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Big Tech will annihilate Telcos. Analysts are saying that the pace of Big Tech and its role in bringing global internet to all will annihilate Telcos as we know them in the not too distant future.

Regular readers will know that we have been writing about Big Tech. Specifically, can you trust FAANG with our personal data? Well as Big Tech gets bigger, it appears that Big Tech will annihilate Telcos and that may have some dramatic privacy implications.

When it does, everything we do online, every word we speak, everywhere we go, what we buy and more will be rivers of gold to Big Tech. Is that good, bad, or inevitable?

U.S. Correspondent Sam Bocetta steps a little outside his usual comfort zone to explore some fundamental changes that may see FAANG getting its teeth into us by controlling data/internet/voice and more. Sam writes:

Big Tech will annihilate Telcos

Big tech will annihilate Telcos. Resistance is futile

This article was inspired by Peter Adderton, CEO of Boost Mobile, and his startling admission to GadgetGuy, “In the next five years, Telco’s as we know it may not exist. We may be buying communications (voice and data) directly from Amazon (Bezos/Project Kuiper), Google (Project Loon), SpaceX (Elon Musk), OneWeb (Richard Branson), Boeing, Samsung and even Facebook (Solar-powered drones).”

Yep, that’s right. Although Telcos don’t care to admit it, their whole house of cards business model might be about to tumble. And when push comes to shove, the dinosaur Telcos are no match for the agile Big Tech meteors that will rain down upon them.

Big Tech annihilate Telcos

First, the premise of this article

In the beginning, we had analogue voice and data – remember those old pinging modems and raspy telephones. Everything went over Telco-owned copper wire. It was relatively private as the consequences of metadata were unfathomable.

Big Tech will annihilate Telcos

Then came the digital superhighway, and everything changed because of two letters – I.P. (internet protocol). Suddenly the world started going digital. Voice became a series of 0s and 1s and transmitted as data. Metadata was born, and Big Tech started to monetise the rivers of gold it creates!

Next, we enter the world of the internet, where Big Tech rules. We use I.P. to transmit voice (VoIP), stream music/movies, email, bank/pay bills, search, research, shop, social media, news, store photos, go paperless, monitor security and baby cams, OK Google/Alexa/Siri, IoT, watch porn, gamble and move everything to the cloud (other people’s computers).

Ultimately everything ends up digitalised. This allows Big Tech to collect huge amounts of both personally identifiable data and metadata on us all. We knowingly or otherwise give up privacy to use their ‘free’ or convenient services.

They are not breaking the rules – there are few anyway. But the EU GDPR, California Privacy Rules and reasonable Australian privacy provisions will hopefully eventually force Big Tech to respect what should be our inalienable privacy rights.

It is your data, and you must have control over what you allow its use for

The internet is also a dangerous place where Cybercriminals hide behind the lack of regulation. They use its anonymity to steal our data or I.D., empty bank accounts, install nefarious malware, perpetrate frauds and generally make the digital highway damned unsafe. Cybercriminals likely know more about you in your dark web profile than you do!

And then you have data-harvesting apps (almost any free app) where if the product is free, the product is you. Facebook is a data-harvester that sells access to you – not a benign social media platform.

Data harvesters

So, it comes down to who do you trust with your data? It is not about the Telcos owning copper, fibre, 2/3/4/5/6/7G (infrastructure) or Big Tech and satellites/drones. It is about how we use that infrastructure and what bullet-proof regulations protect us as we bare our very soul to the internet

So back to the prospect of Big Tech controlling communications.

In the U.S. broadband internet is already the domain of Big Tech

Looking at a leader board of the top internet providers in the U.S. the list has changed quite a lot. Five years ago, Telcos and major cable T.V. providers dominated it.

Copper (ADSL) providers now number only four Telcos. AT&T (similar scale to your Telstra), Verizon (like your Optus), Sprint, U.S. Cellular and T-Mobile have lost so much market share to other providers it is not funny.

Fixed wireless has 12 providers and has become extremely popular – reasonable latency rates, no lock-in contracts, and mobility – take it with you. Most use Telco infrastructure, but more are building their own cell towers or microcells and fibre backhaul. Fixed wireless is most likely to be superseded by satellite.

Satellite providers like Dish, HughesNet and ViaSat have pushed fixed-line internet (especially ADSL) over the cliff. Their USP is 49 state coverage and reasonable pricing, especially for regional and remote areas. These providers use SpaceX, Amazon, Google, and more big tech satellites. This is where the growth is.

Big Tech will annihilate Telcos
There are tens of thousands up there

Many now use the old cable T.V. network, and Comcast Xfinity and Charter Spectrum have the lion’s share of 16 providers networks. But the keyword is ‘old’ and HFC cable is near end of life. Its replacement is likely satellite!

Fibre (like your NBN) is rolling out, and there are 19 providers

But it is the new Big Tech entrants that are most interesting. Google Fibre offers up 1Gbps Internet service at an economical $50 per month to 28 cities across eight states, with potentially ten more states on the way. Does that mean Google has all our metadata as well as internet data? Absolutely! Does advertising subsidise Google’s reasonable fibre cost? Ditto.

Big Tech annihilate Telcos

Telcos no longer have the infrastructure copper or cellular monopolies. They are losing to satellite and fibre – the domain of Big Tech.

The future may look very different as Big Tech eats the Telco lunch.

Australian perspective

Internet

The Telcos had the absolute monopoly with copper (voice and ADSL) and HFC cable but not anymore. You now have the government-mandated NBN voice and data fibre network and some 176 of its Retail Service Providers (RSPs) competing for your business.

Dialing

As NBN nears its completion of the roll-out and the RSPs get better Telstra, Optus and Vodafone/TPG market shares are eroding. In 2019 Telstra/Belong had 47.8% of NBNs retail installations, Optus 15.5% and TPG 21.9%, Vocus 7.3% and the rest 7.5%.

Telstra has the largest share because

  • It owned much of the voice and ADSL market, and it successfully converted that to NBN
  • It is the only Telco that has the Universal Service Obligation to provide a voice-only service over NBN (GadgetGuy article here and that means a $25-50 per month VoIP phone line rental and call costs).
Big Tech will annihilate Telcos

Oh, and c) for some misguided reason people are still loyal to Telstra when there are literally 174 often better and cheaper NBN alternative RSPs.

Mobile data

Mobile voice and data (cell phone) is still the domain of Telcos and via a network of reseller MVNOs – just like Peter Adderton’s Boost. But as Adderton says we may be soon buying voice and data from Big Tech.

Telcos have the 4/5G monopoly because it is prohibitively expensive to buy spectrum and install towers to cover the country. Global satellites are a major threat here – maybe not in five years – but sooner rather than later.

5G – the sky is falling

We’ll let you into a big secret: 5G is a huge hoax perpetrated by Telcos to try and shore up their monopoly position against Big Tech.

Despite Telcos trying their darndest to convince us to buy brand-new, 5G ready smartphones, very few people have actually done so (it is about 100,000 handsets in Australia, and the majority are the free upgrade from a Samsung S10+ to the 5G version).

In short, 5G has been a huge flop because most consumers are cannier than the Telcos think they are. They’ve looked at the ‘advantages’ offered by 5G, and thought – So what?

There is another reason why 5G is a hoax, though, and it is one that Telcos will hate me for telling you: their business model is dead. Let me explain. 

The traditional Telco business model in 2020 is absurdly old-fashioned

You want to do what? Build a hugely expensive nationwide network of cables, towers and transmitters? How will you fund that? Oh, by locking 25 million Australians into expensive and unbreakable 24/36-month contracts. Good luck with that.

Telco model

As we wrote in our 5G Guide, the future of the telecoms industry is pretty easy to fathom: get people buying 5G, then 6G, then 7G, etc. It is the classic ‘get them in the tent’ strategy.

If you think that sounds like a repetitive, suspiciously simple business model, you are right. Specifically, there are two problems with that kind of thinking.

The first problem is that most people just don’t see the point of faster and more expensive telco connections and handsets. They can already do everything they want over 4G, and they can do it fast enough. To add insult Telstra is charging $15 more a month to access 5G when most of the time a handset will only find a 3 or 4G signal.

In the absence of a ‘killer app’ that ACTUALLY needs 5G, it has been pretty hard to convince users to buy into it – let alone pay a premium to use it. Oh, and there are mythical speed and reception fallacies too unless you live on top of a rare thing called a 5G tower.

Satellite will come in, and 5/5/7G will be dead.

What that means for your data

Let’s assume, for a moment, that Adderton’s prediction turns out to be true.

Adderton

That instead of using a 5G/6G/7G mobile data network, satellite or solar-powered drones will handle all our data.

Telcos can amortise costs over 25 million Australians. But Big Tech can amortise it over 7.7 billion people. Do the math – Big Tech has won – resistance is futile.

Let’s then look at how that affects our biggest concern here at GadgetGuy: the privacy of your data

On the surface, it might not seem like this shift would make much of a difference to your data privacy. Sending your personal or business data via a Big Tech satellite doesn’t seem any less secure than sending it via 4/5G or NBN.

But consider this. What is the difference between regulations that apply to Australian Telcos and the so far lack of global regulations imposed on Big Tech about privacy?

Your Telco will tell you that they don’t sell this data, but that is not entirely true

They do collect masses of data, especially from cell phones under the mandated data retention provisions. Things like name, address, billing data, credit reporting, and so much more. That more includes metadata like who you are calling or called you, SMS to/from, location, and a whole lot more.

Similarly, if you access NBN or any other services, e.g. Foxtel, IoT devices, location tags etc. they will have viewing preferences, locations of assets or pets, home security, searches, websites visited etc.

In Australia the Telecommunications Act 1977 regulates Telcos. Given its age, the Act only covers monitoring and recording, caller number I.D., directory listing and a generic reference to the protection of private information defaulting to the 345-page Privacy Act 1988. It is insufficient for the internet, let alone the app-driven world.

Telcos and Big Tech must adhere to it. But the Act lacks needs a lot of updating, foresight and some real teeth. It is a global sport to find ways around it. For example, Facebook is registered in Ireland and says it is not subject to Australian laws. Apple says it won’t comply with data requests. Well, if they want to do business here, the Act must prevent companies from thumbing their noses at it.

BTW – Telco’s do sell ‘anonymised’ data with PII removed. But as has been revealed it is very easy to de-anonymise’ data simply by merging it with complementary data sets. Horrifyingly an anonymised dataset that contains just 15 demographic attributes could accurately identify 99.98% of people in a six million sample.

The biggest leakage of data, however, is beyond a Telco’s or Big Tech’s control – from apps like Facebook on the phone or in your computer.

Big Tech will tell you they don’t sell your data. Was that a flock of pigs flying past the window?

Pigs Fly

Big Tech may not directly sell your data (although Facebook does so), but it does monetise it. The subtle difference is the business model – a free service means you are the product. If you stream free music or watch streamed T.V., then Big Tech knows exactly what you are doing and can make money from it.

Big Tech needs heavy regulation, especially for paid services.

GadgetGuy’s take: Big Tech will annihilate Telcos – The Death of the Telco?

Adderton’s predictions make sense, and we do not doubt that it will happen – perhaps not in the next five years.

In the interim Australian Telcos are subject to Australian laws and public opinion. They offer a higher level of protection to the data that uses its infrastructure – with the caveat that it is all about the apps and devices stealing data.

Whether 5G will be the last “G” is a different question. Given the scale of the infrastructure required for a move to mobile satellite communications, it might be that in five years we are writing similar articles about 6G, 7G, or whatever another new gimmick the Telcos come up with. But one thing is for sure: Telcos – you are on notice.