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Posted by Dan Bieler on February 8, 2013
Orange’s CEO mentioned during a business show on French TV that Orange is receiving money from Google for transmitting Google’s traffic (most of which stems from YouTube). No details about the financial arrangement of the year-old deal were disclosed.
Given the well-known explosion in data traffic, carriers must invest a significant amount in their network infrastructure to support this traffic. See the Forrester report, “The Future Of Telecom: Strategies To Move Off The Endangered Species List,” for more information. For years, carriers have argued that online service providers (OSPs) like Google should pay for using the carrier network infrastructure.
So, does the Orange-Google deal mean that Orange has won a true victory and that the balance of power between carriers and OSPs is restored? Does the deal really address the challenges of the carrier world? Hardly.
No doubt, this deal makes Orange and other carriers feel much better about their regained “power” vis-a-vis the big OSPs. In this sense, the Orange-Google deal therefore risks cementing the role of the carrier as the connectivity provider — while carriers take the most pressing task of transforming into providers of truly innovative services too lightly.
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