Google - A Telecom Threat?

Market Studies

1394 Market and Technology Study

Google - A Telecom Threat?

Published: March 31, 2012


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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


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


Appendix I, The Planning Environment

Appendix II, Advanced Access Architecture Plans

AAA Deployment Forecast Summary



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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