Why The Telcos Hate Innovation

from the it's-a-threat dept

Business Week is running a fascinating essay that highlights all the reasons why the telcos hate innovation. They're not technology companies, which is highlighted by how little they spend on research. They're in the business of extracting as much money as they can from their network right now -- which is a short-sighted and eventually self-destructive plan. They view real innovation as a threat, not an opportunity, because tech innovation is usually about driving down the cost of infrastructure. That doesn't help them squeeze more money out of it. As the writer of the essay points out, this is evident in the telcos continued fight against things like muni-WiFi, even as they quietly get involved in muni-WiFi projects themselves.

The article also highlights how this lack of technological innovation from within the telcos means that even in areas where they have every opportunity to innovate, such as IPTV, all they're doing is catching up to what the cable providers already deliver. They're missing the opportunity to do much more. In fact, this is a great way to view the net neutrality issue. If the telcos were really about promoting innovation (and the author makes fun of AT&T for claiming it needs to merge with BellSouth to be able to innovate), then network neutrality wouldn't be an issue at all. The company would focus on making its platform (the network) as accessible and as fast as possible -- to encourage more innovation and development from third parties. Instead, the telcos focus, not on encouraging innovation, but on setting up roadblocks. The roadblocks give them the power to squeeze more money out of the network -- but at the expense of actual innovation that would make their networks that much more valuable.

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  1. identicon
    Anonymous Coward, 21 Jul 2006 @ 12:21pm

    Mike, services are what makes the damn network valuable correct. If someone else sells those services over the network, then the network isn't valuable. Thats my point.

    Could I sell advertising on Techdirt? That would bring value to me, but not much to Techdirt. Could I set up a grill in a movie theater and sell hotdogs and profit from that? Sure, I could undercut the moviehouse price, consumers would benefit, but the theater owner would get pretty pissed.

    Hell, I will make it easy, would a bar owner let me walk into his place and sell beer out of a cooler for a buck a bottle? I would make a profit and the consumer would benefit, how do you think that would go over?

    Sure, those services make the network valuable, but without the network, those services are also worthless. You seem to think that its ok for services to be worth something, yet you deny the right of the network to be valuable also.

    Answer my question, if you had to make the decision, would you lay fiber to equip consumers with high speed access if you knew that all they would buy from you would be that access? Would you take your $50 a month for data? Would you invest a thousand bucks to wire that house for that return?

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