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9/21/2007
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Google Shoots Down Reports Of Grand Telecom Ambitions

It is unlikely that Google wants anything to do with selling increasingly commoditized connectivity. Quite simply, it's not a very appealing business to be in at the moment.

Google appears to be in the midst of a transformation from information provider to telecommunications provider. To those predisposed to see Google marching to conquer, the company is becoming not only a source for information but the owner of the means by which that information is delivered.

The truth is rather more mundane, but let's start with the speculation.

Evidence of Google's grand ambition to conquer the world supposedly can be seen in reports that the company may bid on wireless spectrum in the U.K., in addition to reports that it's likely bid for spectrum rights in the U.S. this January.

The Guardian Unlimited published an article on Friday that states that U.K. regulatory agency Ofcom proposed on Thursday to auction off a third of the spectrum held by mobile carriers Vodafone and O2 and that Google "is understood" to be interested.

It's not clear which Google this might be since the Google based in Mountain View, Calif., says this is pure speculation. "We're not actively looking into bidding on spectrum in the U.K.," said Google spokesperson Barry Schnitt in an e-mailed statement.

Google also is reportedly investing in a new undersea fiber optic cable called Unity that's due to be laid across the Pacific Ocean by 2009. "Unity would see Google join with other carriers to build a new multi-terabit cable," Communications Day reports. "Google would get access to a fiber pair at build cost handing it a tremendous cost advantage over rivals such as MSN and Yahoo, and also potentially enabling it to peer with Asia ISPs behind their international gateways -- considerably improving the affordability of Internet services across Asia Pacific."

"Additional infrastructure for the Internet is good for users and there are a number of proposals to add a Pacific submarine cable," Schnitt said. "We're not commenting on any of these plans."

Google does have an abiding interest in bandwidth. Google's previous fiber optic cable purchases have been to connect its data centers and to "peer" with telecommunications companies. Google's peering arrangements help ensure that its traffic gets delivered in a timely manner to points where the network infrastructure can handle the load.

Google's taste for fiber to date has been mainly to keep its data moving through the pipes. "We are expanding our network to interconnect our data centers (for example, to replicate our search index to all of our data centers sites) and to provide our users with the best and fastest service by peering with Internet service providers and telecommunications companies," Schnitt said. "Our connectivity needs are global, because we have users and data centers all over the world."

As much as it might look like Google is planning for a future role as a communications service provider like AT&T or Verizon, it's unlikely that Google wants anything to do with selling increasingly commoditized connectivity. Quite simply, it's not a very appealing business to be in at the moment.

That's not to diminish the value of fiber and spectrum. As price pressure moves the information market further towards free, Google will have the ad infrastructure to make money and the network pipes to control its destiny. It will be ready to defend itself against companies with antiquated business models that want a piece of Google's action or to provide the ads those companies will almost surely need in the future to generate revenue.

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