Is Google a threat to telcos?

Google's influence and market power with key telecommunications industry stakeholders is having a significant impact on the industry, says research firm Gartner.

According to Alex Winogradoff, research vice president, Gartner, Google will continue to be a market disruptor and disintermediator, especially in the communications market. "Carriers should selectively partner with Google rather than trying to compete, especially in areas where they don't have differentiated and core assets," he said. "However, carriers should also find common ground with Google (for example, on network neutrality) and, if necessary, look for creative ways to oppose Google on issues critical to their survival."

Gartner said that coming late to the operating-system and mobile markets has not been a problem for Google and that its Android and Open Handset Alliance (OHA) activities have already had a profound effect on the mobile industry. In addition to disrupting the traditional telecom ecosystem, Google's actions are diluting the market potential and the service providers' ability to profitably monetise their investments in new markets (such as entertainment and software as a service (SaaS) applications).

The research firm highlighted six critical actions by Google that have already had, or will have, the greatest impact on the telecom industry. Google pressured the Federal Communications Commission (FCC) to set aside the "C" Block (22MHz to 11MHz in the uplink and 11MHz in the downlink within the US 700MHz spectrum auctions) as an open-access spectrum. All winning "C" Block bidders would be required to provide open access to applications (which cannot be blocked) and devices (which cannot be locked).

Google's primary motivation was to encourage the development of open broadband network platforms to ensure they will be able to deliver bandwidth-intense over-the-air services and applications.

On November 5 2007, several technology and wireless companies jointly announced the formation of the OHA and the development of Android, a new software platform for mobile devices that includes an operating system (OS), middleware and key applications based on the Linux OS and open-source principles.

This was quickly followed on November 12 2007, with a preliminary release of the Android SDK, as part of Google's $10 million developer challenge. This will help ensure that application and access openness is maintained on the mobile Internet as effectively as on the wired network to enable Google's ad model to spread as successfully as it has on the wired Internet; to open up the "closed" mobile industry ecosystem to Google's applications; and to enable Google to exert a strong influence over the development of the next-generation mobile OS.

Since the US regulator (FCC) adopted four network neutrality principles designed "to encourage broadband deployment and preserve and promote the open and interconnected nature of the public Internet," Google and other Web-centric companies have been lobbying the US Congress to codify these rules in favour of something called non-discrimination in network design between the public and private Internet.

In short, Google wants regulation to ensure that the public Internet remains free from potential discrimination and content blocking but also wants equality between the public and private Internet at no cost to customers or Web companies (in essence, no quality of service).
Google has been investing heavily to develop the world's most complete storehouse of geographic and mapping data supported by innovative applications that can detect mobile devices.

Google wants to be "the most-trusted source" and the best at matching up unique geographic location-based data so it can take advantage of just-in-time advertising opportunities derived from location-aware applications and bypass device manufacturers and carriers as the gatekeepers of location data.

Known as "white space" in the US and "interleaved spectrum" in the UK, this is the underutilised 800MHz spectrum that can be used to broadcast TV through the airwaves but also has highly favourable propagation characteristics for wireless broadband.

A powerful industry lobby backed by Google, Microsoft, Philips, Dell, HP, Skype and others (known as the Wireless Innovation Alliance) has been urging the FCC to develop rules to unlock the potential of TV white spaces.

Google's interest in white spaces is another effort to ensure that there are viable broadband options available for their services. The spectrum, which will likely be released as an open spectrum in 2010, would become another means for bypassing the carrier access network. Google is looking to engage enterprises by getting them hooked on using its applications and cloud computing infrastructure. Making it easy for users to download Google applications and giving them free space on Google's cloud infrastructure.

This will give Google great marketing insight to help it develop a presence within the SMB market. With eventual migration to larger enterprises where enterprises will come to Google for all their back-office SaaS needs.

The impact on carriers looking to generate revenue from the SaaS business model within the SMB market will require carriers to clearly differentiate their applications from Google or partner with it.

Source: Indiatimes