Google/Telco an Interesting Disruptive Innovation Story

In a conversation before the holidays a friend pointed out to me a Business Week article At Stake: The Net as we Know It that was very interesting.  Here is the opening remark:

The internet has always been a model of freedom. Today the Web is flourishing because anyone can click to any site or download any service they want on an open network. But now the phone and cable companies that operate broadband networks have a different vision. If they get their way, today’s Information Highway could be laden with tollgates, express lanes, and traffic tie-ups — all designed to make money for the network companies.

The story is about the backlash of the Telco’s for all this bandwidth the internet companies are using for free.

I appreciated having this shown to me.  It speaks to two things to me:

  1. Dissruptive Innovation can be whipplashed – If the Telcos are going to come up with a toll structure, the business model of the internet falls on it’s face.
    In this case, these great companies who have built an empire on a specific premise and changed the way we do business can even be hit.  These companies, mainly built business models on the fact that between the last mile, the network was free to the users and providers.
    It will be interesting what if anything can be done in this case.  With emergence of VOIP and the IPTV there will be some real bandwidth hogs out there.
  2. Be carefull what you wish for you may get it.
    The telcos have been hammering for new applications that would drive bandwidth on their networks in a race to drive revenue.  Now they have it and realize that they are not getting the rich revenue of the past and that they have been commoditized as the value is not in the network but in the solution or application.  The user sees IP networks as we see power, plug in and it should be there.

The other side is that with these other organizations like Google having so much money, they also have the opportunity to change the network provisioning all together.  I had a Telco CIO tell me just after Google went public that they were going to use some of their proceeds to buy up black fibre to have their own networks.

Once again, these dissruptive innovators are looking for new areas… we will see.

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