The explosion of advanced technologies and the new services
they're inspiring, along with the urgency to get them to market first, is pushing the
cable industry into the arms of full-service construction, installation and
network-management "outsource" companies, which, in turn, are gobbling up
smaller construction and contractor businesses.
The same consolidation fever gripping the cable and
telecommunications industries is also spreading to the industry that actually builds and
installs their networks, creating a burgeoning business out of the near-desperate demand
for network rebuilds, new builds and upgrades in the era of advanced new services.
Add to the mix a critical shortage of skilled labor and
technicians, softer customer-care elements and employee skill sets new to the industry,
and the business of building, installing and managing the 21st-century
multimedia network is assuming a whole new look and attitude.
"The scope of the work" -- construction,
installation, maintenance -- "required for rebuilds and new builds is so complex that
operators are looking for companies that can excel at certain projects. So the combination
of outsourcing the technology and construction is growing," said Andy Paff, chief
technical officer for WorldBridge Broadband Services Inc., a Colorado-based installation
company.
WorldBridge is an example of the consolidation occurring in
the construction and installation industries. The company was recently acquired by
C-COR.net Corp., a designer and manufacturer of network-distribution products for two-way
hybrid fiber-coaxial networks, with the purpose of meeting the growing demand for
rebuilds, new builds and upgrades.
"We decided to get beyond just being an amplifier
supplier and help customers with services and network integrity. Now we have the tools for
network management and monitoring," C-COR.net CEO David Woodle said.
C-COR.net will fold its field-service organization and
recently acquired Advanced Communications Services company into WorldBridge, which will be
headed by WorldBridge CEO Paul Janson.
"We now have three legacy companies from different
parts of the country and enough base to shift people effectively. We saw real success in
being able to do that," Woodle said.
The deal follows similar acquisitions by ViaSource
Communications Inc., Expertech Network Installation Inc. and other network-construction
and installation-outsource companies.
ViaSource recently added Communication Resources Inc., RTK
Corp. and Telecrafter Services Corp. to its stable of field-service and installation
companies. Expertech is a 1996 Bell Canada Enterprises spinoff.
"Nearly 70 percent of current installation projects
are done in-house. We want to shift that number to 30 percent in-house and 70 percent
subcontracted," ViaSource president Craig Russey said.
Last week, his firm announced that it won a three-year
contract from Time Warner Cable in New York City to handle home installation of the Road
Runner online service there.
According to Expertech, 66 percent of the cable and
telecommunications companies it has surveyed currently use some type of outsource firm for
a cross-section of projects and services.
That number is expected to increase in the next two years,
led by the need for customer-care and billing systems, which are expected to be outsourced
by 37 percent of the companies, up from 29 percent this year.
Network-planning and construction projects will likely be
outsourced by 34 percent of companies, up from 24 percent currently, and
operations-support systems should jump from 20 percent now to 28 percent by 2002, the
report said.
"Lots of major suppliers are expanding their networks,
which means more fiber to the home, upgrading switches and building networks,"
Expertech general manager of U.S. operations Scot Roberts said.
"As a result, a lot of companies face severe shortages
of installers and skilled workers, and those companies haven't invested in training the
people to do those jobs, so we're getting more requests for those people," he added.
Finding the people to train is a daunting task, though.
With an already-shallow labor pool to draw from and entirely new employee skill sets
needed to deploy new technologies and services, outsource companies such as MasTec Inc. --
a Florida-based company that designs, engineers, builds and installs network
infrastructures -- are holding back little in their search for quality employees.
"A few years ago, it was simple upgrades and splicers
that were needed. But new services have prompted us to include premise wiring of
computers, phones, digital set-tops and cross-technologies. Now we have to go after new
employees much different than a few years ago. We're not just a cable contractor
anymore," said Austin Shanfelter, president of MasTec's broadband-services group.
Recruiting is always a challenge. "We do lots of
military recruiting, at local technical schools, through the government, even waiters, but
it's getting tighter," Shanfelter said. "We used to share and steal all of the
same people in the industry, but that doesn't work anymore."
MasTec is another consolidated company. Two years ago, it
combined 42 acquisitions and its existing work force into an enterprise of 10,000
employees, making it the largest Hispanic-owned business in the United States.
ViaSource is experiencing similar challenges in recruiting,
but the overall strategy of outsourcing construction, installation and management projects
to the new breed of full-service providers is a trend that is not likely to end soon,
Russey said.
"If you look at the work force on the deployment side,
it's defensive and a cost center, but it's necessary to get services into the home,"
he added. "The dilemma is clear: Cable installations used to take 15 to 30 minutes
with no barriers. Today, with telephony, modems, computers and other connections, that
opportunity doesn't exist."
What does exist is the need for more skilled workers,
technicians and quality construction crews -- all key components to an emerging
construction and installation outsource industry that is betting that it can assemble
groups of quality workers for less cost and hassles than a cable operator can.
"Give us the project and we'll save you money and
grief," Roberts insisted.
Despite the inevitable shakeout of the construction,
installation and network-management industries, outsourcing rebuilds and other
construction projects is likely to gain popularity with cable and telecommunications
companies.
"[A total of] 90 percent of our business is working on
some element of a rebuild, and skilled, experienced people are needed," Paff said.
"So it makes sense to outsource, because you run into the classic equation of hiring
lots of new people to do new things in peak times. You just can't look inside to get all
of the right people."
