The VAN Wars
Alan D. Wilensky, The Analyst Prince
bizQuirk Technology Strategists, LLC
A disturbing set of behaviors sparked by the VAN mergers has percolated throughout the EDI industry. Many of these behaviors existed before, in a minor, putative form, and most savvy network operators dealt with them in stride. But, the climate has turned somewhat dark in the industry of late. It could only be more perfect if this were the ides of March.
Are these tribulations due solely to the recent mergers? The answer is complex, but the root of the problem lies in the EDI Industry’s architecture, or rather, the lack of a good routing architecture.
What are these supposed malignant behaviors? Well, a previously settled culture of administrative and network operations is starting to fray. Generally, services done at a client’s request in order to conduct business or change providers is considered an inherent right. However, recent events have transpired to impede the rights of end-users, and the B2B application service providers that they have selected according to their rights and their unique needs.
This indigestion has even infected some of the mid-tier competition. They seem to be clawing for survival, testing their peers, seeing what they can ‘get away with’.
Et Tu, Brute? They very colleagues that should be assembling in unity are drawing forth long blades against their brethren, while the Shogun (Dath Vader, whatever pleasing metaphor you choose) dines and laughs heartily at the bloodshed.
Interconnections and ‘right to migrate’ issues are not novel, having been tested and settled in many industries, including telecom, mobile telephone, and parcel delivery services. There is ample case law emanating in regulatory, state, and federal fora whose outcomes all trend in favor of independent business and competitive providers. That we have to drag out the litigators and beat the horse again in the EDI industry is unfortunate, but the alternative is just too horrible to contemplate.
The regulators are not stupid, they have fought AT&T, Worldcom, MCI, and a host of once powerful cellular carriers who once had the public by the scruff, and who now are all but forgotten, lost in the footnotes of history. The business of EDI third party communications has flown under the radar. The agencies who manage wire-line competition are eager to see what has transpired since the mergers, as they now understand that EDI business is vital to our economy, and that monopolistic practices should not be tolerated.
DOJ reluctantly passed MegaVAN #1 under the HSR test for monopolies, and did so reluctantly and with a dire warning: “thou shalt not abuse thy market position”.
We are not sure what the geekier MegaVAN #2 will do as a newly formed pod. The WebSphere division has always been a tough place to call your home. Just ask Eugene.
My personal opinion, (this has nothing to do with my clients in the EDI business), “If MegaVAN #1 does not start acting more responsible and respectful towards its competitors, those who dearly value competition on merit, we are going to see a fully fledged Title II and Sherman Act case developing in 2011-2012”.
Such practices provoked by overweight conglomerates to moderate competition are the primary cause of an unstable operations climate, and it evinces a shocking lack of forethought as to the long-term health of the industry. It takes a lot of Chutzpah to deny another major EDI provider interconnect rights as a non-settlement peer.
Severe legal exposure is a consequence of not playing nicely in an interconnected world,, the results being unhealthy for the industry,damaging honest and capable competitors, placing them at temporal disadvantage. To fight these battles, one company at a time, is not a well considered course of action. Therefore, organizations of affinity seem a likely next step. The power of a consortium will magnify the potential for successful redress (to gain fair access across all routes).
The combination is persuasive, strong, synergistic, and a natural construct of these demanding times. It is wise for all service providers to recall some of these verities:
➜ We are not dealing with thought leaders, philosophers or keen observers of the history of our industry, nor are they leaders in the true sense. We are simply dealing with profiteers who have not considered the outcome of their actions on an industry.
➜ Relying on the megaVANs for communications is not a sustainable strategy.
➜ The recent proliferation of closed trading hubs is a reaction to the poor state of affairs of EDI service policies of the large VANs. Major retailers and logistics operations are creating these closed hubs out of sheer frustration. They have no pecuniary interest in such hobbies, their trading partners would much rather use routed and ubiquitous connections if the industry would simply act like adults.
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