Om Malik takes a look at the changing map of global broadband and tries to suss out the economic significance of it:
Indian telecom powerhouse Reliance Infocomm has signed a deal with China Telecom and will establish a direct cable connection between those two countries. Now the calls will fly directly over Reliance’s FLAG Telecom cables that will connect to China Telecom network in Hong Kong. When compared to meaty issues (such as Feedburner’s two-way RSS,) it doesn’t seem like a big deal, but it could have longer term implications on the bandwidth business.
Why? For starters the calls between the two countries that till recently were routed through Europe/US, will no longer need to travel half way across the planet. This means reduced role for major US carriers like Level 3, MCI and AT&T (currently the world’s largest ISP.) It is a trend that is gathering momentum, and slowly and slowly the network traffic that almost always used to flow through US is becoming more and more regional. Through most of the 1990s it was cheaper to connect the European Union countries through US, but then small regional networks started to siphon off traffic.
This is fascinating, I had no idea that data still followed such a circuitous route, and it would be interesting to figure out how much revenue these telco's collect in toll-money, and how much they stand to lose, as the broadband infrastructure gets built internationally.
The map on the left shows major broadband pipes, with capacity measured by fatness. Still the main arteries are between the U.S. and Western Europe, while the rest of the world's pipes resemble mere veings or capillaries.
(I remember years ago seeing a National Geographic article about barges going over the Atlantic laying fibre-optic cable...it would appear that companies stupidly, and shortsightedly ignored trans-Pacific routes, which are clearly less fat on the map)
As an analogy, I'd compare this to international money flow. Today the U.S. is still the world's largest network hub, and the dollar is still the world's so-called reserve currency. The major New York banks still collect huge rents because they're the dollar dealers, with everything from Mid-East Petrodollars, and East-Asian Electro-dollars (coined that!) flowing through back their coffers. However, much of that business may be a vestige from a time when the financial infrastructure wasn't so well developed globally, and foreign economies were more prone to collapse (this was not too long ago, of course). Most U.S. economists (and NYC bankers) fear a day when global money needn't flow back through U.S. dollars for whatever reason.
Fortunately, perhaps, our big telecom players aren't the captains of industry they once were, and the economy stands to suffer less as they lose their pre-eminent global status. Undoubtedly, as Asia continues become a more and more important economic zone, those pipes will get fatter and fatter and a more even distribution of bandwidth is probably a good thing for everyone.
Comments