The new new telco – confused of calcutta.
There has been a lot of debate as a result of recent announcements aboutGoldman Sachs investing $450m in Facebook at a valuation of $50bn, and planning to raise another $1.5bn at the same valuation, apparently by attracting wealthy private investors into a special purpose vehicle at high speed.
Much of the debate is about the valuation, with talk of Bubble 2.0 (and even 3.0, I lose count nowadays).
The valuation doesn’t surprise me, however dark the art of valuation may have become. Why?Because Facebook is the new new telco.
What do I mean? Let’s start with the original telco, which comprised of the following components:
- A population of subscribers, aggregated into a directory, with relevant personal contact information (addresses, telephone numbers)
- Reduced search costs within those directories as a result of classifications and groupings: alphabetical (A-D, E-H and so on) geographical (London, Birmingham and so on) and functional (white, yellow and so on)
- Multiple modalities of communication between the subscribers (post, telegraph, telephone)
- A record of changes, published regularly as errata and addenda
Original telcos provided services via fixed devices and spent vast amounts of money on infrastructure. They sought to justify monopoly positions by pointing to the infrastructural expenditure required.