Google Net - All things considered, a cheap means to an end

So they're taking it one step further than I thought and are taking the fiber all the way to the home.

-Makes sense as they'll have zero dependence on any CLEC, RBOC, MSO or local transport layer. They'll own the traffic from the starting point to the end.

-This gives incredible scale and opens tons of opportunity to exploit mindshare to drive more revenue.

-Google building this network is kinda like the equivalent of the inverse of the Comcast purchase of NBC. Instead of NBC paying Comcast fees to carry it's traffic, NBC now has a free ride to the TV sets of Comcast subscribers. Similarly with GNet, Google now has a free ride to GNet users/subscribers/testers and bypasses paying transit and transport fees to telcos, etc.

The big question is how does this fit into their network neutrality stance. Will google let other transit providers (aka ISPs) ride this last mile to the house?

Why should they when they are the ones spending the money to lay the fiber?

My gut tells me that the answer is yes but there will be a cost. That cost could be in the form of monetary compensation from the ISP to google or that cost could be that Google gets visibility into the usage of the ISPs customers. That visibility and the historical data resulting from it is likely far more valuable to Google than the revenue they could generate by selling the last mile to alternative ISPs.

Envisioning this one step further, by connecting their network to all private networks run by telcos, isps, msos, ilecs etc, Google can become the arbitrator/clearing house of peering (traffic exchange) between consumers and traditional network operators. Creating a true, on demand, utility based connectivity model. Like a cloud for network service. Like bringing BGP to the masses by enabling it at the core instead of the edge.

Can they have their cake and eat it too? Time will tell.

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!!!

Next up: GoogleNET

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 them can be classified as marketing or a means to an end. The end being, selling advertising.

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 solution 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.

The internet hasn't changed anything. 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.

Peering at the edge and the role of the P2P

Here are some reasons why I am leaning that way:

1. Ubiquity in access and Choice. Everyone, everwhere on the planet and perhaps elsewhere will eventually have the ability to choose who their isp is and how they connect to their isp. ISP is defined as a company who sells transit. How they connect is defined as the last mile and example are hfc(cable), fiber, copper(DSL), wireless(wifi, wimax, satellite, whatever)

2. Networks are only as good as the networks they connect to. The whole point of p2p was to improve performance and save costs, at least that is my impression of how p2p's position themselves commercially. p2p technology works best when the 'sharing' happens locally, as in the same town, region, neighborhood because the data doesn't have to encounter so many hops along its way from one peer to the next.

3. Last mile service providers don't connect with one another. This is stupid on their part! Example: I'm on comcast and my neighbor uses pacbell dsl. I just downloaded the maverics surfing competition video which i got by seeing it in my koniki client. I watch it and move on but it is still on my computer and kontiki is still running in share mode. My next door neighbor fires up his kontiki client and he too sees the link for the surf comp and clicks it. Does my neighbor get that file that is sitting on my machine or does he get it from some other location on the net? That depends on different factors but chances are it isn't coming from my pc. Stupid because this isn't efficient and when services aren't efficient they will be driven to the ground sooner rather than later. It wouldn't be efficient for my neighbor to get to my pc vs some other node on his isp's upstream provider(for example sake pac bell, sbc and att and all separate companies) even though he can see my pc from his home office window because in order to do so it is going to cost pac bell money, it is going to cost comcast money, and it is going to cost the surfin website company money and its going to take a shit load longer and have no QoS. That little request for the video i just watched, should it have to come from my pc to my neighbors, would have the itinerary below:

neighbors pc to pac bell Central office to pac bell regional hub to upstream provider to some public peering switch to Level3(comcast upstream provider) to Comcast regional datacenter to headend to neighborhood node and finally down to my pc. and then head back(next door to me) in some similar fashion....I think there is another hop between the node and headend too so it's even longer has more potential points of failure.

For this reason, it would make sense to move the peering to the edge and the p2p networks are a potentially more efficient way to peer than what is currently done. This could take place in or at the CO level or Headend level by merely interconnecting the two and running bgp or some other protocol that accomplishes the same thing. In this example, it would save comcast money that they pay to L3 for their upstream connectivity, it would save PacBell money that they pay to uunet for upstream, it would save the peering provider money because the router would consume less power and generate less heat and not be taxed by the demand of the reques. ie, it's more efficient. The old school telco boys with their closed networks and fear of new techonologies and competition are slowly but surely retiring and moving on because they've been at it for 30+ years and they have better things to do like play golf and play golf again. Backfilling for them are leaders from the IP generation and their mindset is more progressive, they understand the layer one is always going to be layer one and that it is a commodity. As such, they aren't as concerned with keeping it closed at the local level as their predecessors once were. They see the value and understand the threat of not opening it up. Its better to get something than go out of business right? They're keenly aware that their incumbant status could be a liability on several fronts including net neutrality supporters stirring up the pot and filing lawsuits, new technologies emerging which are more efficient and have low barriers to market entry and they still owe a shit load of money to pay back the banks for paying for all that fiber so they wise up and collectively develop a plan to have some arbitrator transfer packets amongst themselves. The arbitrator has to be a neutral third party to avoid any conflicts of interest between the networks and has to have deep reach into the networks users hardware and obviously know what they are doing from a technical perspective.

A couple p2p providers, specifically kontiki, are in a great position to jump on this. It's no wonder they were purchased by Verisign!