Wednesday, February 10, 2010

Google Wants A Piece Of The ISP Market

Google wants a piece of the ISP market and could build a distribution platform that competes with cable. Or as the article speculates, it is a ploy to force cable operators to put more capital investment into their infrastructure. "Building out pipes and delivering bits is a lousy business. It's hugely capital intensive -- Verizon is spending ~$20 billion just on the first phase of its FiOS buildout -- and hugely focused on manual labor, customer service, etc. Add low margins and increased competition, and it makes no sense for Google to do this on a broad scale."

The cable platform will be replaced by IP and the financial model will be changed to take in more revenue from higher speed connections and less from cable subscription. And IP would enable more direct relationship between the content creator and consumer; the pipeline will simply follow traffic control and hopefully not turn into a toll collector.

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