23 August 2006

Don't Say I Didn't Warn You

Back in January, I said,
Worse for the telcos would be Google offering its own access, say through municipal WiFi/WiMax, giving the telcos a run for their money in Internet access, as well as mobile and long-distance voice.
This comment was in the context of what has now become known as net neutrality, a pseudo-macho initiative touched off by the CEO of a certain global telco. Well, guess what:
Google has been toying with idea of implementing free municipal Wi-Fi. I've always believed that it began as a whim but became a subtle threat aimed at the major carriers who are saber-rattling over tiered service, threatening to charge Google more for its supposed free ride on their networks. This, of course, is ludicrous, since there is no free ride for anyone.

First, Google, the king of doing good work inexpensively, now has a cookie-cutter model on how to light up a city. Google's software engineers have the architecture. They know the problems. They know the costs. In fact, this initial model will inevitably be tweaked to be cheaper and more efficient in future rollouts. Combine this new knowledge with information developed in towns where other companies have done municipal Wi-Fi and you'll have a lot of people looking at this idea. If the spreadsheets show that they can beat the cable and telco companies at their own game, then expect a deluge of activity. But here is the killer. What if suddenly—from this experiment—Google discovers that localized service combined with localized search and local advertising (specific to the target community) can not only pay for the system but provide a new profit center?
What if, indeed! Between IPTV and VoIP carried on free(ish) networks with the coming improvements in capacity, reliability and coverage, the traditional telcos and cable companies had better be revamping business plans and reconsidering tiered pricing proposals. As they say, it's hard to compete with free, particularly if free to the customer is profit to the provider.

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