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Google - this internet won't scale

And can't pay its way

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Google's TV chief has admitted the internet is crap for TV. Speaking to the Cable Europe Congress in Amsterdam, Vincent Dureau told attendees:

"The web infrastructure, and even Google's [infrastructure]...doesn't scale. It's not going to offer the quality of service that consumers expect."

Dureau, is head of TV technology at the ad giant. He candidly admitted that his own YouTube video service was part of the problem.

Engineers point to two different problems with today's internet. The bandwidth is too low, but more acutely, latency and "jitter" mean the quality of the viewing experience is severely compromised. If an email program, or even one of Google's YouTube's Flash-based movies is forced to wait for a second, no one notices. But if a movie keeps hiccuping, no one will use the service again.

Adding to the dilemma is the question of who will invest to fix these problems - and who will end up paying for that investment?

Deloitte and Touche's recently-published Telecoms Predictions report for 2007 contains a gloomy prediction that escaped almost everyone's attention. Deloitte's authors touch on the economics of the "net neutrality" debate, with respect to investment, advising partisans to calm down.

"Clearly, something has to change in the economics of internet access, such that network operators and ISPs can continue to invest in new infrastructure and maintain service quality, and consumers can continue to enjoy the internet as they know it today."

That caught the attention of pundits. The conclusion, however, didn't.

Prices are likely to have to rise, if not for the sake of preserving neutrality a the retail consumer end of the market, then for the sake of allowing telecommunications companies, ISPs, and backbone providers, greater headroom for investment in new capacity.

Precipitous downward pressure on backbone interconnect prices, paid by internet companies, ISPs and telecommunications firms, has left IP backbone providers with little incentive to light existing and new fiber.

The net neutrality debate will likely be overshadowed by a more critical debate about the long-term viability of the internet as a whole [our emphasis]. All involved may have to revisit pricing policies, including those facing retail customers, in order to ensure that the internet as we know it today continues to flourish.

So the internet, that great destroyer of businesses, may itself face a Darwinian extinction - because it can't generate enough business to ensure its own survival. ®

Related Link

Deloitte & Touch Telecoms Predictions 2007[PDF]

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