Carriers Urged to Team with Google for Telecom
In the 1960s, the rock band The Kinks sang, "I'm a lover, not a fighter."
Now, one industry analyst is suggesting the nation's telecom carriers would benefit from showing some love toward Google Inc. instead of fighting over issues such as net neutrality, white space spectrum usage and selling software-as-a-service over carrier networks.
If the carriers don't accommodate and partner in some areas with Google, they stand to lose, said Alex Winogradoff, a Gartner Inc. analyst who wrote a report on ways that Google could influence the future of telecom.
The coming battles could be large and industry-altering, but they are avoidable, said Winogradoff in an interview Thursday.
"For Google, it's all about access," Winogradoff said. "Google is not interested in competing as much as loosening the ties that bind. They want to be the store and source for all the world's information, as in all roads lead through Google ... Everybody gets sucked into its maelstrom."
If Google gives away free applications or capabilities that carriers have tried to charge for, that "destroys the carrier business model and disrupts the ecosystem ... that's Google's game," Winogradoff said.
The carriers, including AT&T Inc., Verizon Communications Inc., Sprint Nextel Inc., and their wireless units, need to "selectively partner with Google rather than try to compete," Winogradoff added.
"The issue is ... to what degree Google destroys [the carriers'] business case and business model, Winogradoff said. "It's more in the new service categories [such as entertainment, SaaS and cloud computing] where the carriers' future growth expectations may be severely impacted if they don't find a solution in partnering with Google."
None of the major carriers nor Google could be reached immediately for comment on this story.
Jack Gold, an analyst at J. Gold Associates in Northboro, Mass., said he was not so sure that partnerships between carriers and Google are the solution. But, he said, the telecommunications world is still far from open, despite some steps carriers have made toward openness.
"Carriers have so far kept tight reins on network usage," Gold said. "Carriers can still choose what applications appear on a wireless phone that you buy. They can unprovision a phone's browser, for example. To date, carriers have wielded tremendous influence on what you do with your phone."
Winogradoff said Google's influence on the future of telecommunications is enormous, but Gold note that many other companies, such as Microsoft Corp., will also be challenging carrier controls.
Google has increased its influence in the past two years in several ways, Winogradoff noted. Google has:
Pressured the Federal Communications Commission to set aside the C Block of 700 MHz spectrum for open access to applications and devices.
Led efforts to create the Open Handset Alliance and the Android mobile device platform that includes a new operating system, middleware and key applications.
Helped lead the network neutrality debate , urging Congress to codify the FCC's neutrality principles that encourage broadband deployment and promote the open and interconnected nature of the public Internet. Google backs laws to ensure the public Internet remains free of content blocking and potential discrimination and supports assurances that customers and Web customers on private portions of the Internet pay no more for service guarantees.
Invested heavily in static and dynamic location information as a means of taking advantage of advertising for location-aware applications. Google also wants to bypass device manufacturers and carriers as the gatekeepers of location data, Winogradoff said.
Promoted white space spectrum usage in the 800 MHz block with Microsoft, Hewlett Packard Co., Dell and others. The spectrum is likely to be released as an open spectrum in 2010, ensuring more options for Google services, Winogradoff said.
Engaged businesses to use Google's online applications and cloud computing infrastructure. Winogradoff said Google will develop a presence with small and mid-sized businesses at first, then migrate to larger companies, which could go to Google for back-office computing needs through a SaaS model.
Google is not doing all these things to compete directly with carriers or content developers but because Google "finds their business process to be an impediment to innovation and change," Winogradoff added.
Google's actions will have their biggest impact on carriers in the new service categories of cloud computing and entertainment content, and will hurt carrier revenues in traditional communications services (such as simple connectivity) by only 1% to 3%, Winogradoff said.
Gold, however, predicted that carriers will become more open and might not necessarily partner with Google. "Verizon is starting to read the handwriting on the wall, but it remains to be seen how far and fast the carriers move toward openness," Gold said. "Google does have a lot of thrust and weight in this debate, but they are not the only guys pushing."
As one example, Gold said Cox Communications Inc. said in October it would build its own cellular network, and "they could make it wide open."
For the next two years, Gold said, the big question is "what's openness going to mean?"