It was reported a few months ago that YouTube might be costing Google $US500m a year in bandwidth charges. Yet consumer devices like the Flip and iPod Nano are making it even easier to push video up to YouTube. YouTube is now serving over 1 Billion videos a day.
But today …
But the lack of a monthly bill in the mailbox doesn’t mean Google’s internet connection is free — it’s just that it has purchased unused fiber optic cable known as “dark fiber” — and uses it to carry its traffic to other networks where it “peers” or trades traffic with other ISPs. Its costs for bandwidth are then amortized across the life of its fiber and routers.
Google is becoming one of the biggest investors in international fibre and combining that with a substantial content distribution network.
All this is very behind the scenes but you can sense that the Internet is changing slowly from being dominated by traditional Telco players who solely monetize on bandwidth used to content providers that can monetize via the information and commerce opportunities contained in the transported bits.
This is interesting for a remote country such as New Zealand as we start to drive demand for competition on our international links, such as the new Tasman cable proposed by Kordia.
Small, remote countries are going to need a lot more bandwidth or risk a digital divide with other countries. But relying on traditional Telco models no longer makes sense. The economics of fibre have moved up a layer into the content space. Therefore, new cable initiatives need to be considered on these new models and no doubt in partnership with the global content providers.
The discussion needs to lift up a level.