Battle Tech Vs Telco’s ?

By Stephanie Mehta, Fortune senior writer
"....The reasons for the rivalry are complex and myriad, but it essentially boils down to a classic struggle between content players and distributors for the hearts, minds and wallets of American consumers - all with a digital twist.

And the twist is this: Internet companies would like telecom networks, wireless networks in particular, to be more "Internet-like," meaning they'll begin to migrate away from a so-called walled garden approach on their wireless networks, and use the mobile Web as freely as they do on a PC. Already carriers in Europe, such as Vodafone, are taking steps to break down such walls, letting customers access general Web content without having to go through the carrier-operated portals.....

The tech-telco throwdown has manifested itself in several ways. Early last year there was a hearty debate over Net neutrality legislation, which sought to regulate the Internet by prohibiting phone and cable companies from limiting or prioritizing Web traffic on their wired broadband networks. A few Silicon Valley-born, venture-backed companies such as M2Z (short for "Move to Zero") now are seeking to become broadband network operators, arguing they can do it better and cheaper than the incumbent phone companies...
But the biggest and most interesting salvo in the tech v. telecom fight is Google's potential bid for wireless spectrum, and its rumored development of wireless handsets. Google CEO Eric Schmidt earlier this month told a group of regulators and communications lobbyists that the company probably would bid for wireless licenses in an upcoming auction of spectrum in the 700 Mhz band, presumably in the hopes of building the nation's fifth nationwide wireless network.
But by thinking about bidding on licenses - and possibly deploying its own handsets - Google clearly must be thinking about ways to end-run the traditional telecommunications infrastructure. (Consumers without Web browsers in their mobile phones typically access mobile data through a "deck" of services controlled or selected by their phone company.)

Technology and telecom companies "are trying to leverage their existing strengths to get to a dominant position in the wireless value chain," says Blair Levin, a managing director at Stifel Nicholas, and a former Federal Communications Commission official. "Google is about applications, and it is trying to make sure the network operators don't dominate the field and keep its searches away from the consumer."

But that doesn't mean the phone companies are going to cede market share and customer relationships without a fight. They're no fans of companies seeking free or low-cost spectrum from the FCC in exchange for promises of offering cheap broadband, and they've long argued that their ownership of networks gives them the right (or responsibility) to only allow authorized devices on their networks, thereby limiting customer choice of handsets.

And though it certainly seems tech companies have momentum now in driving change, it is very likely that any tech company that tries to get into the telecom space may find it needs to change, too. (More on that in next week's column.)
"All these things - Net neutrality, Google's interest in the 700 Megahertz auctions - these are all examples of the collision of technology and the communications sector," says Scott Cleland, a self-described "tech-com" analyst who clearly is aligned with the communications camp. "If you think of two cars colliding, one car can take the other in a different direction, but sometimes, they both take each other in an entirely new direction."