Memo to telcos: Make nice, not war with Google the disintermediator.
Sure, the search giant may have outmaneuvered telecommunications carriers on regulation issues such as Net Neutrality and White Spaces, but it’s a wise carrier that looks for ways to partner, rather than battle Google.
That’s the gist of a new Gartner report , “Dataquest Insight: How Google May Influence the Future Direction of Telecom,” released today.
The report predicts Google (NASDAQ: GOOG) will get what it wants — unfettered Internet access — and recommends that telecom players partner with the search titan instead of battling in court or federal agency hearings.
Google is advancing what Gartner terms a well-executed strategy on several fronts to ensure its own agenda is addressed, according to the research firm’s report author. “They want to remove access control from carriers and they’ve been very smart about it,” Alex Winogradoff, Gartner analyst, told InternetNews.com.
“Google wants to be the source of information and have everyone go through them. Pretty much a ‘all roads go through Google’,” he said.
The Gartner report comes as wireless carriers are facing big challenges in today’s sluggish economy. Carriers are selling handsets and services to an increasingly saturated marketplace, while trying to advance mobile services and applications to grab new subscribers. Then there are the Google strategy challenges.
“Google wants to be the hub and spoke of everything and have everyone who deals with data, indirectly or directly, go through them,” explained Winogradoff.
Take the “C” block issue. According to Gartner’s report, Google pressured the Federal Communications Commission (FCC) to set aside the “C” Block (22MHz to 11MHz in the uplink and 11MHz in the downlink within the U.S. 700MHz spectrum auctions) as an open-access spectrum.
“All winning “C” Block bidders would be required to provide open access to applications (which cannot be blocked) and devices (which cannot be locked). Google’s primary motivation was to encourage the development of open broadband network platforms to ensure they will be able to deliver bandwidth-intense over-the-air services and applications.”
Google “wants to be able to provide services like on-demand video, which carriers are making big money off, but not pay to deliver those services using carriers’ infrastructures. Meanwhile carriers have invested heavily to provide those types of services,” added Winogradoff.
A spokesperson for Verizon Wireless, which declined to comment specifically on Gartner’s report, said the carrier “encourages all companies interested in entering the wireless market to abide by the “openness” requirements on the C Block that Google and others fought so hard for.” Google and AT&T did not respond to media inquiries by presstime.
On the mobile front, Gartner’s report continued, Google wants to be “the most-trusted source” and the best at matching up unique geographic location-based data so it can take advantage of just-in-time advertising opportunities derived from location-aware applications and bypass device manufacturers and carriers as the gatekeepers of location data.
While telecoms may be tempted to face off in resistance, battling Google in future FCC hearings and spending lots of lobby money to protect their investments, Gartner believes carriers would be better served working with Google and finding common ground given the advancements Google has made. A primary reason is that the new presidential administration will be very Google-friendly, noted the analyst.
Gartner’s report outlines six areas where Google’s actions are impacting the telecom industry. The first is Google’s lobbying efforts to get the Federal Communications Commission to set aside open access spectrum. This now will provide open broadband network platforms that players, such as Google, will be able to use to push out applications and unlocked mobile devices, according to the report.
In forming the Open Handset Alliance and its strong support of the first open platform smartphone, the G1, Google has brought openness on the mobility device front which will provide Google with an advertising platform, said Gartner.
“This will enable Google to exert a strong influence over the development of the next-generation mobile operating system,” noted the Gartner report.
The search giant’s lobby to get television broadcast white space spectrum opened for unlicensed device use is another victory Gartner cited in the report. The newly opened spectrum band provides a free viable channel for public use and Web company use.
But it is Google’s effort within the network neutrality issue that could really hit the telecom industry.
What Google seeks with the Net Neutrality debate, said Gartner, is regulation to make sure that the public Internet is free from “content blocking” and providing equality between public and private Internet without cost to customers or Web companies — aka Google.
In essence, said Winogradoff, Google wants Internet access that’s now controlled by telecom to be had for free.
“If that happens it will be the largest impact that telecom industry has experienced,” said Winogradoff.
“It used to be that companies needed to be in the industry to make an impact but Google has showed we live in a different world today,” said the analyst. “They’ve been very smart.”
It’s not as though telcos are sitting still, either. Verizon Wireless is reportedly close to a search deal with Microsoft (NASDAQ: MSFT) to become the default search provider on Verizon’s mobile phones, according to the Wall Street Journal.
If the deal comes to pass, Microsoft would have outbid Google for the placement by offering between $550 million and $650 million over five years, about twice what Google offered, the report said.