Google Likely to Investment in New Trans-Pacific Cable

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Googleis looking into investing in a new, multimillion-dollar cable across the Pacific Ocean, people familiar with the matter said, a move that comes as big technology companies send an increasing amount of traffic across private networks.



The prospective investment illustrates a counterintuitive trend in telecom amid debates about equal access to the Internet: Software companies like Google and Facebook Inc., which were born on the Web, are becoming responsible for the lion's share of the growth taking place outside of it.

The shift gives the companies more control over quality and prioritization of their traffic long before it reaches consumers. The search giant would control its own portion of the new subsea cable and use it to connect data centers in Oregon and elsewhere with Japan, according to two people familiar with its plans. 

Google took a stake in a similar, $300 million cable finished in 2010. Telecom companies typically bundle several fiber optic lines into a single underwater cable and share the cost of construction, which can take more than a year.

Internet companies, banks and research organizations already use a quarter of the world's international bandwidth to send information across private networks instead of the public Internet, according to market researcher TeleGeography. Private networks account for as much as 40% of the traffic on certain corridors, like those across the Atlantic Ocean.

The closed-off networks are often used to more efficiently move around data that consumers will eventually fetch through the Internet. They give big tech companies a leg up on rivals who would have to spend millions of dollars to enjoy the same advantage.

Those investments include hundreds of thousands of servers, sprawling warehouses and miles of wires that connect them. Network investments make up as much as a fifth of those costs for Microsoft, Mr. Khalidi said, though most of that spending goes toward simply wiring up data centers internally.

Much of Google's bandwidth is reserved for its private "B4" network, which shuttles emails, YouTube videos and other traffic among about a dozen of its data centers. The network, now more than three years old, already carries more traffic than the public-facing one Google uses to send its search results and YouTube videos to the Internet, according to a white paper the company published last year.

Web companies flush with cash are filling a void left by telecom companies that aren't plowing as much money into new backbone network capacity.

"The amount that each carrier invests is not increasing at all," according to Shota Masuda, senior manager of Japanese supplier NEC Corp.'s submarine network division. "The newcomers like Google and Facebook are filling in the gap."

Much of the investment is rushing to routes that bridge North America, where many of the world's most valuable technology companies are based, and Asia, where most people on Earth live, says Howard Kidorf, a managing partner at telecom engineering firm Pioneer Consulting.

A Microsoft spokeswoman said the company is in talks to help build a cable connecting China, South Korea and Japan with the U.S. The investment would help shuttle copies of data stored by its Azure cloud-computing service, among other products.

Investing directly in underwater cables requires Internet companies to commit large amounts of cash up front, but experts say paying ahead can end up delivering long-term savings. Internet companies can pay to upgrade their own segments of Internet cable at cost rather than paying a middleman to do it at a substantial markup.

"They did the math," NEC's Mr. Masuda said.


Google Likely to Investment in New Trans-Pacific Cable


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