More than 15 months ago, Google’s CEO, Dr. Eric Schmidt publicly admitted that he wanted to build an infrastructure for what would be a global $100 billion company. With best case scenario projecting their revenues at just over $30 billion at the end of this decade, the claim was audacious, though not to be taken lightly.
In order to build this leviathan enterprise, Google will have to continue to build its back-end systems at a rapid clip, but more importantly it will have to keep investing a lot of money to control and own oxygen of the New Net Economy: bandwidth.
I had written about the GoogleNET back in 2005 for the now defunct Business 2.0 magazine and have been following this pretty closely, though not writing as often about it.
The latest news from the telecom world is that Google is now looking to get into the trans-oceanic cable business. Trans oceanic cables connect countries and sit at the bottom of the sea and have capacities that run into terabits per second.
There are rumors first reported by Communications Day, that Google is heading up a new trans-pacific undersea cable called Unity. (I guess after going to China, they can’t call it Do-No-Evil-1)
Communications Day understands that Unity would see Google join with other carriers to build a new multi-terabit cable. Google would get access to a fibre pair at build cost handing it a tremendous cost advantage over rivals such as MSN and Yahoo, and also potentially enabling it to peer with Asia ISPs behind their international gateways - considerably improving the affordability of Internet services across Asia Pacific.
Alan Mauldin, who tracks the business for Telegeography thinks that these are early discussions and at this point they just might be discussions. Even if it is discussions, he points out that they point to Google’s Godzilla like appetite for bandwidth.
Trans Pacific routes are one of the busiest, and most expensive in the world. The difference in the pricing between Trans-Pacific routes and Trans-Atlantic routes is like shopping at Nordstrom and The GAP. The demand on Trans-Pacific routes has exploded, thanks to the big broadband boom in Asia and growing economic trade between US and Asia. Internet traffic in these routes was up 41 percent between mid-2006 and mid-2007, reports Telegeography.
At present there is 3.3 Tbps of lit capacity, but it is expensive. Google has to pay a ton of money for this bandwidth like others. Sure there are new cables being put into place, and others like Pacific Crossing-1 and the Japan-US Cable system are being upgraded, but that doesn’t solve the Google’s insatiable need for bandwidth.
The Mountain View, Calif.-based company is putting a lot of resources in India, China, and South Korea as part of its global expansion. The company is also betting big on video and has grand plans for offering more and more web-based services. All that needs bandwidth - a lot of it.
By becoming part of the consortium, it gets two things: wholesale prices for its bandwidth needs, perhaps preferential treatment and they still get to share the cost and risks associated with owning a sub-sea cable. Anyway if this does get done, it still won’t be a few years before Google can get its hand on all that capacity.
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