Summary
AT&T has been complaining to the FCC about Google Voice and violations of the principles of Net Neutrality that Google defends. The real issue is about who is going to make money delivering services to the consumer.
Analysis
ATT complained to the FCC about Google Voice policies violating 'common carriage' while touting 'net neutrality'.
I'm not going to go into a dissertation about who is right and who is wrong. Or if 'common carriage' should be a requirement for all 'service providers'. Or if 'net neutrality' means carrying someone's traffic without restrictions even if the carrier doesn't make money. These are important issues, but the ATT complaint has much deeper roots.
The real issue consists of three interrelated questions:
- Who is a service provider?
- Who is a carrier?
- Who is a web company?
Notice I didn't ask 'What' in these questions, but asked 'Who'? The reason is that all of these types of traditional segmentations are blending and disappearing.
Google is a web company that wants to deliver competitive services over their own network equipment.
AT&T is a carrier that wants to deliver competitive services over their own network equipment.
They each want to become your service provider of choice.
That is where the recurring revenues are. Google desperately wants to diversify to reduce dependency on click based advertising models. AT&T wants to get a chunk of all those application sales and ongoing service revenues and get away from the minutes and bytes model that is quickly commoditizing.
AT&T and Google are quickly becoming direct competitors. The situation will grow worse with the expansion of sales of SmartPhones and Netbooks. Google Apps for business will likely be displaced by Microsoft Office 10. As more Smartphone models come on line that rival the iPhone, the services, and the blending of those services, will quickly become the distinguishing element between one service provider and another.
AT&T, as evidenced by their purchase of Plusmo (provider of cross-platform application solutions), is setting the stage to not only carry the services but to create them as well.
Google, as evidenced by deployments of servers in co-location with carriers, is heading towards carrying the services they sell.
The battle is heating up and it will definitely reach the boiling point. The opportunities for startups are myriad and acquisition fever will only get hotter over the next two years.
David Croslin consults with leading institutions through GLG
Analyses are solely the work of the authors and have not been edited or endorsed by GLG.
