turn that into an "ah-ha".

Nortel became dependent on phone companies, outfits like AT&T, Comcast and Verizon. After DWDM brought the benefits of Moore's Law to fiber, these companies stopped buying. And they're still not buying.

I call this an "ah-ha" moment because, if you recall, these same companies have gotten enormous subsidies over the last 15 years, supposedly to extend broadband into schools and neighborhoods and to raise its speed.

They didn't do it. Instead they raised the price of bits. Companies that depended on carrier expenditures, like Nortel, took it in the shorts. Those who bet on increased bit supply lost.

All this reminds me of my last story at Corante, The Legend of Dennis Hayes. Those of a certain age may remember Hayes modems, and how they dominated the market for connectivity in the 1980s. Hayes bet the farm on ISDN, and lost it.

My conclusion then holds true for today as well:

The moral: don’t trust a Bell company. Don’t bet on a Bell company fulfilling its promises. Ever.

Something worth considering as the Obama Administration moves to subsidize increased broadband. No monopoly subsidy will work as well to increase supply as the simple addition of competition.