20 September 2005

Google WiFi service?

There have been a few stories around lately about Google's entry into computer networking, starting with a report in Business 2.0 in addition to this Reuters article from today. The Business 2.0 article claims that Google could save money by avoiding transit fees it incurs from interconnecting with Internet backbone providers.

I am doubtful about this claim, because backbone providers are willing to peer with others only when traffic flow is symmetric. Going to a separate network, as these articles suggest, would enable Google to bypass backbone providers entirely for at least a portion of thie search. Is this a reasonable strategy? Is this a way for Google to leverage network economics to its advantage? Would Google be able to offer new services? Is this effectively a replay of the Western Union/AP deal of the 1860s?

5 comments:

Martin Weiss said...

Here is another article about Google's possible wireless plans (free subscription required).

KuangChiu Huang said...

Free WiFi hotspot could be Google’s anemoscope to figure out the volume and the symmetrization of traffic from the free Internet. If the traffic could alleviate its nature of asymmetric traffic significantly, Google can decide to become a bigger ISP and have some bargain power with backbone ISPs (AT&T) for better terms. The imaginable strategies for Google might be mentioned as here below.

1. Purchases of unused, high-capacity fiber-optic network connections by bargain price for its website and the preparation to be an ISP.
2. Bluffs backbone ISPs that it will enter the market and proceed with a fierce price competition.
3.Negotiates with backbone ISPs and forces them to make some compromises with Google on preferable rates.

However, I suspect whether Google can take Western Union/API in telegraph service as a strategy template. Western Union was the dominate telegraph service provider with monopolistic power at that time but backbone ISPs in the US is an oligopoly market. The impact of new entrant and price competition for an oligopoly market is not as severe as monopoly market and much difficult to bulldoze them on preferable rates.

Martin Weiss said...

I don't believe that Google would use AP/WU as a template. However, it looks like it has the same kind of content/carrier parallels that AP/WU had. What is different this time? What is the same? What policy interventions (if any) are needed?

Martin Weiss said...

Om Malik reports that GoogleNet is expanding rapidly. Clearly, this was well in process before the press began reporting this.

Martin Weiss said...

There's more ... Look at Kevin Werbach's thoughts on GoogleNet. His concerns are focussed more on a structural shift in the Internet. He will undoubtedly have more to say about this in future.