That is the network operations cost equivalent of the older argument that telcos now need to learn to innovate "at Google speed."
Both arguments are correct in terms of direction, but have you ever really met an executive at a telco who actually believed his or her firm really, genuinely could reach the cost level of Google or other application providers? Have you ever met an executive who honestly believes a telco, especially a bigger telco, really can innovate at Google speed?
That requires matching the online rivals on a value per gigabyte basis, says Fekrat. But who believes that actually can be done? And if it really cannot be done, how valid are any proposed business strategies that assume that level of cost control and innovation speed?
That is not to argue that all service providers must not become better at rapid innovation, or better at cost control. But whether an access provider can match an application provider might be highly questionable.
Put the argument the other way. Google plans to build a 1-Gbps fiber to the home network in Kansas City (both Kansas and Missouri portions of the city). Does anybody really believe it will cost Google so much less than a big telco to build such a network?
Does anybody believe Google can attain revenue vastly superior to a cable company or telco by offering access only? The point is that the access business and the applications business simply have different requirements for investment, time to innovate and revenue models.
Google does not appear to have unique advantages as a broadband ISP, nor do telcos have unusual advantages as application developers. The logical implication might be that if a telco cannot out-innovate or cost match an application provider, it needs to stick to businesses where there are natural advantages. The issue is figuring out what those businesses might be.
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