Overview
This report asks if Google is a threat to Telecom. By threat, of course, we mean competitive threat. The simple answer to this question is “YES!” As with many simple answers to complex questions, this leaves a lot unsaid. Some of what is unsaid would include questions as to the existence of a market to even be concerned about – surely Google doesn’t want to compete for the traditional wireline market, which appears to be dying. Would Google like to compete in the broadband market? From their activities in Kansas City it certainly appears that there is some interest there. What about mobile? The recent (but still awaiting regulatory approvals) purchase of Motorola assets by Google, suggest that they may want to get into the handset and other devices business. That business certainly has worked out well for Apple. Finally, who besides Google may be a major threat to the RBOCs? What about Apple or Microsoft?
All of these questions and others are addressed in this report. In 2010 we published a report on about the same subject, “Google and the RBOC’S.” This is an update of that report and a complete re-write of much of it. In terms of Google’s activities, 2010 is like ancient history. So, in this report we will try to move from ancient history to current events.
This report, focuses on the perceived strategies of Google, the RBOCs, and other “super-competitors.” The RBOCs that we will focus on are Verizon and AT&T. The report will use these companies’ public announcements and private interviews and the author’s years of experience in this area to develop a view of their strategies, comments on the strategies and likely outcomes. The report will provide forecasts on all the topics of interest.
We will start the report with a description underlying economic situation. Because of the overriding importance of the state of the US (and World) economy, we will provide a review of our forecasts for the nation’s economy as well as its impact on telephony. That portion of the report will also provide our forecast for capital spending over the next five years. The report will then continue with a review of the current telecom market structure. With that background, we will look in detail at the activities of Google and the major RBOCs. From these activities and the market structure, we will develop and present our view of each company’s strategy and comments on each. Forecasts will be provided for each of the areas addressed.
In addition to the strategies of Google and the RBOCs we will also look at some other major companies that may be in or coming to the telecommunications space in the US.
We also feel that the following are the major issues in today’s competitive structure in telecommunications.
- Telcos become wireless, rather than wireline companies.
- The Advanced Access Architecture deployments being undertaken by the major RBOCs and many smaller telcos.
- Overbuilding by major telcos.
In addition to the detailed discussion of the competitive environment and the companies’ strategic response to that environment, his report will address each of these areas, and provide forecasts as to our expectations for each. For reference, our view of the planning environment is provided in an Appendix.
Table of Contents
Table of Contents
Table of Fig. s
The Lightwave Network Series of Reports
The Lightwave Network
The Lightwave Series of Reports
General Reports on the Network
General Market Reports
Specific Systems Reports
Introduction
The Telco Business Transformation and Next Generation Network Series of Reports
This report
US Telecommunications Economic Forecast
General Economic Background
Telecom Economic Background
Telecom Forecasts
Possible Positives for Telecom in 2012
Telecommunications Capital Forecast
Telecommunications Economic Forecasts Summary
Telecommunications Economic Forecasts - 2012
The Face of Network Competition – Market Structure Today
Google as a Major Player
Google Metrics
Google’s FTTP Kansas City Project – “Google Fiber”
Google’s Purchase of Motorola Assets
Google Voice
How do you compete with “Free?”
Google Voice Growth
Google Voice – Downside
Forecast for Google Voice
Google Phone
RBOCs – How Do They Compare?
RBOCs vs Google Metrics
Net Income
Market Capitalization
Cash on Hand
Market History
Post-merger Competition
RBOC Purchase of IXCs
RBOCs vs. Cable Companies
RBOCs Are Becoming Wireless Access Companies
RBOC Loss of Main Lines
It’s a Wireless Access Industry!
The Wireless Access Landscape
Forecast for Wireline to Wireless
The Super Competitors
Update on the “Super-Competitors”
Strategies of the Major Players
Google Strategies
Management and Financial Items
Network Items
Summary and Forecast of Google Strategies
Verizon Strategies
Management and Financial Items
Network Items
Summary and Forecast of Verizon Strategies
AT&T Strategies
Management and Financial Items
Network Items
Summary and Forecast of AT&T Strategies
Comments on the Strategies of the Major Competitors
Summary of Forecasts
General Economic Background
Telecom Economic Background
Telecom Forecasts
Possible Positives for Telecom in 2012
Wireline to Wireless
Google Voice/Google Forecast
Overbuilding
Appendix I, The Planning Environment
Appendix II, Advanced Access Architecture Plans
AAA Deployment Forecast Summary
AT&T
Verizon
Forecast Size of Deployments
Forecast of Homes Passed
Penetration Rates
Appendix III, Overbuild
Overbuild – How?
Overbuild - Significance
A New Type of Competition
Summary of Overbuild Forecasts
Appendix IV – Vision Planning Primer
What Is Vision Planning?
Development of a Vision
Vision Planning – Examples
IBM Example
Lincoln Example from the Civil War
The Vision Planning Pyramid
The Vision Planning Process
Step 1. Vision statement
Service Vision Example
Step 2. Develop a view of the future environment and test.
Step 3. Restatement
Step 4. Backwards deployment (Implementation Plan)
Service Implementation Plan Example
Summary of Vision Planning
Table of Fig. s
Fig. 1, Lightwave Network
Fig. 2, Telecommunication Capital Expenditures Actual and Forecast
Fig. 3, Telecommunications Economic Forecasts
Fig. 4, Recent Google Acquisitions
Fig. 5, Forecast for Google Voice
Fig. 6, Google vs. RBOCs- Net Income
Fig. 7, Google vs. RBOCS - Market Capitalization
Fig. 8, Google vs. RBOCs - Cash on Hand
Fig. 9: Summary of Competitive Position, Pre-Mergers
Fig. 10: Revised Competitive Structure Due to IXC Purchases
Fig. 11: RBOCs Subsume IXCs and CLECs
Fig. 12: RBOCs vs. Cable Companies
Fig. 13, Telcos vs. Cable Companies – 2009
Fig. 14, Verizon Wireline vs. Wireless Revenues
Fig. 15, Verizon Loss of Main Lines vs. Wireline Revenue
Fig. 16, Wireline Customers vs. Wireline Total Revenue
Fig. 17, FiOS vs. Uverse Services
Fig. 18, FiOS vs. Uverse Quarterly Additions
Fig. 19, Wireless Competition
Fig. 20, Forecast for Wireline to Wireless Migration
Fig. 21, The Super Competitors
Fig. 22, Google as a Serious Threat
Fig. 23, Apple Financial Parameters
Fig. 24, Microsoft Financial Parameters
Fig. 25, Comparison of Net Income - Including Apple and Microsoft
Fig. 26, Comparison of Market Capitalization - Including Apple and Microsoft
Fig. 27, Comparison of Cash on Hand – Including Apple and Microsoft
Fig. 28, New Super Competitors Chart
Fig. 29, Google Strategies
Fig. 30, Verizon Strategies
Fig. 31, AT&T Strategies
Fig. 32, Planning Environment
Fig. 33: Forecast Homes Passed Cumulative — All Technologies
Fig. 34: Forecast Homes Passed Annually — By Company — All Technologies
Fig. 35: FTTX vs. High-speed Accesses vs. US Households
Fig. 36, FiOS vs. Uverse - 2012 Forecast
Fig. 37, Verizon's NOOF Arrangement
Fig. 38, Forecasted Overbuild Strategic Outcome
Fig. 39, IBM’s Gerstner’s Corollaries
Fig. 40, Vision Planning Pyramid
Fig. 41, Vision Planning Approach
Fig. 42, Traditional Planning Approach
Fig. 43, Tom Peter's List of Good Vision Attributes
Fig. 44, Davenports’ Visioning Process
Fig. 45, Service Vision Statement Example
Fig. 46, Vision Statement Examples
Fig. 47, Example of Vision Statement and Implementation Plan for Service
Fig. 48, Summary of Points about Vision
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