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Archive for April, 2010

European telcos want to charge Google

Tuesday, April 13th, 2010

European telecommunication giants are preparing to fight Google over the data traffic and bandwidth that is consumed due to YouTube videos, according to a new report from the Financial Times. Their goal: to have Google pay them for the bandwidth YouTube and its other websites consume.

The metaphor of the bullfighter comes to mind. The enraged bull (or a herd of bulls in this case) storms – with bloodshot eyes – towards the red cloth. His only goal is to hurt or kill his fluttering menace, his only weapon: brute force. The fearless bullfighter plays along and taunts the beast a little more. When the thousand kilos of bovine meat have closed to a mere few inches, the matador swoops away, raises his sword and elegantly, but decisively, stabs the beast between the shoulderblades. The fight is over. The bull has become victim to its own rage and shortsightedness.

So too will the story go for tradional telcos. Yes, they are absolutely right: internet companies like Google move gigabytes of traffic through their copper pipes. And they *should* be paid for this! The enraged telcos stab furiously at Google; frustrated because they still don’t understand internet business and only see their revenues and margins decline. All they know is how to charge for landlines and interconnections, and by God, that is what they’ll do. They’ll charge Google more than they ever charged before!

And Google will pay them… and play them; and it will take ownership of the consumer. For Google, it will be a bargain: pay the telcos for bandwidth usage, and then turn around and offer their services plus connectivity for free to the consumer! Instant lock-in. Google will stab the telco by taking the end-user away from them. For every Euro they demand from Google, they’ll loose hundreds of Euro’s in end-user subscriptions. Worse even: as soon as Google has control over enough end-users, they will be able to play the telcos against each other. Telef√≥nica, France Telecom and Deutsche Telecom will have to earn the *right* to provide internet access for Google… And that will be the end of the bullfight; until another matador comes along and challenges the incumbent.

It is the typical herald of innovation and change. Just as an upcoming breeze announced the arrival of Mary Poppins, so too can we deduce the arrival of imminent change by the giants and incumbents who put their heels in the sand and try to push their old model more violently than ever. Was it not Einstein who said: “Stupidity is trying the same thing again and expecting a different result…”?