Google Takes on the Telecoms

Now that WSJ.com is back, I can read the article that was forwarded to me. And the plot thickens:

Internet companies are making an aggressive and unprecedented push into services traditionally offered by phone and cable companies -- threatening to upend the business of transmitting voice and data.

Google Inc. unveiled the latest such effort Friday with a proposal to provide free, wireless high-speed Internet access in the city of San Francisco. The service would allow users to bypass fee-based connections of cable and local phone companies in favor of wireless links.

Users could log on through computers and email, surf the Web, download music or do anything else they can do with a traditional Internet connection -- including, potentially, make phone calls with voice-over IP, or VOIP, technology.

But wait, there's more:

More troubling for telecoms, it would bring their industry an entirely different business model. Google generates nearly all its revenue, which totaled $3.2 billion last year, from the small advertisements it shows alongside search results and other Web content.

By offering consumers free service, Google could pressure traditional providers to slash fees for Internet access, a growing source of telecom revenue -- when they don't have Google's advertising revenue to make up the difference, and have large, extensive networks for transmitting voice and data to maintain.

Google's proposal to use wireless fidelity, or Wi-Fi, technology would cost far less than a traditional network. It also would give Google a direct pipeline into consumers' homes -- long the big edge for telephone and cable companies.

I am curious, though: Google's whole model is advertising-based. Indeed, both Google and Yahoo!--among others--can offer free maps, free searches, free VoIP, free this, free that, because it's all advertiser-supported. But is that truly sustainable? What happens to all our connectivity if the model collapses?