Telcos Need to Ramp Up R&D to Stay Competitive

[Commentary] With venture capitalists still leery about telecommunications investments after the fallout from the dot-com crash, telcos should beef up their R&D if they want to stay competitive, Dave Burstein, a longtime telecommunications reporter, wrote on Aug. 26. Two percent of sales would be a good start, he suggests, which would mean $2.48 billion and $1.94 billion for AT&T and Verizon, respectively. AT&T spent $892 million in 2008, down from $985 million in 2007. Verizon doesn't disclose its R&D spending, but analyst Chris King at Stifel Nicolaus estimates it's very little, as most of its vendors do the work. In a time when technology moves faster than ever and so much innovation is built upon the very service the telcos provide, you'd think they'd step up their efforts at developing new ways to deliver better broadband through wires or wirelessly. Think about the history of Bell Labs, which pioneered inventions such as the transistor and the laser. Yet, the innovation is coming from startups and the equipment vendors, or even from companies such as Google and Microsoft, which are trying to build a device to deliver broadband in part of the digital television spectrum.