Growing tech firm influence threatens telcos' control of internet backbone
21 January 2014 | Kavit Majithia
The threat posed by Google and Facebook in taking control of the world's internet backbone came to the fore last month, after it was revealed that the companies have significantly ramped up investment in telecoms infrastructure over the past year.
The two companies – which between them generate a significant percentage of the world's online content – have been active in funding new submarine and underground cables, in addition to striking agreements to lease dark fibre. There are now concerns in the telecoms sector that operators will lose control of the underlying infrastructure that delivers content on networks, as the ambitious technology companies begin to secure a bigger share of the market.
Reports revealed that Google in particular is aggressively seeking to acquire contracts for bandwidth, and the internet giant is prewriting agreements for these services when it does any business with telecoms companies.
Google now controls a network of over 100,000 route miles around the world, according to a source, a network significantly larger than US operator Sprint's system, which reportedly covers less than 40,000 miles.
Telcos are said to be concerned over the growth in power the technology companies are experiencing, and are reluctant in passing over control of these networks, which generate their largest sources of revenue.
There is a deeper concern that relinquishing control over these networks will mean telecoms companies will be further marginalised, with the industry already coming to terms with the idea of operating as a dumb pipe provider.
If Facebook and Google continue their expansion and influence over underlying internet backbone, analysts warn that operators will be regulated further down the value chain, and could potentially serve as simple manufacturers of hardware.
There are a select few operators that have struck deals with both companies, including Swedish carrier TeliaSonera, which runs Facebook's European network. Facebook has in turn made significant strides in the country, and opened a data centre on the edge of the Arctic Circle in Sweden, in addition to serving traffic on dark fibre cables in the continent.
Erik Hallberg, president at TeliaSonera International Carrier, concedes that "the rules are changing". Google in particular has targeted infrastructure development across Asia, starting as early as 2008, after signing an agreement with an investment firm to build a $300 million cable between California and Japan.
It also struck a deal on a 6,000 mile cable linking six Asian countries, which launched in June. The Wall Street Journal also revealed that Google has secured agreements to take control of private fibre routes that link its data centres to 12 large internet hubs in the US.