Web 3.0 Just Kicked Through the Door

In the playbook for Google's world dominance there is one play still in the developmental stage:

GoogleNet - the one missing link. No pun intended with the missing link part. Link....network... get it?

The posting below is a repost from February of 2007. I'm reposting because I think it is just as applicable today as it was then.

Couple quick thoughts before my paste:



- the amount of data on every persons habits that google will be able to manipulate and exploit is scary. the Chrome OS and Android just gave google 5 times the access they had to me before. Why? Android was built to run on devices and I can't stand windows crashing every hour so i'll gladly switch to a more stable android. not to mention its free. Android will be the OS for my mobile phones, set top boxes, home entertainment systems, appliances (refrigerators, ovens, vehicle management and entertainment systems, home automation devices (remember google's forays into the home automation and electrical smart meter markets?) and probably, in the not too distant future, they'll manage our terlits too. Thats a shit load of visibility they'll have in to the patterns and habits of connected people. Again, no pun intended :)

- will the Feds just sit back and watch as Google take it deeper than Ma Bell ever dreamed possible?






They are giving away everything else, why not connectivity too? Its all about efficiency right? Operational efficiency, risk mitigation efficiency and customer efficiency. Efficiency is the driving force behind Googlenet(gnet). What is GNet? Google's foray into the ISP business. This 'business' for Google is the means to an end. At the end of the day Google sells advertising and they'll use whatever means necessary to do that, be it building an OS and giving it away for free or by providing free connectivity so that free OS stays online 24x7. The more interaction we have with devices the more impressions google has to sell to advertisers.

The gnet hypothesis: Bandwidth costs have fallen to a level that the advertising revenue more than subsidizes the cost of the network. We are in the very early stages of a true 'gloabl village' as Marshall McCluhan called it. The cost structure for a traditional ISP like PacBell DSL..errr AT&T, comcast, etc to supply services to the residence is around $40 per month and trends down as they grow because they get cost scale.... in the network world, the more you buy the less it costs.

goog will be placing a bet, and a very calculated one, that advertising $$ will not only subsidize operational costs of providing free services(isp, voip, office, etc), but will exceed them.

Owning the customer's network routes from end to end(being the ISP) provides Google with private infrastructure platform for delivering customized content and adverting to each and every one of the people using their service. this delivery platform is always on and knows where you go, what you type, where you live, who your friends are, what files you have downloaded, what you look like, and whatever else they add on to their services. So when Johnson & Johnson or GE or Proctor & Gamble or Coca Cola or Pepsi is planning their media buys for the next year do you think they'll purchase advertisements on radio, television, print or the 4th network(Google)? based on the ability to target a specific population that has certain attributes you desire, the choice is clear...you pick google. Why? because you know that your marketing msg is going to a qualified prospect as opposed to the traditional 'shotgun' approach. plus, you can get results in realtime and tweak your msg if its not working in real time. with the other three media you are somewhat ratholed into trusting some third party for ratings that may or may not even reach the people that you want it to. by the time you figure this out a slew of things can happen...some good some bad but why chance it when you don't need to.

At the end of the day, Google is building a traditional media killer and the funny thing is..actually not really funny but kinda, that the writing is on the wall but nobody seems to believe it. I do. @Home Network had this vision but couldn't pull it off because the cable co's couldn't get their heads out of their rear to see the opportunity that was sitting right in front of them.

goog already has deals in place and likely in the works with the producers of original content which will allow their users access to that content. if i'm a content producer where would i want my content to be seen? ex. let's say you are the producer of The Office and goog offers you the ability to place your content on their network so that it can be viewed by anyone, anywhere, anytime and offers a revenue share or some other creative structure around it such that you know your worst case scenario beforehand. simple choice right? sure abc or cbs might offer an upfront fee in the form of $$ per show but the audience is limited, the timeslot is finite and in order for someone to view it, they have to purchase cable tv or satellite or whatever whereas on the google network you content would be globally accessible and the broadband access which replaces the cable or satellite tv service, is free to the masses. additionally you can develop complimentary services that engauge your viewership such that you are able to really develop a community around you content as opposed to content around a community.

What does this have to do with being an ISP? Everything, why do you think there is such a brouhaha over net neutrality? Without connectivity none of this is possible and with the right connectivity, all of it is possible and defendable from the threat of new competition emerging to pose a challenge.

The internet hasn't changed anything when it comes to the bare bones media model. The driving force of media is and always will be advertising. Without it, there would be no televsion, radio, print or internet. It doesn't matter if its old world or new world, it's still dependent upon advertising and gnet is to google what airwaves were to ABC, NBC and CBS, something to exploit in order to sell advertising.

Net Neutrality: The Ugly Bride

Over the next 20 years net neutrality will be left at the alter many, many times. At&T already did it once when they had no way to provide cable modem service because @Home Network had been the choice of partner for the cable co's. Meaning AT&T didn't have a broadband connection into the home. What did they do? They found the other kid who wasn't invited to the party, AOL, and cried all the way up to the principals office where they screamed and yelled about how poorly they were treated and how they should be included. Funny how shortly after the TCI acquisition was approved they slowly crawled across and into the anti neutrality, anti gov't intervention, pro free market camp.

What about Google? Google talks a good game but like the Barons of the past, they're so rich and powerful that it's easy to be preaching the socialistic smoke screen of open access when the commotion you're making distracts the attention from the real reason you need open access policies: Advertising $$.

Before I get into why, this thesis hinges on where I see Google taking it's road map over the next ten years. Google will become and will accomplish during those 120 months:

- already is today and always will be, and DON'T EVER FORGET IT, generating revenue by getting a piece of the advertising and marketing budgets of BUSINESSES worldwide (Sound familiar? It should because you know many similar companies. Companies like NBC, CBS, ABC, FOX, etc)

- building out an IP network that will kick ass on anything we have today because they'll squeeze every little drop of 'utility' out of each tiny unit of that network, driving the revenue per packet higher and higher the longer that packet stays on it's network. The big deal in this? They will give access and access device away for free to anyone who wants one. Just like the bikes at the googleplex, take one when you need one and leave it for the next guy to use when you're done. Since they're free, there really is no reason to steal them because there is no reason to buy one, right? Riiiight.

- will emerge as the leading global wireless phone carrier, giving access to voice and data via free gPhones to the masses.

- will enable a true global village as Marshall McCluhan predicted. providing ubiquity in access reach, speed and scope. no kids left behind, just like the California school system. uh huh.

How could such a beacon of industry and a company that is studied and admired as the pinnacle of American enterprise show its true colors and be so fickle? Flip flopping from one side to the other? I love answering my own questions and since nobody else is raising their hand I will tell you; first, its real simple and sheds some light on why net neutrality is a pipe dream. Net neutrality itself is a concept and notion created by the telco's and in cooperation with their opposition, which pits each other in a one extreme to the other showdown. Nobody will ever win this showdown because if someone did it would then be over and if it's over how can they conveniently flip or flop to the other side when need be? Everyone wants to have their cake and eat it too and when your talking about something you can see, touch and feel, the history of any given involved party is easily forgotten, effectively masking economic warning signs. The most obvious one being the saying, "if it's to good to be true, it is and never will be true."

It's all about one $ and maximizing how many times that same $ can be 'turned over' during it's lifetime. For this example, my definition of 'turned over' is the value of the taxes the US gov't(or any type of tax collector) collects on each dollar it spends, collects, spends, collects, etc...

Keeping that packet on your network all the time ensures you can have more opportunity to market to the user, provides them with more and deeper analytics of this persons habits, a deeper understanding of what is important to this person and what are they hiding. After all, the easiest way to get someone to do some action is by guilting them into it.

Yes, businesses will do what they can to maintain an advantage in the market for the assets they've built or acquired. This is nothing new and is happening on behalf of every industry, not just telecom. And it is expected. If you elected an official who is uneducated and susceptible to rhetoric and hype you have the ability to change that instead of throwing more rhetoric and hype on top of it. The fact of the matter is that with or without net neutrality, market innovations will happen that shake up the landscape. We're seeing it now with wifi. In a few years the net neutrality debate as it relates to in ground last mile connections to the home will likely be a laughable memory because of innovations by companies addressing a market deficiency such as lack of competition for the last mile connection. Wifi, WiMAX, satellite or any other protocol/standard/whatever bypasses the last mile altogether, thus bypassing the ILEC, MSO, etc.

So, if you really want a competitive market for alternatives to any of the technological services we have today, the best way to ensure that is to allow those companies to keep their systems closed and have tiered offerings because the capitalistic market forces will produce alternative, innovative, ground breaking and industry shattering service offerings. Does Napster ring a bell?

Another thing to consider, the telcos(distributors) rely on the content producers(websites, aps's, isv's, etc) as much as the producers rely on the telcos. They are complimentary in nature and it is in their best interest to play together because the combination of the two is what makes each, in its own right, attractive. What would Yahoo or Google be without the internet? Why did GM pull that all electric car they used to have off of the market and now why is Tesla coming out with an even better one? Because the oil companies needed GM as much as GM needed the oil companies.

We aren't fans, we are participants. Just how fans often confuse their favorite team signing a questionable player or a player saying something negative about their team, these industries are made up by for-profit businesses which must show a return on investment or they will vanish faster than they got here. Don't be fooled by the smoke screens!!!

Is Comcast going to buy Yahoo?

A good deal has been written about Brian Roberts, CEO Comcast, announcement that 160mbps connections are just around the corner. The problem is the internet was built on best effort relationships and is nothing more than a bunch of networks connected together with no quality control on where or how these various networks interconnect. Without some standard for interconnections it is impossible for Comcast to guarantee any performance of packets once they leave the Comcast network. The network is as strong as it's weakest link so even though you may have the ability to get 160mbps, chances are you won't if the origin of your requested content is not physically in/on your AS.

IMHO this is more about setting the stage for a new approach to the comcast network than bandwidth to the internet in general. It is in Comcast's best interest to get as much capacity on their own network as possible because it gives them a huge advantage over the likes of Google, MSFT, YHOO, Fox, etc when it comes to QoS on specific applications. Besides, there is no possible way this could scale out to the internet and that is on purpose....meaning comcast will never be able to guarantee 160mbps anywhere but on their own network. These ever evolving broadband local networks with some overlay backbone connecting them together is the ideal situation for p2p distribution. At the end of the day, comcast wants to keep those packets on it's network as long as possible because then and only then do they maintain 100% control. In doing so they have leverage with the customers who are mainly home users. Service for the enterprise is not far behind nor hard to accomplish...a simple dedicated line between the enterprise and comcast's network and the enterprise is connected. Or better yet, the enterprise could outsource their IT services such as email, CRM, storage, collaboration, voice, video conf. etc. to Comcast and be guaranteed XX Mbps throughput from an employees homes to the corporate environment. Given all of the local and federal incentives for going green which will trickle down to driving companies to promote telecommuting even more than they are now, this is actually a valuable service to be able to offer. Add video conferencing, voip, VOD, etc on top of it and they'll have a network that offers an enterprise customer the most efficient way to address all of their voice/IP/IT requirements. In doing so it also de-stresses comcast's reliance on upstream links by using them less(assuming p2p is in place) and relying more and more on peering. Comcast was one of the early peering sluts so to speak, when other MSOs thought peering was what you did when you teamed up with your second grade classmate to do a bookreport, Comcast was signing network peering deals with anyone who sends a fair amount of traffic to them or vice versa.

I have mentioned Surewest previously and they are currently offering fiber to the home in Sacramento. For customers where this is available, everything (voice, HDTV, IP, VOD, catv, etc) are delivered over IP. It may seem cutting edge and far too complicated for a dumb old cable company to accomplish but comcast is no TCI even if they are saddled with some of the TCI infrastructure, Brian Roberts gets it and embraced it long ago. If that isn't enough, IP really is proving the most efficient delivery medium available. @home was developing products and applications around these virtues and Comcast has merely expanded on that vision.

IMHO, so take it for what its worth, Comcast and Google are the two powerhouses today. Comcast should buy Yahoo or better yet, pull a trifecta Comcast/MSFT/YHOO combo. That would be the google killer. Why bring in MSFT? They have lots of cash, a great revenue stream, lifelong customers and can turn office apps into a hosted infrastructure which yhoo no comcast have done. All of these services may even be free to the end user because they'll all be subsidized by advertising. After all, it is advertising that drives goog's revs and it will be advertising or subscription fees(I view them as the same as they should be mutually exclusive) that surpass licensing revenue of software vendors. Remember, advertisers are fickle and will spend their dollars where they think they are going to get the best return. As such, when a comcast user needs to access google servers, it is comcast who controls how well that user gets that packet back and it isn't necessarily in their best interest to make it smooth and seemless. Think about it, causing poor user experiences with google is one way to discourage ad spend with google. One piece at a time and sooner or later it all adds up to a significant threat to google's so called "unfair advantage"