When Worlds Collide: Google's VP Hire Reflects Telco & Media Convergence
Google has let slip a few more morsels of information about its telecom direction, following its hiring of John Honeycutt, ex-CTO of TV giant Discovery, as vice president for telecom, media and entertainment. But plenty of questions are still unanswered.
Google (Nasdaq: GOOG) confirmed to Light Reading last week that it hired Honeycutt, after the news broke in -- of all places -- Variety. That's an indicator of the unusual perspective Google is bringing to bear on the telco market; the news didn't break in a technology or business publication, it ran in a showbiz rag. (See Google Signals Telecom & Media Ambitions, Taps Discovery CTO to VP Spot.)
Honeycutt is, at first, an odd choice to head up Google's telecom business. His LinkedIn profile shows no sign he's ever worked a day at a telco, or a telco vendor. He spent 15 years in technology and operating positions at Discovery Communications Inc. (Nasdaq: DISCA, DISCB, DISCK). Before that, he worked at Fox Broadcasting Co. as VP broadcast operations.
Why hire an executive from media and entertainment to head up telco? They are related industries, but not the same, and they have different needs.
It's as if a supermarket chain hired a farmer as CEO. Yes, farms and supermarkets are partners who depend on each other for their very survival. But they're not the same business, and succeeding at one does not lead to triumph in the other.
And yet telcos and media/entertainment industries are converging, and it makes sense for Google to merge them all into a single business unit and name a media/entertainment executive to head that unit. It's an odd decision, but it might work.
So far, Google doesn't have much to say about Honeycutt's responsibilities, and it has not yet made him available for an interview. Our communication with the company on the subject has been limited to an email exchange with a PR person who doesn't even work for Google itself; she works for an agency.
Google's spokesperson says video and entertainment services are "becoming a critical part of telco companies' consumer offerings," with "accelerated M&A activity."
Google claims Honeycutt has "extensive" telco experience. He "negotiated multiple long-term telco distribution contracts across satellite, mobile and fiber, and has architected multiple high-bandwidth distribution networks," Google says.
Telco & media convergence
It's true that media and entertainment are becoming important parts of telco business. For example, AT&T Inc. (NYSE: T) acquired Time Warner for $84 billion last year. (See AT&T Closes $84B Time Warner Takeover.)
T-Mobile US Inc. is working on a home TV service; it said Thursday that it plans to launch by June. Verizon is working on a limited roll-out TV service, though it has pulled back on broader plans. (See (See T-Mobile's New Home TV Service to Launch in First Half of 2019, Verizon Gives Fios TV a Facelift and Vanquished in Video, Verizon Admits OTT Defeat.)
Verizon Communications Inc. (NYSE: VZ) acquired AOL for $4.4 billion in 2015 and Yahoo for $4.8 billion in 2016, and has struggled to make those services core of its Verizon Media business unit. Verizon laid off about 7% of its Verizon Media workforce in December, after restructuring the whole company around 5G in November. (See Verizon Media Cuts Jobs, Has No Growth Plans to Share and Verizon Restructures in Bid for 5G Growth.)
And both Vodafone Group plc (NYSE: VOD) and Liberty Global Inc. (Nasdaq: LBTY) are rolling out video platforms around the world. (See Why Vodafone Is Betting on Cloud Video and Liberty Global Packs 4K, Cloud DVR, Voice Into 'Horizon 4'.)
And while telcos get into the media business, media companies are starting to launch their own networks. Discovery, with Honeycutt's guidance, is a prime example. His mission at Discovery was to "expand Discovery’s traditional linear pay-TV model to include screens on all devices anytime, anywhere," according to his biography, still up on Discovery's website as we write this. He was "responsible for Discovery’s entire technology stack," according to his LinkedIn profile, including "all financial, business, collaboration, linear and non-linear media technologies as well as information security, 'big data' and compliance." He led a team of 1,500 people across 60 locations with an annual budget "approaching $500M."
His LinkedIn goes on to show a roster of IT accomplishments, all of which will be useful background as he looks to build business with telcos, media and entertainment companies: When he wrote his profile, he was in process of migrating media operations to public cloud, including receiving content from production suppliers, bringing the content through post-production, linear playout and digital distribution across all platforms.
Next Page: Risky business
Additionally, he takes credit for completely reorganizing and decentralizing the IT team, with help desk calls down 50%, deploying a worldwide content management system, multiple ad sales systems and SAP S/4HANA.
Media companies and telcos have similar networking challenges. Media companies have been slow to migrate from legacy networks to IP, said Roger Sherwood, Cisco Systems Inc. (Nasdaq: CSCO) global strategy, media and entertainment lead, in a 2017 interview. The same is true for telcos of course.
Sherwood moved on to Amazon Web Services Inc. in December, where he is global practice manager for media and entertainment, demonstrating that Google isn't alone as a cloud provider looking to build its media business.
Video is chewing up more and more bandwidth on the Internet, comprising 75% of global traffic in 2017, up from 63% two years earlier, and rising to 82% by 2022, according to the Cisco Visual Networking Index released in November. (See Terabyte Households Surge as Video Eats the Internet and Cisco: Get Ready for the Multi-Zettabyte Internet.)
Google sees itself playing an infrastructure role in telco, media and entertainment. Says our spokesperson friend: "John will work with telcos, programmers, and other media companies to help them modernize their own infrastructure and provide more engaging services to their customers in the future." That's something Google had already been working on; for example, Sky transitioned on-premise data and analytics to Google Cloud Platform, helping fighting piracy and enhancing the Sky customer experience, Google says.
Part of Honeycutt's responsibility will be to expand Google partnerships with SAP, Salesforce, Cisco and other companies, to serve telcos, media and entertainment companies. (See Google Teams With Cisco for Hybrid Cloud and Salesforce, IBM & Google Relationship Status: 'It's Complicated'.)
Still, although media and entertainment are playing strategic roles at telcos, they're only part of what telcos do. Defining telcos as media and entertainment companies is like... well, defining Google as a cloud provider. The cloud is an important and growing part of Google's business, but it's still primarily a search company.
That doesn't mean Google is wrong to combine media and entertainment with telcos, and and put a media exec in a leadership role. When seeking to conquer a big market, it pays to start with a piece of that market. If Google succeeds conquering the entertainment and media parts of the telco business, it can move on to other things.
But there are risks in telcos partnering too closely with Google, or any other public cloud provider.
The relationship between the two sectors is fraught. On the one hand, cloud services are a great benefit to telcos. Cloud services are driving both business and consumer demand for telco networking services. The cloud is home to popular consumer entertainment and media services, including Google's own YouTube, as well as Netflix Inc. (Nasdaq: NFLX) and Amazon Prime. And telcos are already moving operations and network infrastructure to the cloud.
On the other hand, telcos and cloud providers compete in some areas. For example, as telcos get into the media business, they compete with Google's own YouTube.
And it seems inevitable that cloud providers will want provide connectivity to enterprise and consumer customers directly, cutting out the telco middleman. We're already seeing baby steps in that direction: Amazon launched a networking service in November to allow its customers to bypass the public Internet and transport application data on AWS's own network, the AWS Global Network, instead. Google both partners with telcos in offering connectivity, and provides dedicated connections of its own (See AWS Debuts Networking Services – Should Telcos Be Scared?, Google Launches Dedicated Connectivity for Hybrid Cloud and Google Plugs in New Cloud Connectivity .)
If cloud providers get into the network access business full throttle, they will become tough competition to telcos, possibly fatal.
We've sent Google a request for an interview with Honeycutt, and we're keeping an eye on this important development.
— Mitch Wagner Executive Editor, Light Reading