The first thing you learn in restructuring is to accept the situation you are in and focus on moving forward. Since mid-2007, I have been saying we are in a recession.  You don’t need an economics degree to see we are in one.  We are seeing the financial underpinnings of the economy doing more than just rattling.

As I have been saying since 2007, the telecommunications industry is (technology) infrastructure and not the typical infrastructure business.  As infrastructure it will be among the last business segments to exhibit the signs of the recession.  However, given its technology bent it will also be among the first infrastructure businesses to show signs of the recession.  I hate to say I told you all so but I will.

The worse thing for companies in distress is to act like there is nothing wrong.  The worse things for companies seeing distress on the horizon is to act like there is nothing wrong.  Why?  I am glad you asked why.

The answer is simple.  Companies need to be able to effectively plan for the worse.  Not having a runway to react is a disaster.  Companies that do not have a runway to survive the economic winter will die.  Companies that are just now experiencing credit issues should have been preparing for this since last year.  What companies need to do is to stop asking if they could be in trouble.  Start acting like you are.

The goal is to conserve cash.  Stop worrying about how Wall Street will react to your company’s actions.

Telecom carriers should not be expecting users to do more than just purchasing basic calling plans.  Media spending will be down.   Telecom vendors will not be told to stop their development cycles but will be told by their carrier customers that purchases will not happen anytime soon.  Vendors need to prepare for delayed capital purchases.

The short term goals for telecom carriers and vendors are:  

-    Stop all major capital expenditures
-    Increase operational savings – optimize the backoffice and network ops
-    Develop customer plans that focus on more value for the customers without charging them more.  Rate plans may not need to change but the marketing messages need to focus on the basic telecom services – --    VOICE, VOICE, VOICE.
-    Vendors need to focus on generating cash from their maintenance businesses.

The carriers and vendors need to focus on conserving cash. 

For wireless vendors this means no major WiMAX or LTE purchases.  Unless the contracts were signed in blood and the cash committed to the new equipment, vendors need to expect carriers to delay deployments.  Vendors can expect carriers to do small deployments.  Carriers will do these deployments in order to continue gathering marketing data and network performance data – all very basic stuff.  This recession will be tough on vendors.  Vendors need capital expenditures to show performance.  Carriers will need to stop all major capital expenditures.

Even if vendors have contracts signed in blood and set in stone, carriers have absolutely no compunction about changing the terms and conditions of a contract.  The last vendor I heard that sued a major carrier, well that was the last time that vendor did business with the carrier and the last I heard of that vendor.  Imagine a vendor suing Verizon(NYS:VZ) and AT&T.  What is easier to imagine is a vendor shutting its doors permanently after being stupid enough to sue Verizon and AT&T. 

Things will get better but things will get worse before they get better.  Companies that take a Pollyanna perspective of what is occurring in the economy run the risk of losing everything.  Do you really want to play chicken?