Telcos Battle Tech Firms for Internet Control

by Matt Klassen on December 19, 2013

Who controls the Web? Ten years ago that question was easy to answer, telecom firms were clearly our gateway to the information superhighway. If you wanted Internet access, your provider was your local telco, simple as that. But today the answer as to who controls the Internet is a lot less clear, as companies like Google and Facebook have invested heavily in Internet infrastructure as part of their attempt to control more of global Internet backbone.

In fact, we’ve seen both Google and Facebook drastically increase their investment in online infrastructure  over this last year, “installing new undersea and underground cables, creating their own networking hardware systems, and agreeing to long-term deals over leases of so-called dark fiber.”

Simply put, as tech firms continue to usurp the roles of traditional telcos the lines between the two industries will continue to blur, and that will only serve to increase tensions between the two as the battle over who controls the Internet continues to heat up.

Through this process of infrastructure investment its clear companies like Google and Facebook are establishing themselves as rivals to the telcos that count those very tech firms as clients. In fact, looking at Google, the search engine giant has reportedly laid more than 100,000 miles of private fiber-optic cable around the world, dwarfing the continentalU.S.network operated by Sprint, which has only 40,000 miles of cable.

Not only that, but the likes of Microsoft and Amazon have joined the fray as well, investing in their own online infrastructure to help support their respective cloud computing and ecommerce services.

The tech firms themselves defend their foray into the telecom industry as a necessary evil, one aimed at reducing costs for their own users and improving performance for their own online services, not to mention allowing them to support the growth in data traffic their businesses generate through streaming video, online games, and photos.

Simply put, tech firms have found the network solutions offered by the telecom industry to be insufficient for their growing data needs, so they’ve taken matters into their own hands.

In fact, the telecom industry itself benefits greatly from the addition of these tech firms, as “the projects are bringing a fresh source of investment to an industry dogged for more than a decade by falling prices and excess capacity.”

But that said, if things weren’t bad enough for the telecom industry before—with most of these tech companies already rendering telcos as nothing more than a ‘dumb pipe,’ the data source through which these tech firms make their money—they’re positively ugly now, as soon telcos won’t even have the luxury of being included as the data source, instead, as The Wall Street Journal reports, “The current trend, they fear, could downgrade companies even further to mere builders of those pipes.”

Attempting to avoid my usual role as harbinger of doom, I will say that it seems to me that that the entire global telecom industry stands at a crossroads, and where telcos go from here is entirely up to them. They can evolve from the traditional supplier of telecommunications solutions into something more like the tech firms they’re competing against, offering a wide range of multi-faceted services and solutions, or they can maintain the status quo, holding on to their ‘dumb’ data pipes as they watch their industry fade into oblivion.

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Written by: Matt Klassen. www.digitcom.ca. Follow TheTelecomBlog.com by: RSS, Twitter, Facebook, or YouTube.

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