Market Disruption is a Game Verizon Can Play as Well

One often tends to think that big market disruptions are caused by small, upstart firms. History might suggest something quite different.

You might argue that it actually takes a large and dominant firm to truly disrupt a big market. Apple, for example, did not just revolutionize "mobile phones." It changed the relationships of power and value within the mobile industry, shifting power to handset providers and away from access providers.

Some would argue it will take a firm as big as Google, able to launch Google Fiber, and offer symmetrical 1-Gbps high speed Internet access, at $70 a month, to change the U.S. ISP business. 

In similar fashion, you might argue it took an industry as large as the mobile phone business to rapidly bring voice communications to billions of people who still do not have access to fixed network voice. 

And even though lots of firms are trying to disrupt the U.S. mobile business, one might argue it will take firms as big as Sprint and T-Mobile US (or Apple, Google, Amazon, Facebook) to really shake things up. 

So the notion that a big incumbent cannot disrupt a market is false. Consider what Verizon might do in Canada, where regulators want Verizon to enter the market, and the Canadian mobile carriers with 90 percent market share are vigoruously opposing the move. 

The point is simply that big markets get disrupted by other big firms, not start-ups. One is tempted to point to Skype as a countervailing example. But that analogy also is complicated. One might argue that landline voice has been disrupted most by mobile.

International calling has been affected by Skype, but there also are other pressures, such as rapidly declining international and national long distance rates, even before Skype launched. In fact, it was competition by big long distance companies such as MCI and Sprint that caused the drop in long distance prices, long before Skype was thought of. 

That is why it really matters when firms such as T-Mobile US, Google, Apple and Sprint get serious about challenging the prevailing market structure. That is typically what it takes to disrupt a market. But add Verizon to that list of names.