Google, Yahoo, Microsoft Bank Accounts Eyed By Carriers, Not Just Publishers
One of the amazing aspects of the Internet is how companies can often leverage extensive resources that they don't own to make money. Google (GOOG) has been the critics' poster child over the last few years, with content producers railing about how the company can make money essentially by pointing people to material on the web. Now there's a new worry for Google and other search engine operators: telecommunications carriers deciding that they want a slice of the pie as well.
Telefonica (TEF), a telecom carrier in Spain, has said that it's thinking of charging search companies such as Google, Yahoo (YHOO), and Microsoft (MSFT) because they use network resources. Telefonica's president Cesar Alierta essentially said at a press conference that the search engines feast on a banquet of network bandwidth without paying anything, and that this arrangement should end.
Of course, there is something slippery in the logic. Telefonica does get money from its customers who pay for access to the Internet, which includes using search engines, just as Google, et. al. pay for the traffic that comes into and out of their facilities. To me, it seems as though Telefonica is looking to double-dip, getting money from its clients, but then also wanting something extra, even though the "network, product sale, customer care, installation and maintenance" are essentially covered by their own customers.
It might sound like a trial balloon that won't ultimately have much effect, but I'm not so sure:
Telefonica spokesman Miguel Angel Garzon told The Associated Press on Monday the ideas expressed by Alierta were not new and had been talked about by many network service providers around the world.But forget the vagueness of that statement and look at a practical implication. Telefonica isn't some tiny little company wining away; it did over $19 billion in revenue in the third calendar quarter of 2009. That's about 70 percent of the business that Verizon (VZ) did in the same quarter. Plus, there's talk that Telefonica and Telecom Italia (TI) could announce a merger by March. That alone is considerable muscle, and if many other service providers are dancing to the same tune, you might find politicians who are beholding to telecom industry campaign financing offering a friendly ear to the complaints.
Carriers are facing a time when landline business is shrinking, they're concerned about having to invest more into wireless data infrastructure, and they want to maintain profit levels. A Google or Microsoft starts looking like a good place to dine.
Image via stock.xchng user mikehome, site standard license.