Why Silicon Valley has to break the Telco/Cable Comms Cartel

By Tom Foremski - July 11, 2007

(From my ZDNet blog: http://blogs.zdnet.com/Foremski/?p=186)

Silicon Valley is teeming with established companies and startups whose services and products require communications services.

Some of the startups are called Web 2.0 companies, or social networking companies, social media companies etc. It doesn't really matter what they are called, they all require a communications component to unlock the value they create.

This is also true for Silicon Valley's largest companies such as Google and Cisco, they are all increasingly reliant on being able to quickly get to their end user.

Whether it is a text message, or email, or sharing a video clip, or a myriad other many-media forms of communications--they all have to go through one of the big telecommunications or cable companies.

Last mile = Gold Mile

This Telco/Cable cartel sits smack-dab in the middle of Silicon Valley's innovation efforts. The Telco/Cable cartel control the communications gateways, they control the wireless services, and they are the most backward element in our society in terms of resisting technological progress in the US.

And control of these gateways means that it costs end users about $50 plus taxes, or about $60 per month minimum to be able to receive wireless or wired data comms. This is too much money per node and it limits the reach of Silicon Valley's companies, which effectively  places a limit on innovation.

For example, Intel (a sponsor of SVW) has managed to push down the price of computing devices to levels that make them affordable to larger numbers of people than ever before. It has done this with the help of Moore's Law, by being able to reduce the number of computer components to smaller numbers of chips.

And with growing support for the Linux open source operating system, computing devices will become even cheaper.

But without cheaper data communications linking the computer devices, the development of innovative services will slow to a crawl. And the digital divide that separates the rich populations from the poor, in this country and across the globe, will shift at a snail's pace.

This is why Silicon Valley has to, and will, break the back of the Telco/Cable cartel so that communications services become cheaper and more accessible to everyone, and so that innovative companies can continue to compete based on the level playing field of net neutrality.

So how will this happen? The clues are all around us...

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Please also see:

CIO Today: New Rules Could Change Wireless Forever

Financial Post: Google: You ain't seen nothin' yet

and...

SVW 2005: What's Google up to? It's going to become a wireless telco with its own fat backbone...



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By Tom Foremski - July 11, 2007 | Permalink | Comment | Category: A Top Story
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Comments (2)

Richard Koman:

well, see *my ZD post on the 700 MHz auction (http://government.zdnet.com/?p=3292)

In a nutshell, it looks like the FCC rules for the auction will be as Google had asked, namely that 2 11 MHz blocks of the spectrum will be open access, which means Verizon won't want those blocks and GOOG will likely snap em up. Quoting from the Dow Jones article w/ the scoop:
" A person familiar with the company’s thinking ...said that Google could contract out the building of a network to a third-party and then, in effect, act as a traffic cop, leasing use of the spectrum to potential market players who currently find it difficult to get into the broadband market, rather than offering service directly to customers itself."

Posted: July 11, 2007 9:02 PM

Tom Foremski:

Thanks Richard. It will be interesting to see how the Telco Cartel adapts to this...

Posted: July 11, 2007 11:24 PM

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