Is Google trying to “control more of the world’s Internet backbone?” A story in the Wall Street Journal suggests that is the case, and as often is the case, it has some superficial elements of truth, but nothing Google is doing is unprecedented or unusual in the world of enterprise communications. Only the scale might be called noteworthy.
The facts are that Google does operate a very big global backbone network, for its own use, including some 100,000 route miles of optical fiber cables, bigger than Sprint’s U.S. continental network of 40,000 miles, the article notes.
But there is less here than meets the eye. Some would argue that in doing so, Google is competing with telecom capacity providers and threatening to make telcos “dumb pipes.” Neither statement, though having some superficial elements of fact, actually is as ominous as it sounds.
Large global enterprises running mission-critical data networks often find it can make financial sense to build and operate a private network, rather than buying capacity and services from telecom suppliers.
Globally, enterprises buy more than $1.7 billion in communications services annually. For a company such as Google, Amazon or Facebook, the reliance on the global network is mission critical in a new way. Under such conditions, there can be performance, not only financial reasons, to construct a private network, as it makes sense to own and operate private data centers.
By 2013, Google had invested about $23 billion in data centers, for example, and all that investment requires high-capacity backbone transport. In the third quarter of 2013 alone, for example, Google capital investment was about $2.3 billion, primarily for new data center capacity.
But when a firm relies that heavily on cloud computing, it obviously will be able to justify operating a huge private network to support the performance of the data centers.
In other cases enterprises source complete networks from third parties that construct networks from capacity supplied by different telcos.
But the point is that large global enterprises always look at the cost and value of their networks. At various times in the past, even when cloud operations were not important, enterprises have, as a trend, moved to build and operate private networks (buying wholesale from carriers).
At other times they have moved in the opposite direction and preferred to source capacity from service providers and buying retail capacity and services.
Neither trend is unusual, nor does either represent an attempt by enterprises to “control the Internet backbone” or compete with telcos. As with all other inputs, enterprises make “build versus buy” decisions.
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