Nice article in the Register about the woes of telcos which begs a little deeper thought. Their explanation is the abundance of cheap substitutes.
Taking it one level deeper, we can say that the telcos lost the capability to innovate.
Or even lost the capability to perceive innovation as part of their strategy.
Or, to be even clearer, lost the capability to perceive that actually providing consumers some kind of relative value
is necessary to sustain an advantage built on fast-eroding, exogenous isolating mechanisms (regulations, in this case). Because substitutes are definitely right around the corner when those are the dynamics of your market.