Right now, Mark Zuckerberg and Satya Nadella are in a submarine at the bottom of the ocean dodging krakens with Captain Nemo. Sort of.
Microsoft and Facebook, companies known historically for work apps and status updates, are laying a data cable across the Atlantic Ocean.
It’s actually something they’ve been involved with in the past, but this time, it’s different. Previously, they’ve done it as part of a consortium of telecoms, who all had a share and a stake. This time, the telecoms don’t own the cable or the bandwidth. Microsoft and Facebook are cutting out the telecoms to create their own international data network.
There is an irony in this.
For the past decade, telecoms have been eying and trying to transform to be more like the Facebooks of the world, to be digital service providers, to veer away from being just network operators, where profits are flat, legacy infrastructure is burdensome, customer perceptions are negative, and competition is rising from nimbler over-the-top players piggybacking on the telecom’s own massive network investment.
Yet, here are two of the biggest digital service providers…turning into network owners. Of course, the cable will be operated by a telecom, but the telecom is just a vendor in that scenario. The bandwidth is pretty much all Facebook’s and Microsoft’s. And it’s not a unique situation. Google is laying its own fiber in various cities. Facebook is buying up dark fiber (underground cables that aren’t being used anymore) to better control data flow and to expand its network into new areas.
In other words, not only did digital service providers muscle telecoms out of lucrative digital services by using the telecom’s own pipe, now the digital service providers are now muscling telecoms away from the pipes themselves.
In more other words, the ones this time of Michael Murphy, president and CEO of telecom consultancy NEF in the above-linked Wired article, “It’s going to get interesting. Who is the real telecommunications provider? It’s going to take some of their business away.”