Honest numbers

Nov. 1, 2007

by Stephen M. Hardy

Challenging a competitor’s claims probably became standard business practice about 30 minutes after business competition first appeared. How vitriolic such back and forth becomes largely depends on the standards of the business niche in question.

For example, the market research business tends to be a relatively genteel world. Assertions along the lines of “our research methods produce the most accurate results,” with the implication that competitors’ efforts somehow fall short, usually represent the strongest statements you’ll hear. That’s why it was so unusual when Teresa Mastrangelo, principal analyst at broad bandtrends.com, a service of The Windsor Oaks Group LLC, wrote in the October edition of her firm’s monthly newsletter that, as far as she was concerned, the North American FTTH subscriber numbers collected by RVA LLC and presented at last month’s FTTH Conference were flat out wrong.

Mastrangelo appeared to realize that, under the unwritten rules of market research competition, she was treading on forbidden territory. “While we are aware that we will be called out for criticizing this data,” she wrote, “we continue to believe that [RVA’s figure of 2.14 million FTTH subscribers] is too aggressive and they continue to be evasive as to the actual data that makes up these numbers.”

The implication that something slippery is going on was particularly incendiary because of RVA’s relationship with the North American arm of the FTTH Council, which uses the company as its primary source of market data. The council has repeatedly released studies conducted by RVA as if they were official FTTH Council data; Mastrangelo attributed to the council an RVA figure that she printed in her newsletter.

Clearly the potential controversy surrounding these market figures doesn’t do the FTTH Council any good, since it implies that the council is promoting data that over-hypes the FTTH market. The last thing the optical communications space needs is another round of market hyperbole-and the council doesn’t need to have its credibility questioned, particularly as it tries to lobby Congress for more fiber-friendly policies.

The potential problem was compounded when the North American FTTH Council and the Telecommunications Industry Association issued a press release touting the 2.14 million figure as a sign of how strongly the U.S. FTTH market is growing. The press release distributed to the media working the conference was so U.S.-centric that it wasn’t clear whether the numbers under discussion were for North America or only for the United States. In fact, several media outlets mistakenly reported that the 2.14 million number described the U.S market. (The updated version of the release currently posted on the FTTH Council’s web site makes the distinction clearer.)

Mastrangelo capped her commentary by challenging the council and RVA to “show me the data” that backed up the 2.14 million number. And, lo and behold, Mike Render, the “R” in “RVA,” stepped up to the task. In a letter to Telephony (see it at http://telephonyonline.com/home/news/rva_ftth_data_102207/), which had reported on the controversy, Render outlines how he derived his figures and why his numbers might not match those collected by Mastrangelo and others. To Render’s credit, this puts the spotlight on him and removes it from his client.

While the back and forth on this issue probably isn’t over, the controversy in which the FTTH Council finds itself enmeshed provides a pair of lessons for organizations public and private who want to use market research data to advance their aims.

The first, of course, is that market research represents someone’s opinion about future trends-and others are likely to have a different opinion. If you use market data to help create excitement about your product or market space, be prepared to defend that data from challenges with something stronger than “well, that’s what the market researcher said.” I’ve seen companies get around this potential pitfall by taking a variety of forecasts and averaging them to create a research consensus. Failing that, understand how your market researchers of choice derived their numbers and be prepared to offer that information if necessary.

The second lesson is to make sure you’re not misusing the data. As both Render and Joe Savage, president of the North American FTTH Council, pointed out to me when I questioned the original press release, the overwhelming majority of the 2.14 million FTTH subscribers in North America reside in the United States, so the point the press release was trying to make is true-the number of FTTH subscribers in the U.S. is growing rapidly. But the fact that the press release gave the impression that the 2.14 million figure represented one thing when it actually described something else calls the trends the TIA and the council were trying to highlight into question.

The bottom line is this: Regardless of where market research numbers come from, once data appears in public next to your name, those numbers are yours.

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