When it comes to communications, webscale giants such as Google and Facebook are better off collaborating, not disrupting industry leaders, a new report by ABI Research suggests.
Last year, Facebook and Google spent about $2.5 billion worldwide in the telecom space, according to the report -- a figure quickly diminished by the $400 billion fixed and mobile providers spent globally in 2016. SpaceX (plus others) is exploring the opportunity for satellite-powered broadband, a multi-billion-dollar investment over several years.
But while Google Fiber, Google Loon, Facebook's drones and SpaceX satellites may capture the general public's imagination, providers' investments in fiber, next-generation access networks, DSL and VDSL technologies and automation are far more likely to result in speedy deployment of gigabit services today.
Webscale companies' investment have been credited with sparking a surge of competitive pressure on incumbent providers that morphed into new infrastructure, an emphasis on customer experience and new applications, services and pricing strategies. But Internet giants cannot continue to spend heavily on communications technologies without much of a return, cautioned Lian Ive Su, senior analyst at ABI Research.
"On one hand, these activities are a timely reminder for operators not to stay complacent as all industries have been proven to be prone to disruption…" said. "But on the other, we would like to question the rationale behind such decision, given the huge disparity between the capital investment between both sides. While the internet giants come up with innovative approaches, none of the approaches are financially sustainable or scalable at the moment."
Rather than continue to work alone on inventive approaches, webscale giants should seek collaborators -- as Facebook has done with the Telecom Infra Project (TIP), which includes the social network's wireless technologies and open sourced radio access network reference design, OpenCellular, according to ABI Research.
"The elephant in the room is obviously the spectrum and infrastructure resources owned by the incumbents, such as base-stations, poles, and trenches," said Su. "While the arrival of 5G opens up more options for network deployment, the existing resources offer advantages difficult to be ignored and act as a high barrier to entry. Collaboration is the way forward."
— Alison Diana, Editor, UBB2020. Follow us on Twitter @UBB2020 or @alisoncdiana.
(Home page image: Aquila drone by Facebook, courtesy of Facebook)