Continued from Goog-411, Part I
According to a recent blog post I came across during my research I believe that they are on the cusp of an even bigger strategic move, let me explain. The Internet as we know it is a utility pipe similar to electricity or water, with internet service providers (ISPs) building their profits primarily on how many users they can have practically share the same Internet connection. Based on the idea that most users aren't on the net at the same time and even when they are online they are mainly between keystrokes and doing little or nothing when viewed on a per-millisecond basis, ISPs typically leverage the Internet bandwidth they have purchased by a factor of at least 20X and sometimes as much as 100X, which means that the DSL line or cable modem that you think is delivering multi-megabits per second is really only guaranteeing you as much bandwidth as you could get with most dial-up accounts.
This bandwidth leveraging hasn't been a problem to date, but it is about to become a huge problem as we all embrace Internet video. When we are all grabbing one to two hours of high-quality video per day off the net, there is no way the current network infrastructure will support that level of use. At that point we can accept that the Internet can't do what we are asking it to do OR we can find a way to make the Internet do what we are asking it to do. Enter Google and its many, many regional data centers to fill this gap.
Looking at this problem from another angle, right now somewhat more than half of all Internet bandwidth is being used for BitTorrent traffic, which is mainly video. Yet if you surveyed your neighbors you'd find that few of them are BitTorrent users. Less than 5 percent of all Internet users are presently consuming more than 50 percent of all bandwidth. It's BitTorrent -- not Yahoo or Google -- that has been the target of the anti-net neutrality from telephone and cable companies. But the fact is that rather than being an anomaly, the BitTorrent users are simply early adopters and we'll all soon follow in their footsteps. And when that happens, there won't be enough bandwidth to support what we want to do from any centralized perspective. A single data center, no matter how large, won't be enough. Google is just the first large player to recognize this fact as their building program proves.
It is becoming very obvious what will happen over the next two to three years. More and more of us will be downloading movies and television shows over the net and with that our usage patterns will change. Instead of using 1-3 gigabytes per month, as most broadband Internet users have in recent years, we'll go to 1-3 gigabytes per DAY -- a 30X increase that will place a huge backbone burden on ISPs. Those ISPs will be faced with the option of increasing their backbone connections by 30X, which would kill all profits, OR they could accept a peering arrangement with the local Google data center. In which their internet traffic will be encrypted and sent through Google's servers to the Internet. The data that is received will then be encrypted and sent back through Google’s servers to your computer.
Seeing Google as their only alternative to bankruptcy, the ISPs will all sign on, and in doing so will transfer most of their subscriber value to Google, which will act as a huge proxy server for the Internet. We won't know if we're accessing the Internet or Google and for all practical purposes it won't matter. Are we tomorrow sending all of our internet traffic first to Google before it is passed from there to the destination server of your preferred site? This would really put Google in the driver seat. With one move, Google reduces all operators to bitpipe providers (from the end-user to the Google network) essentially marginalizing the ISP’s.
Take note that YouTube, owned by Google, accounts for close to 10% of today’s Internet traffic this means Google would literally save millions each month by activating their own branch on the internet tree. If Google moved all its traffic onto its own network, phone and cable firms would suddenly find the electronic equivalent of a vacuum on their own networks. They would also find a gaping hole where big network usage revenue used to be and the roles could be reversed -- the phone and cable firms could become customers of Google and be forced into buying access to the Google network.
However, if purchasing dark-fiber for the past three years was the sign of Google pulling anchor and heading towards becoming a telephone company, then the acquisition of ReqWireless in July 2005 was the tide that took them out to sea. Even more recently, Google has purchased GrandCentral Communications—a Web Startup that allows users to consolidate their different home, work and mobile phone numbers into one through an Internet application. More tangible evidence comes from Europe where the South Korean electronics maker LG introduced a new phone on the market preloaded with Google applications. Many have dubbed this phone the “Google phone.” The other giant factor to Google leaning towards becoming a wireless provider comes from their interest in the 700 MHz wireless spectrum auction set to happen in January of 2008.
Continued in Goog-411, Part III