How Amazon, Google, and Facebook Will Bring Down Telcos

Just abouteverything you see on TV is presented by one of a handful ofmedia conglomerates. A similarly small number of telecommunication companies provides your cable service. If you have Comcast and you’re watching NBC, the content and the delivery infrastructure areowned by the same people. This tiny world will concentrate further if regulators approve AT&T’s acquisition of Time Warner.

The internet was supposed to alleviate this. Instead, it may compound it. Amazon, Facebook, Google, and a handful of others aredisplacing media companies and telcos. They alreadyhost muchof the content youconsume, and produce more and more of it. They own much of the infrastructure carrying thatdata, and they’re starting to sell Internet access.

These tech titans didn’t planto take down the telcos. But they depend upon youhaving fast, reliable internet, so they’re bringing everything in-house. This promises to make things drastically better for you as a consumer, so if you hate big telecoms, you’ll feel schadenfreude at their demise. But you might end up with more of the same as the new guard becomes the old guard.

May the Best Signal Win

You’ve probably heard about Google Fiber and its shift toward wireless Internet overfiber-optic cables.Google Fimobile service could be even more radical.Instead of building cell towers, Google resells access to Sprint and T-Mobile networks. Companies like Cricket and TracFone do this too, but Google-Fi lets your phone use the bestsignal available at any moment.

Granted, most mobile devices hop amongnetworks asyou roam—but only if your carrier’s signal is unavailable. If you’ve got one lousy bar of signal with your carrier, tough luck. Traditional roaming won’t let you switch to another carrier’s stronger signal. Google-Fi offers the best signal, period, no matter where you are.

That could change the economics of wireless service. Instead of signing up with a singlecarrier, you’d sign-up with a broker—called a mobile virtual network provider—and use the best network available. Today’s carriers would become invisible wholesalers competing to offer access at the cheapest rates. That could save you big money while providing superior service.

Falling in Line

The big carriers will resist this, of course, but it creates opportunities for smaller players like Artemis Networks. The company created awireless network using what it calls pCell technology. Traditionally, it would have to offer people service plans, just like AT&T and Verizon. Instead, founder Steve Perlman plans to sell the service to virtual network providers.

Google is also building a servicethat would let people connect to public Wi-Fi using a common login. Obviously,a blanket of public WiFi connections willmake Google-Fi more viable. But beforeGoogle can stitch this massive network together, others mustbuild pieces of that network. That’s where Facebook comes in.

Earlier this year, Facebook unveilednetworking gear designed to beam the internet into remote locations and dense urban areas. It isn’t interested in becoming an internet service provider; instead it sees others using these open source tools to deliver high-speed wireless internet to new areas.

As new technologies and expanded access to the wireless spectrum drivedown the cost of operating cell services, Google and other wireless brokerswill be able to createnationwide–even worldwide–networks. That would makewireless service a commodity and shift the balance of power from incumbents like AT&T to companies like Google.

Dark Fiber

Even if tech companiesdon’t wrest wireless service from the telco’s grasp, they can weakenthe giants in other ways. Amazon, Facebook and Google have long built their data centers and leased or bought unused fiber-optic infrastructure–so-called “dark fiber”–to connect them, bypassing traditional telcos.

This has big implications. Amazon, for example, runs what most experts consider the world’s biggest cloud hosting service. Untold numbersof apps and websites rely upon this serviceto carry their data. Traditional telcos have no part of that.Google and Facebook hope to lure more companies into hosting content on their AMP and Instant Articles services, respectively.

It’s hard to determine the scale of thisprivate infrastructure. The Wall Street Journal reported in 2013 that Google had about 100,000 miles miles of fiber-optic routes–far more than Sprint’s 40,000 miles. Meanwhile, the research firm Telegeography reports that private networks account for about 60 percent of trans-Atlantic data traffic. If Amazon, Google and Facebook don’t already control more telecommunications infrastructure than the largest national telcos, they soon will.


Put it all together and you can see a day when you’re watchingcontent that Google produceddisseminated via infrastructure that Google owns on a phone that Google made using wireless service Google brokered.

Many people find this appealing. Its hard to find an industry loathed more than telcos, which have a reputation for lousy service, opaque billing, and rising rates. Tech companies, on the other hand, generally are seen as innovators. And they’re making thingsbetter. Comcast and AT&T already offerfaster connections in areas where they compete with Google Fiber.

Google-Fi, Amazon’s rumored Internet service and Facebook’s open source hardware could spur greaterinnovation from entrenched telcos. The risk, of course, is that those tech companies simply replace telcos as the new oligopoly.

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