Did I tell you that I spent about 10 years of my professional life building high bandwidth pipes for telcos and blue chips ? During those years, I watched the advent of telco domination, but also their struggle to reach for the high margins of content providers.
Being a telecom operator is really a profitable but ungrateful task. You spend billions of dollars building the network infrastructure, and you resell access to this infrastucture to customers. Those customers use it for lots of different interesting tasks, from IT back-ups to video delivery. Being Apple, SAP, Youtube or Skype is much more fun than being AT&T, T-Mobile or Orange.
As always with profitable but gloomy businesses, the boss wants to be an artist. He wants to launch new ventures, do sexy things so that he can be proud of and be invited to hype parties. So telcos have tried to become content providers for years. At the beginning were the ISP portals, then there was triple play, now there is mobile DVB. Telcos want to be television channel providers, buy start-ups or develop web services.
They are crazy about Google billions revenue and valuation, because Google is just using their pipes for free. They would prefer Net tolls to Net neutrality. But they just can't compete when it comes to end-user benefits.
Well, it takes time to go from digging the streets to providing content. It takes a change of culture and mindset too. It takes switching from capital-intensive deployments to talent-intensive initiatives.
I don't know how the story will end for telcos, if they will be commoditized and content providers will rule, or or if they will succeed in taking a bigger share in revenues and fame.
What I do know is that telcos' infrastructure was built on ATM switches and IP routers. My team installed quite a few. Network technology is the most standardized of many, because a Cisco router must talk to and understand a Juniper router, if the network is to work. There is no other choice for vendors than meet the standards.
But wait. Routers and switches interconnection compose the basic layer to allow for Internet communication to happen. They were the technological layer necessary for building Web 1.0. But with the advent of Web2.0 and social media, another layer is needed on that technological layer. And that layer is the social graph.
I used to say that Internet is a collection of routers, and Web2.0 a collection of people. For the social media initiatives to expand, we need a new layer of people interconnecting in a standard way. Do we have to call the IETF (Internet Engineering Task Force) so that they work on it ?
No, that layer is already there, taking shape everyday. That layer is the social graph, as build by social networking sites. That layer is Facebook, interconnecting 150 millions people. Facebook Connect could in fact become the de facto standard (in networking terms we would say "protocol") to allow people to interact.
Is Facebook the new Cisco ? No, because in social media, routers are now people. Facebook interconnects people and build the social graph. Facebook is the new At&T, Facebook is the new telco, Facebook is a social communication operator (socialco ?).
If what I feel comes true, it means that Facebook will (like telcos) sell access to the people infrastructure that they have build. And because they are the only one with such a reach, they will be able to demand a high price for this.
If Facebook is the new socialco, then they will have to get content providers to use their people infrastructure, and enrich it with great applications and content. That's what they are currently trying to do with Facebook Connect, uh ?
Let's assume that Facebook succeed in drawing the best app developpers, the best content providers on its platform. They will become a media and businesses will pay to access the media. Of course competing social networking companies will try to get their share of the pie, and provide alternatives to app developers and content providers.
In the end, the social graph may become a commodity. Google support of Open protocols like OpenID, OAuth and OpenSocial may well be a way to commoditize access to the social graph before Facebook gets too big.
In the end, Facebook may have the same feeling that Telcos have : we're profitable but the real stars that users love are app developers and content providers. We're profitable but no-one talks about us anymore, because we're just the pipes for Web2.0 to flourish.
Somehow, it just feels good to be an app developer ;-)
What do you think ?
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