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Monday, September 24, 2007

High-Speed Pacific Cable - The Race to Wire Up

Google Inc. is in early discussions to join a group looking to lay a high-speed trans-Pacific undersea cable that could potentially result in the Internet company's becoming an investor in the project, according to a person familiar with the matter.

The discussions highlight the growth of Google's infrastructure requirements as it continues an ambitious international expansion and increasingly offers data-intensive services such as online video and email, and online word processing for businesses.

The talks also come amid a resurgence of interest in laying such fiber-optic cables under the Pacific as use of the Internet and international phone service has grown quickly in Asia, making capacity tighter and often technologically outdated. An earthquake off Taiwan's coast last December that disrupted Internet service in much of China when it damaged undersea cables heightened calls for new lines to reduce risks of further disruptions. Some of the world's biggest telecom carriers -- including Verizon Communications Inc. and AT&T Inc. -- are already moving to build new trans-Pacific cables to keep up with the surging volumes of Internet and phone transmissions.

"Additional infrastructure for the Internet is good for users and there are a number of proposals to add a Pacific submarine cable," said a Google spokesman in a statement, declining to comment further. The talks were reported earlier in Australia's Communications Day. The person familiar with the matter said the discussions remained fluid.

The talks come amid longstanding speculation about Google's intentions in the telecommunications industry. Such speculation has centered on whether it plans to offer Internet or voice access broadly to consumers, such as through a U.S. wireless-spectrum license Google has said it will likely bid for next year. One person familiar with the carriers' thinking said that the potential undersea fiber-optic investment could reflect Google's recent push to provide Internet-based services such as email and word processing to businesses, since companies have lower tolerance for service interruptions and offices around the world.

Colby Synesael, an analyst at Merriman Curhan Ford & Co., said that the potential undersea cable could allow Google to have greater control over its operating costs and infrastructure needs. He said he isn't concerned that one more cable under the Pacific would create a glut of capacity. "Even if it does create a bubble today, I would argue that capacity demand would catch up in two to three years," said Mr. Synesael.

The Race to Wire Up

Google may be the ultimate do-it-yourself company. From the start, Google's sense of its own engineering superiority, combined with a tightwad sensibility, led it to build its own servers. It writes its own operating systems.
It is now threatening to buy wireless carrier spectrum and it is getting ready to hire ships that will lay a data communications cable across the Pacific, according to a report from Communications Day, an Australian trade news service.
Google would plan to be part of a project called Unity that would also include several telecommunications companies. Unity hopes to have a cable in service by 2009, the publication wrote. It would own a dedicated portion of the multi-terabit cable, giving it a significant cost advantage for trans-Pacific data transmission over rival Internet companies.
Barry Schnitt, a Google spokesman, didn't confirm the plan, but did tell the publication the company is interested in the area, saying, "Additional infrastructure for the Internet is good for users and there are a number of proposals to add a Pacific submarine cable. We're not commenting on any of these plans." Communications Day also noted that Google has advertised to hire people who would "be involved in new projects or investments in cable systems that Google may contemplate to extend or grow its backbone."
Google has long been buying up data communications capacity. Its search engine works by making copies of nearly every page of the Internet in its own data centers. That requires Google move no small amount of data around the world on a regular basis. And its new plans to deliver applications over the Internet will use even more bandwidth.
Dave Burstein, the editor of DSLPrime, who tipped me off to the CommDay report, explained even though there is a lot of unused fiber capacity across the Pacific, there are few players, and prices are seen as unusually high. He adds that there is a glut of cable-aying ships, so the cost of building a new link to Asia has come down.
This new move puts Google in competition again with Verizon, which has fought Google's approach to the new wireless spectrum auction in the United States. Verizon is part of a group of Asian carriers that is building a $500 million cable between the United States and China.

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