Research Notes

How will companies like Google, Microsoft, Apple and Facebook influence future willingness to invest in telco infrastructure that is vitally important to modern society?

There is a great deal of focus in the media about the new and exciting services that companies like Google, Microsoft, Apple and Facebook are continually launching. But have you stopped a moment to consider the influence that these multinational companies are having on people and companies that are contemplating investing in future telco infrastructure – infrastructure that is vital for the further development of our modern society?

The telco industry is one big value chain. At one end of the value chain you have the companies that are building and selling access to mobile telco infrastructure. At the other end of the value chain you have the end-users that are purchasing access to mobile infrastructure and then using different types of applications and services that are being created and offered by various different market players. Among these market players are of course the telco companies like mobile operators, but there are also other “outside” companies including Google, Microsoft, Apple and Facebook.

It is common knowledge that there is already an ongoing battle between the telco companies on one side and market players like Google, Microsoft, Apple and Facebook on the other. In France, President Sarkozy has been talking about finding some way to tax a company like Google. Google’s response was to try and create some political goodwill by announcing plans to set up centres in France that are to focus on French culture. Needless to say, culture is very popular both amongst the French population and politicians.

There is also a battle in the network neutrality area between companies like Google on one side and the telco companies that are investing in mobile infrastructure on the other. In practice this is a battle about what quality of service should cost and who should be paying for the mobile capacity that is needed when Google, Microsoft, Apple and Facebook deliver services to end users?

Unfortunately we often see that the focus on this debate is off-track and that many politicians simply do not understood how vitally important mobile communication is to modern society and its citizens today it – and will be even more so in the future. If we allow companies that deliver mobile services to piggyback for free on the expensive mobile infrastructure that the telco industry is designing financing and building – at no cost to a country and without using taxpayer’s money – it can only have a negative influence on the telco industry’s willingness to invest in future telco infrastructure expansion.

Strand Consult has spent a great deal of effort analysing this very important challenge to the telco industry and modern society. Through our work we have close contact with mobile operators, politicians and the regulative authorities about these issues. One enormous problem for politicians is that defending the telco industry generates absolutely no votes, compared to defending companies like Google, Microsoft, Apple and Facebook that deliver well-known and popular services.

Our reports and closely examine these challenges that mobile broadband providers are currently facing. In these reports we describe a number of services that mobile broadband providers can offer to create new revenue streams that can partially compensate for the decreasing mobile traffic prices and the increasing competition that companies like Google, Microsoft, Apple and Facebook are creating.

While mobile operators are currently battling to do business with tough competition among themselves and tackling many different complicated challenges, a number of companies like Google are simply doing business as a type of service provider that is taking advantage of the existing mobile networks that the operators are building and operating. It is a fact that Google does not believe that operators should be allowed to charge customers to prioritise bandwidth for different types of mobile services!

What Google is in fact saying is that they are not willing to pay to ensure the quality/bandwidth of the traffic that there mobile services are generating on an operator’s network and furthermore that their customers should not have to pay extra to ensure access to Google’s services at a certain quality/bandwidth level.

Google believes that all service providers should be offered the same quality of service/bandwidth on all mobile networks and that mobile operators should not be allowed to differentiate the quality/bandwidth of different types of mobile traffic that is being transmitted through their networks, to thereby be able to sell different levels of service quality to either service providers or end-users.

In our research note we examined and analysed the challenges that a market player like Google is creating for the telco industry – and thereby also creating for modern society. The telco’s industry’s interests in this area are in reality identical to the interests of any modern society.

Many countries have liberalised their train traffic, thereby allowing different companies to operate and share the railroad tracks. But imagine if those companies drove up and down on those railway tracks without paying and without contributing to any type of servicing or future expansion of the railroad network. Under those circumstances it would not take long before the railroad system would break down.

In our report we have examined and analysed these challenges that the telco industry is currently facing. Using our extensive knowledge and the data we have collected from a number of reports about this business area,

Strand Consult has designed a number of workshops, where we examine various business cases together with the customer and describe the consequences and scenarios the current lack of political understanding about these problems will soon have on society. Please do not hesitate to request more information about this exciting and challenging subject. Contact Us
More information:
Strand Consults Strategic Workshops

Successful Strategies for the Mobile Broadband Market

Show me the money – The future Business models for mobile Broadband Services

How media companies can get success on the mobile broadband market

How to get success with Value added services on the Mobile Broadband market

OneAPI – Next Generation Value Added Services in the Mobile industry

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