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The beginning of the end for the role of operators as we know them?

July 31, 2012

This is a recent article on the deployment of fiber access networks by Google in Kansas City:

http://gigaom.com/2012/07/26/the-economics-of-google-fiber-and-what-it-means-for-u-s-broadband/

I believe this means much more than broadband access.. it could be the beginning of a new evolutionary process in the data communications networks, where the service providers start building their own network, then they will interconnect it among them.. and hops.. this reminds me of something.. I believe that is how the Internet was born.

Is this the real beginning of Internet 2.0?

You might think a network is just a network, it only carries bits around, so if current network operators are not profitable, what advantage can a service operator like Google get from building their own access network?

Network providers don’t have much cash to spare and don’t make much money from evolving their access network to fibre, while sustaining all the risk. So their incentive on access network investment is low.

On the other side service providers are those with the cash, and their future revenue is dependent on building new applications that will hugely benefit from a fast access network.

But, back to Google.. there is more to it I thinks, besides the above speculation about who benefits from a faster access. They do it the Google way.

They use more off-the-shelf components, they seem to have highly optimized processes already (the thing that tends to drive up the cost for operators). They even change the typical business models, where they convince the users to commit to the product even before they start the roll out! It seems they are capable of bringing about the kind of innovation that is required for a proper fibre roll out.

There has been a lot of talking about how operators are considering to start and sell content, because their are not making any money… but maybe it will go the other way around, where the content providers will start building the network, then they will interconnect it among them, and they will build the real Internet 2.0.

This would be a huge change in the network ownership model…

I suppose if we had to look at the negative side of it, we could see that with more than one service provider, the market segmentation would increase. Leaving aside the economical debate, this could bring technology segmentation, where different providers might use different technologies which might not be interoperable, if not at the IP layer. In addition, without a proper regulation, there won’t be a proper national rollout plan, so it might only cover patches of “wealthier” population, exacerbating the digital divide.

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