Lack of cellular capacity is killing the business.
But then I came across this piece from our own Marguerite Reardon. It may be the most important story of the year so far. Carriers do have a solution to their capacity problems, she writes. Offload traffic to WiFi.
The idea is that carriers could create their own hotspots on buildings and on poles that would move wireless traffic to their wired networks, either cross-town or cross-country. Get those Internet calls onto the Internet fast and your wireless frequencies are free for other customers.
But if that makes sense, and it does, then two questions occur:
- Why is the government even thinking of giving carriers more spectrum, when even carrier engineers say the solution is more WiFi?
- Doesn't this move the mobile phone battle underground?
When you move wireless traffic onto the Internet, you add traffic to wired networks. In the near term this would seem to benefit Comcast and the Bells, who dominate the last mile and have enormous control over core Internet traffic.
But they are not alone in the core. Global Crossing and Level 3 are there. Qwest, Sprint and Savvis all live there.
And then there's Google.
Google spent most of the last decade buying unlit "dark" fiber, and speculation has been continuous about what it might do with it. It's plainly an element in keeping its internal costs down. I have written here before about how Google's costs for moving and processing data are an order of magnitude lower than anyone else's.
Its recent announcement, seeking to test 100 MBps connections to the home, indicates that not all this capacity is accounted for. Now that the value of core capacity is rising, Google is sticking its hand up.
If Google can send 100 Mbps connections to the home, with minimal investment, why can't it pick up wireless traffic off WiFi and route it where it needs to go? Especially if that traffic is coming off an Android phone, or (later this year) a Chromium tablet or netbook.
All this could be checkmate for the phone carriers.
If Google supports WiFi, if the carriers know they need WiFi, if Google can serve the underground and core needs of WiFi, then who needs the phone company?
Other than Google, of course.
Without the competition AT&T, Verizon and Comcast provide, Google would quickly come under severe antitrust scrutiny. So it needs to play this game carefully. Keep the phone companies in the game. Stay out of their way as much as it can, for as long as it can.