Well, this is my year in review in Telecom Regulatory affairs and Net Neutrality.
The biggest news of the year was the imposition of Title II on Broadband Internet Services. If you have read my stuff, you will have seen that I considered this whole episode unfortunate. Early onto the whole Netflix/Comcast debate that catalyzed this issue for the general public, Cogent admitted that they were the cause of the Netflix slowdown. This was ignored and the fact that no ISP had slowed down Netflix was overlooked. Because of this we all decided we had a problem that needed to be fixed. And fix it we did. My issue is that I consider Universal Broadband Service a much higher priority and that will be years in addressing. Even with all the carriers taking Connect America Fund (CAF-II) money, don’t expect 100% coverage for a very long time.
The other big issue here has been consolidation. You are seeing this at the ISP level (Time Warner/Comcast), Equipment level (Nokia/Alcatel-Lucent), and Chip level (Broadcom/Avago). I think this means that the industry is slowly deciding that it needs to act as a commodity business at the network level. I agree with this, but it also means that there will be a lot less innovation in networking. An industry that has acted in a similar way is the Commercial Airline business. So, I expect Mergers and Acquisitions to dominate the corporate landscape for a long time. It also means that you will not see equipment startups that win with a very few exceptions.
On the other hand, services are through the roof right now. The players that consumer think about Google, Facebook, and Twitter are all services companies not ISPs. The same is true on the Business Side with a shift that is progressing to Cloud Services and away from Enterprise applications. I would expect this trend to continue for some time. It takes no where near the kind of investment to make a services startup that it does to make an equipment startup.
The one thing that is not happening is the build-out of new networks. With all due deference to Google Fiber, they simply have not added lots of new cities. If you look at the Google Fiber Map, it is curiously overlapping with AT&T properties. There are a few Centurylink Cities, but Verizon is curiously untouched. This leads me to say that Google is trying to spur on Fiber to the Home (FTTH) deployment. With Verizon having broadly rolled out FiOS there is no need to overbuild. I will predict that Google sells their network within 5 years.
The Wireless front has been tumultuous with attempted buyouts and other actions. However, at the end of the day we are now where we were at the beginning of the year for the most part. T-Mobile’s Uncarrier offerings have impacted the way the consumer buys service, but the other Wireless Providers have nearly matched and not much has actually changed.
Finally, the Over The Top (OTT) video market is starting to get some real broad traction. I would expect to see more cord cutting over the next few years. If I could get a rational sports plan, I would cut today. But I want to see the Warriors and the NBA League Pass would not allow me to do so.
Have a great Holidays and thanks for reading!
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