Google could be your next ISP

Internet behemoth Google now boasts a network that's bigger than all but two of the world's internet providers (ISPs) and telcos fear the search giant is just one step away from becoming an ISP itself.

Network measurement expert Arbor Networks this week released a new report claiming that if Google were an ISP, it would be the fastest growing carrier in the world and the third largest globally.

"Based on anonymous data from 110 ISPs around the world, we estimate Google contributes somewhere between 6-10 per cent of all internet traffic globally as of the of summer of 2009," Arbor's chief scientist Craig Labovitz wrote.

Instead of relying on third parties to deliver its services, the search giant has spent billions over the last several years building data centres spanning millions of square feet all over the world.

Its equipment is in place at more than 60 public exchanges and, according to Labovitz, over the last year the company has deployed its Google Global Cache servers in more than half of all large consumer networks in North America and Europe.

Google has effectively cut out the middleman and now more than half of its traffic is sent directly from its servers to the world's consumer ISPs, Arbor revealed. Next, it could cut out the ISPs as well by offering internet plans itself.

With a wealth of infrastructure already in place, Google recently announced it was taking the next step by building an experimental fibre-to-the-home network in parts of the US servicing initially between 50,000 and 500,000 homes.

Google plans to connect these homes to the internet at blistering speeds of 1Gbps. By comparison, the upcoming National Broadband Network in Australia is predicted to offer about 100Mbps.

"I think Google is gearing up to be potentially quite a formidable competitor to existing telcos and ISPs given their moves into the infrastructure level," said Warren Chaisatien, research director and principal analyst at Telsyte.

Indeed, at the recent Mobile World Congress in Barcelona, Google CEO Eric Schmidt was heckled by telco representatives in the audience who feared that Google was increasingly competing with them.

Not only on the infrastructure level, but also by selling its mobile phone, the Nexus One, directly to consumers online, and by releasing apps such as Google Voice, which allows users to bypass the networks to make voice calls.

Schmidt stressed the Google was purely experimenting in an effort to see what was required to bring networks up to 1Gbps, which could pave the way for more exciting applications and convince telcos to upgrade their networks.

Analysts aren't buying it. "I think what we are seeing today is that Google is conquering the world, starting from online content but now they are building infrastructure," said Chaisatien.

Chaisatien believe in the next 5-10 years the ISP, telecoms and utilities industries will merge to form "smart grids". He said this is "one of the key arenas that Google intends to play very strongly in".

Steve Dalby, chief regulatory officer with Australian ISP iiNet, said the ISP saw Google as a significant player in the online world but did not fear it any more than other potential competitors.

Peter Coroneos, chief executive of Australia's Internet Industry Association, which counts both Google and the ISPs as members, said increasing competition between Google and telcos would only provide better outcomes for consumers.

He pointed to the rollout of cable networks in the US, which unlike in Australia are not controlled by existing telco players, but by companies traditionally in the television space. The end result is consumers get more choice and cheaper access to the internet.

"What we're witnessing is technological convergence, and in the long-term people are going to be getting their internet access from many different sources," said Coroneous.

"Change is necessarily painful but the successful well-managed companies will always adapt, and that's why in the face of the cable threat in the US the telcos are still profitable companies."

Google's push into infrastructure will inevitably add to fears surrounding its overwhelming corporate power, and increase regulatory heat on the company. But Coroneos pointed out that Facebook this week overtook Google as the most trafficked site in the US, showing that dominance can never be assured.

"Competition is important and we have very strong laws in Australia to prevent abuse of market power ... so you would expect our competition laws to keep it in check," he said.

- © Fairfax NZ News