All the telecom markets are flat: landline, cellular, broadband, TV, and long distance minutes. This makes it incredible hard to grow and remain profitable. Price comes into play more often (ask the guys that sell LD minutes). What one company loses another gains and around and around we go.
When Gizmo5 decided to use Jajah for VOIP termination last month, it meant that the minutes moved off Level3's network.
Another example is video. With networks putting episodes online, it moves eyeballs from cable TV to the Internet. Smaller MSO's are losing high ARPU customers to DirecTV for HDTV content that the smaller MSO system cannot provide without a forklift upgrade that costs millions. When someone signs up for Verizon's FiOS TV, they are likely leaving either a cable system or a DBS (satellite TV company - DirecTV or DISH). It's a bloody Red Ocean out there.
Now Ars is reporting that AT&T is getting into the CDN (content delivery network) market where it will compete against patent holders like Level3 and Akamai, as well as Limelight and Highwinds. Yet one more crowded field that AT&T joins. I wonder how long until AT&T gets sued for patent infringement?
When the market is a red ocean it is hyper-competitive, price conscious, and the cost of customer acquisition is very high. In these markets, the company has to have a clearly unique market differentiation.