DSL Prime: Google TV

One again, google redefines the business paradigm, this time altering the telecom universe.

by Dave Burstein of DSL Prime and Future of TV [April 19, 2005]

"Another humongous Google shoe just dropped"
—Xeni Jardin, Boing Boing

A very big thing. Distributing video will now become free (if no charge) or a modest percent of sales (if charged). Really. Not just quarter screen—they suggest a minimum data rate of 750 Kbps, and welcome MPEG 4 video at 1.1 Mbps and 1.5 Mbps—pretty good full screen playback. Essentially, Googling is moving forward as though their internal cost of storage and bandwidth is approaching zero rapidly, jumping the Internet possibilities years ahead. Google doesn't think of itself as a search company any more. Yahoo and MSN can copy search techniques, so Google has looked for other advantages. Producing their own servers is part of it; building their own worldwide backbone another.

Between 5 percent and 25 percent of the sales expected by most telco video efforts just disappeared. You'll be hearing a lot as this one percolates through Wall Street and the press. The first implication for telcos is that between 5 percent and 20 percent of your planned video revenues won't develop. Jennie and I are working hard on a Future of TV issue to develop the story; your ideas welcome.

Condolences to Kevin Martin on the death of his father Richard. Martin remains strongly attached to rural North Carolina, where he grew up on a dirt road. That base, and Kevin's very strong sense of self, suggests he comes from a very nurturing home. Martin is scheduled for a major role at NAB; interviewers should be especially courteous at this hard time.

Additional breaking news in D.C. is that Earl Comstock is turning down an FCC position, with Jeremy Pelofsky at Reuters suggesting a problem with taxes for household help prevented his nomination. Comstock is smart, independent, and knowledgeable in the D.C. issues. His work for Alaska Senator Ted Stevens was reassuring to rural telcos; one of the other candidates mentioned by Pelofsky, Peter Pitsch, has written extensively on why funding for rural telcos should be cut back. That may make him anathema to rural Senators who have to approve his nomination. The rurals are quietly under life-threatening attacks, with Verizon and SBC behind "Teleconsensus," a 50 to 90 percent cutback in funding. Pitsch on the FCC is very bad news for the smaller telcos.

I'm heading to Toronto for VON Canada. I'll do a video session Tuesday afternoon and listen to others Wednesday. Please say hello to the round fellow with a beard and pass me a news tip or three.

Google wants to peer with you
Building a worldwide backbone
In a decision that is changing the future of the internet, Google has told employees to move forward on the assumption that bandwidth and server costs will rapidly approach zero. That's a revolutionary development, whose importance is being evaluated on Wall Street and in the press in several articles you'll read next week. I was working on an article that the cost of video had dropped to around twenty cents per hour or so, based on Tom Hammer's comment on what Akimbo is finding as they build their offering of a million programs.

Google builds their own servers by the tens of thousands and would probably rank as number three or number four manufacturer. To lower bandwidth costs, they are hiring for "Negotiation and purchasing of IP transit services in North America, Europe, Asia, and/or Latin America; negotiation of partnerships with Internet exchanges, regional peering providers, and paid peering arrangements with major carriers. Identification, selection, and negotiation of dark fiber contracts both in metropolitan areas and over long distances as part of development of a global backbone network."

Persistent rumors have Google jumping in to voice over IP. What I hear is they won't be just competitors with Skype and Vonage, but instead will offer a far more comprehensive set of services that include video. But that's unconfirmed.

Copyright 2005 Dave Burstein.
The DSL Prime Newsletter is reprinted with permission.

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