As next-generation media and connected services lift demand for faster internet speeds, some in the industry wonder whether the broadband market could see a shift in the balance of power from incumbents such as AT&T Inc. and British Telecom to tech companies like Alphabet Inc. and Amazon.com Inc.
Industry observers gathering at The Great Telco Debate in London agreed Nov. 30 that, as tech companies starting to sell internet access and increasingly displace media companies by hosting and producing their own content, a strategic ploy to provide telco services would not be far-fetched.
At the heart of such a strategy would be a desire to be gatekeeper of the internet, along with content and services such as TV and music. With many tech companies' services dependent on internet penetration to provide such services, some argued that digital businesses increasingly share an incentive to ensure broadband services are up to speed.
Digital players will undoubtedly have their hand in the game, according to Tony Poulos, an industry critic and managing editor of DisruptiveViews. He suggested that tech firms, which "have the most to lose" from inadequate internet services, could attract investment away from the telco industry.
"Investors, at the moment, do not like telcos. They are getting worried about the amount of investment in network infrastructure… and they are looking for growth," Poulos stressed.
Amazon has long been rumored to consider connectivity services alongside its retail and entertainment offerings on Prime in Europe, starting with the United Kingdom. Such a service would rival packages offered by the likes of Sky plc, BT and Liberty Global plc's Virgin Media.
Meanwhile, Google has already successfully entered the fiber broadband market through Google Fiber in the U.S., even as recent reports suggest the service is being scaled back. Google had reportedly planned to launch ultrafast broadband in the U.K. until discussions with British fibre specialist CityFibre Infrastructure Holdings Plc broke down.
Nonetheless, noting the expansion of Google Fiber across the U.S. market in recent years, Graham Wilde, CEO and co-founder of telecoms and IT consultancy BWCS, said the popularity of these ventures had so far proved that consumers are already primed to buy broadband services from tech firms.
Tim Pritchard, managing director, customer experience at Kantar TNS, agreed with this view, adding that from a branding perspective, telcos remain rather "unloved."
"The big [carriers] have been complacent over the years. They have not understood the voice of the customer," he told delegates.
Pritchard added that with customers now more vocal than ever, the brands likely to "survive and thrive" would be those that "listen, respond and innovate" on the back of customer needs and feedback.
That said, delegates did express doubts about broadband boosting tech companies' bottom line, with most agreeing that tech firms are unlikely to replace telcos' role as the backbone of communications infrastructure. As many put it, deploying raw communications technology remains a massive undertaking that requires time and large levels of investment.
As such, Chris Lewis, CEO and founder of Lewis Insight, argued that the future of telephony services would ultimately lie with the local service providers rather than global tech giants.
Echoing this view, Dean Bubley, analyst at Disruptive Analysis, remarked that attempts to provide capital-intensive broadband services would likely be unprofitable for tech firms.
"Amazon and Google are both B2B companies and not consumer-facing. They both make money out of businesses either through Google AdWords or…AWS," he said, concluding that the provision of broadband as a consumer play would require them to do so at a loss.
