The Anti-Carrier

A new breed of carrier is emerging that challenges convention.  We call them the anti-carrier.

This is a new class of provider focused on content and services. Ultimately this is what compels consumers to connect in the first place.

The difference is, anti-carriers don't (typically) own facilities, fiber, spectrum or any broadband infrastructure.  But they DO own (or provide a portal into) value-added content and/or services that millions of people crave.

The You-Tube's and GoogleVideo's of the world could turn out to be broadband operators worst nightmare if they find a way to make the Internet reliable enough to do what cable companies and phone companies have been doing for decades.

A germane example is Yahoo!'s recent purchase of Meedio. Meedio creates software that manages and controls home entertainment, information, and automation systems using customizable graphical interfaces that run on TVs, PCs, touchscreens, and wireless PDAs. Meedio's IP, technology, and staff are being folded into their Digital Home team.

Ultimately these anti-carriers threaten to relegate traditional broadband operators to merely dumb bit-pipers. As content providers digitize their content or offer content-based services and make them available over the Internet or some broadband infrastructure, what role to traditional service provider then play?  Consumers seems to be more willing to pay big monthly fees for content and service than for broadband connectivity.

The best example(s) of a would-be anti-carrier would be Google, Yahoo!, Ebay or even FON. These companies recognize how broadband penetration into the home opens the door to innovative services, like SKYPE or Google video, that potentially take the focus off of the carrier and onto them and their advertisers.

Anti-carriers see billions of dollars in opportunity revenue from ads linked to searches for ringtones, games, local listings and mobile Web content. But in the US. large carriers still control access to a vast majority of the nation's subscribers.  This WSJ article does a good job of capturing some of the issues.

So is the conventional carrier threatened to become merely a cheap conduit to some new service? Will differentiating their business is primarily performed by price, coverage or customer service with commoditization to quickly ensue?  Nah.  It makes for good blogspew but carriers have big bucks and can be quite smart with them.  Then again, Google's has amassed a massive valuation in one-tenth the time it took any telecom carrier to do the same.

And we should see a day soon when connectivity is free if/when certain content or services are purchased. Connectivity just gets subsidized with the content or service. Google’s PR rep. Barry Schnitt recently chirped..."We believe consumers are already paying to support broadband access to the Internet through subscription fees and, as a result, consumers should have the freedom to use this connection without limitations.”

Google has started erecting broadband Wi-Fi networks, like the one in Mountain View, CA, that provide free connectivity to users. While users can't really run or purchase TV services over such a network, that's not to say they won't be able to in the future.

AT&T (SBC) smartly teamed with Yahoo! and is bundling services with their broadband offerings.  To survive, others will follow suit or perhaps even purchase those who do.  So, it would seem, that Time Warner's purchase of AOL was a smart one after all - and even though it hasn't looked that way recently.  Time Warner owns content that people want and the infrastructure to get it there.

That's seems to be a winning combo...and perhaps signs of things to come?