Did Facebook and Google Just Kill Off the Phone Company?

By Tad Miller | Jul 8, 2011
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Before I was in Search Engine Marketing, I spent 9 years as a Paralegal working mostly in the area of Telecommunications Regulation both at the state utility commission level and at the FCC level.  On several occasions the law firms I worked for were engaged to oppose the merger of phone companies and sometimes to apply for and advocate for the merger or acquisition of phone companies.

The level of “importance” that local and long distance phone service played in peoples lives in those days was practically a matter of life and death to the general public – at least that’s how all of documents supporting or opposing those mergers made it sound.  In those days it really wasn’t that overstated.

The world has changed a lot in a very short time.  People aren’t even getting land line phones, they are getting mobile phone lines and often the only “hard-wired” connection from a phone company to a house is a data line i.e. DSL or Cable Modem.

Other technologies like MagicJack or Vonage have taken away local and long distance subscribers, but they haven’t become really mainstream.  What has become mainstream is Facebook – which has over 750,000 subscribers.

Enter the Webcam

Web-cam’s have been around for years and so have the services that make web-cam calling possible.  My parents live for “Web-cam Wednesday” with my kids.  We have bounced around on different web-cam platforms: Yahoo, MSN, Skype, Logitec, etc.  Reliability has been an issue – but have settled on Skype because it really hasn’t given us too many problems.

Events in the last few days will likely usher in the age of the web-cam and possibly the end of the long distance land line call to the masses.  First, Google unveiled Google+ Hangout:

I really picture Google+ Hangout being the webcam platform of business in the future and the means by which conference calls are done in the future.  I really want to see how Google might integrate Hangout with Google TV.

The bigger web-cam news for the masses is that Facebook is partnering with Skype to allow for very easy web-cam chats with it’s soon to be billion subscribers.  It’s so easy that I expect that it will become as common as phone calls were in the 90′s were.  The service is totally free. Skype is making it’s money from licensing their technology to Facebook.

What does this mean from the dollars and cents side of things?

  • It will become increasingly difficult for phone companies to re-coup their expenses of maintaining local phone service in the face of declining subscribership
  • It will become increasingly unprofitable to provide land line long distance telephone service with declining subscribership.
  • Data is and will continue to be how phone companies make their money – both at the wireless and land line levels.  They are going to be just fine in that arena (lots of money to be made).
  • There will be even more “eyes” on Facebook than there already is and that will mean more ad clicks for Facebook.
  • Google use data from “Hangouts” and other Google+ services to provide searchers with more targeted ads

All of these things were happening anyway, the events of the last two weeks will likely accelerate them.

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