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December 5, 2007

Google owns tons of wires, what does that mean for wireless?

Posted by Tricia Duryee at 8:57 AM

I've been waiting to read something about Google's fiber and wired infrastructure strategy, and today Om Malik wrote a very informative piece on his blog.

Since I don't cover Google on a regular basis, and have only been paying close attention to the company since it started making moves in wireless, I was unclear how it was truly operating behind the scenes.

Separately, I had heard that it was buying up unused fiber around the country, but I didn't know what it was for, or how much it was buying.

Malik addressed both of these questions. The blog post discusses how Google's infrastructure is its strategic advantage -- Google must deliver search results to its customers as fast as possible, and to do that, it needs to own fiber, servers, optical switches, etc.

He wrote:

"The faster the results show up on our browsers, the less inclined we'll be to switch to a rival search engine, no matter how great the rival's search methodology may be. The faster (and more efficient) its infrastructure, the more easily Google can keep serving the ad-based money machine."

He also wrote that Google is rumored to be a big buyer of dark fiber -- to connect its data centers -- which could help explain why the company spent nearly $3.8 billion in the past seven quarters on capital expenditures.

So I want to bring this discussion back around to telecom, and ask the question: if owning infrastructure is what makes Google so good on the PC, then how could it dominate in the wireless industry? Does it take owning a wireless network to enable it to be better and faster? Is that why it is so interested in building mobile operating systems and participating in the spectrum auction?

One thing to note is that wireless networks often are used to send information when it is difficult or too expensive to lay down wire. Perhaps Google's interest in the wireless industry is also to support its wired infrastructure.

Or will the next information war take place on the wireless handsets? And, will Google need to own spectrum and wireless infrastructure in order to ensure the speed of its service?

I'm not sure what the answers are, but I think understanding its wired strategy provides a good start.

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Tricia Duryee
Tricia Duryee
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