Smart Telecom, which was the biggest unbundler of the Irish local loop has entered a major restructuring, after running out of cash. It’s sad to see a business fail after so many people have worked so hard to develop a pretty good product at a decent price. What are the lessons?
– you need deep pockets to take on an incumbent operator, especially if you aren’t part of an international group.
– there is no point having a big nationwide brand and a national sales force on the street, if you can only deliver services to one-sixth of the phone line users
– It’s important to understand people’s ‘sine qua nons’ or ‘hygiene factors’, things that have to be there in order for the product to be acceptable. For example, people need to be able to keep their phone number. (Interestingly, magnet seemed to have no problem doing this)
The story in today’s paper is that the company will now be sold or merged with another firm, possible Imagine or even Vodafone. Another possibility is that the company could be operated as a wholesale operation providing services to the likes of Imagine or Vodafone. Even though it has not been a success in the marketplace, Smart’s infrastructure has value and hopefully it will continue to make a difference in the Irish telecomms marketplace.
There are bigger issues to think about behind the scenes. For example, there’s no real reason to think that BT’s unbundling strategy is much more profitable than Smart’s. At some stage there is going to be pressure to restructure there or even walk away.
It is also worth saying that it is sad for the original management team of Smart. They will essentially walk away from six years of hard work with nothing except stress and health problems. Hopefully they wil lick their wounds and try again. We should all wish them well with whatever they do next.