Google and the Bells

While Verizon and AT&T spent most of the last decade pocketing broadband incentives, cutting back capital budgets, and trying to squeeze customers dry, Google invested.

I have long noted that Google now has a better core network than either of the old phone companies, absent only their strength in the last mile (which is what the “net neutrality” argument is really all about) and taking Google Voice out of beta is proof of that.

(Lily Tomlin, shown here on her well-deserved Time Magazine cover in the 1970s, first shot to fame playing Ernestine the telephone operator as a symbol of the annoyance and control the Bell monopoly was capable of.)

Chris Dawson thinks all this is kind of scary. I don’t. Given the Bells’ eagerness to cooperate in the Bush Administration’s spying program, I wonder if Google could possibly be worse.

Google’s growth has led to all sorts of FUD concerning its intentions, despite a complete lack of proof that it has used customer data in unethical ways. That is to be expected.

It would be nice if someone else had invested in Internet capacity over the 2000s, especially the people who controlled the nation’s Internet networks. It’s a shame that only Google did invest. But condemning them for reaping the fruits of their investment strikes me as short-sighted.

I first used Google Voice a year ago, while touring the Far East with my son, and it was really quite amazing. For the cost of free WiFi in a Taiwanese hotel room, and a $30 headset obtained at a store down the street, I was able to chat with my wife and daughter across half a world, with very high quality.

It’s something I won’t soon forget.

Rather than worrying about Google’s competitors, who could still after all catch up if they would just spend some money on their own infrastructure, I think it’s more important to look at what this means to the larger economy.

It’s nothing less than the end of the voice network. With everything moving through Voice Over IP (VOIP), voice becomes a low bandwidth service, one that can now be enhanced with file transfers, location services, teleconferencing, and other things.

Putting all our voice traffic on IP means companies can now compete with enhancements to plain old voice. We’re finally going to be placing those video calls the 1964 New York World’s Fair promised us. And more.

It should be no surprise that an Internet company did this, rather than a voice company or a TV company like Comcast. Innovation seldom comes from incumbents. Western Union turned down the idea of voice telephony, and the Bells didn’t go into video until cable operators had long-since pioneered the space.

This is what gives the U.S. economy its vibrancy, the fact that innovators can always overthrow incumbents, that no lead is ever completely safe, and that not even control of the government (the Bells have long been the dominant lobbyists in Washington and state capitols) will save you.

Open source, open networks, and open competition are all products of the same capitalist impulse. They all deserve a standing ovation.