GoogleWorld 2010
Total Telecom Magazine
December 2005
Should Telecoms Be Afraid of Google?
It is the year 2010. Google now “carries” 15% of voice and 30% of the rapidly-growing video minutes in consumer markets. It has transformed the economic model of both how that communication is paid for, and the cost of the underlying infrastructure.
The phone has moved beyond instant messenger clients to becoming just another function on your web browser. Now, voice communication is just as likely to be an added dimension of experiencing a given web page as it is to come from dialing a phone, or clicking on an instant messenger.
Implausible telecoms nightmare? Yet more unfounded Googlemania? Perhaps. But we recently constructed this and four other planning scenarios to help broaden the view of telecoms’ strategic challenges, direction, and potential outcomes.
Since then, eBay’s acquisition of Skype and Microsoft’s announcement of Windows Live and Office Live further highlight the threat that a new generation of web-based functionality will co-opt all manner of applications, including communications.
Web 2.0 Meets Telecoms
The hypothetical outcome in our “Google World” scenario is arrived at by extrapolating three converging forces very much at work today, but poorly understood by either telecoms service providers or their infrastructure vendors:
- alternative innovation approach – different software, differently developed, differently distributed
A combination of technologies (e.g. AJAX, or asynchronous JavaScript + XML), development processes (so-called “agile development”, one school of thought called ‘XP’, or extreme programming), and big-brand, web-based delivery (e.g. Google, Yahoo!) are converging to radically change the economics of software applications, of which communications is one category.Google has thus far shunned process-bound product planning and is the primary practitioner of this three-part innovation approach. They innovate in rapid, pragmatic steps consistent with their “beta” philosophy of commercialization.
- alternative infrastructure – low-cost network overlay for VoIP and related control functions
From ENUM (translating phone numbers to IP addresses, among other functions), to VoIP peering fabrics (transiting calls over high-quality, semi-private internet connections), to cheap PSTN call termination, the hypothetical Google World’s enabling low-cost infrastructure already exists and is growing. It bypasses not only today’s fading PSTN, but even portions of nextgen infrastructure found in, say, BT’s 21CN.
For Google, the technical challenge of assembling alternative telecom network infrastructure is unlikely to be greater or more costly than the substantial home-grown engineering already undertaken to manage their server and storage complexes, for example. - alternative business model – generalizing today’s “paid search” economics to contextual sponsorship of any web-based function
Google is the current master of contextual precision in presenting relevant sponsored material at the right time to the right person at the right place. While the advertising-heavy US television market is just now transitioning to targeted ad inserts and (controversial) “local people meter” measurements, precision targeting and measurement are already the essence of Google’s business.
The fact that Google “didn’t invent paid search” has turned out to be irrelevant to their rapidly-increasing profitability and dominance. It is a small step to add “click-to-call” functionality to sponsored links, a larger step to have voice communications in, say, Google’s forthcoming web-based office productivity software, paid for by document printing services, graphics design firms, or office supply companies, and so forth. The latter is apparently also the aim of Microsoft’s Office Live – a competitive response to Google.War of the Worlds
Broadband has always ultimately been about more than connectivity, more than the underlying technologies, more than “just telecoms.”
A maturing broadband market has set multiple industries on a collision course for profits. Our imaginary “Google World” scenario is but one of a number of ways in which web portals, content and application providers, device manufacturers, and telecom carriers might compete for and redistribute broadband-related consumer and enterprise spending.
The principal threats to telecoms are complacency and technology tunnel vision. Few legacy players appreciate the disruptive potential of radically different competition, of which “Google World” is only one, albeit extreme, example. And most are focused on technology (3G, IMS, etc.) as their saviour.
If telecoms carriers admit to larger competitive threats and let go of the business model inherited from the circuit-switched, monopoly era they have the potential to retain, indeed regain, their market power and growth potential. Despite multi-industry competition, if telecoms play to their strengths they can establish themselves as an essential and high-value “marketplace” hub between connectivity and applications – and invite Google to join them.
(See also: Scenario – Google World)
1 December 05
