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Re: Google seeks GoogleNet bids?
- From: Tom Vest
- Date: Tue Sep 20 08:40:04 2005
On Sep 20, 2005, at 5:43 AM, Michael.Dillon@btradianz.com wrote:
The chief tradeoff here is not "public" vs. "private", but rather
returns to layer 1/2/3 transport vs. returns to content and end-user
I'm kind of surprised that I hadn't seem mention of it
here before now, but Om Malik points out in his blog that
Google is reviewing bids for it's natioal DWDM network:
There seems to be a trend whereby anyone who can aggregate
sufficient traffic to warrant their own IP network is doing
so and offloading the so-called public Internet. In the case
of Google it is reminiscent of the way the television networks
aggregated broadcast content way back in the 60's.
Ten years ago, the idea that there could be a public Internet
which anyone could use for any purpose was rather new. Is this
concept now on the decline?
Barring regulatory impediments, every content provider that reaches a
certain size ultimately concludes that outsourcing transport is
suboptimal -- either too expensive, too variable, or too restrictive.
The "certain size" that they have to reach is largely determined by
the ratio of transport outsourcing costs (opex) to infrastructure
ownership costs (capex), which vary differently with scale (security
concerns, service type/vulnerability, and tax laws also affect the
Once ISPs cross that threshold they build, and once they build they
start thinking about all of the other content and services that they
might deliver with this new capability. AOL, MSN, Yahoo, and now
Google are just a few obvious examples.
It works the other way also. Sometimes changes in technology, telecom
law, or tax policy cause the service/infrastructure ratio to flip,
and you get infrastructure divestitures. The 1996 Telecom Act opened
up the wholesale access segment to many more/new players, and
dramatically reduced the costs and difficulty of reaching dial
customers. That prompted many operators to enter the transport
business, but others to divest. Arguably the whole Internet thing
itself was a product of a similar flip in 1984, when the US "value-
added services" sector was created by regulatory fiat and set apart
from the regulated basic access telecom segment.
Huge improvements in the cost and availability of transport over the
past five years have resulted in a massive expansion of the
infrastructure insourcing group (visible by the accelerating demand
for ASNs). I think of this as a kind of democratization of control
over transport. Did this trend undermine the "public Internet"? I
don't really see how.
No doubt the massive shift in US telecom law currently underway will
also have a major effect on these patterns. However it won't be some
idealized "public Internet" that will shrink as a result, but rather
the segment of the Internet that is not directly controlled by
incumbent, facilities-based access network owners. Whether or not
this latest shift represent a good thing or a bad thing remains to be
seen -- however the examples of other countries that are dominated by
facilities-based telco-ISPs certainly doesn't not inspire much optimism.