Telcos Fear & Loathing: Its Googles Fault

Search-engine and advertising giant Google Inc. (GOOG) is causing fear and paranoia among telecom service providers, who must quickly adapt to and exploit Google’s emerging role in both mobile services and IP-based telephony, or be overwhelmed, according to a new report from research firm Ovum.

More than any other Web company or VoIP provider, Google poses a threat to the basic business models of traditional operators, wrote Ovum principal analyst Tony Cripps. That might sound like a paradoxical claim, given that Google has just raised a white flag to wireless carriers, effectively ending its attempt to create a new sales channel for mobile devices by flogging the ill-fate Nexus One smartphone through its own online portal. The decision marks a victory for the traditional, device-plus-service-plan model of major carriers distributing mobile phones.

Google’s growing force in mobile applications, free VoIP services, and particularly mobile operating systems with the hugely successful Android platform, however, are all increasingly at odds with service providers’ plans to retain subscribers and sell higher-priced applications and services to them.

At its I/O developers conference in San Francisco this week, Google released a series of APIs, largely around its Latitude location-information services, that could serve as the kernel for an entire new generation of mobile applications and location-based services – essentially bypassing the carriers.

“Google’s ability and willingness to invest in whatever is necessary to achieve its aims – to place advertising in front of as many people as possible, wherever and whenever it can – is placing a growing strain on traditional telecoms industry players’ ability to roll out novel and profitable services to their subscriber bases. By targeting users of connected devices other than PCs, Google is also competing with telecoms players for the attention and loyalty of subscribers.”

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