Good observation, especially with MCI’s acquisition by Verizon, one of the key USPs was revenues from trunks and bandwidth, which definitely appears to be diminishing as you point out. Another thing is web servers, there was a time when most of the web server hostings were based out of the US, even Indian sites as a matter of fact, but that is diminishing as well. I think the thought seems reasonable especially with Asian economies being the booming broadband markets of the near future.

In today’s IT Blogwatch, we look at the various Web 2.0 contenders vying to be your browser’s homepage. Not to mention some smart stuff to consider as stocking fillers…
Do smarter tools mean smarter homepages? Stephen Bryant thinks so: "seven …

Asian ISPs originally sent all their traffic to the US because of two major points:

* Most of the Content was there originally

* The US was the most “neutral” and advanced country at the time

There was a long period where there was no peering within even the same country. So for instance if you were on one Singporian ISP as a customer and wanted to send email to another Singaporian on the other Singaporian ISP, the mail had to go all the way to the US and back.

But as many of these Asian countries have dramatically outpaced the US in both backbone and local access bandwidth and developed their own local content, and developed some peering. Traffic has stayed more within each country.

Now the trend that Om points out, they are bypassing the US as the way to route traffic between countries.

And here back in the US, we have become what the Asian Countries use to be: Bandwidth completely controlled by monopolies, cronyism between the monopolies and the people running the regulatory environment. All of which has stopped innovation in its tracks and the US is now 16 – 27th in the world in terms of broadband.

The US is becoming the Morro Bay of the world….

Da Mayor (ex San Francisco mayor) Willie Brown told this story at newspaper legend Herb Caen’s funeral:

Herb was covering the opening of a new train station in some small town way to the south of San Francisco and San Jose. Morro Bay perhaps. Herb interviewed one of the local residents and asked him, “Are you excited about all the people and business that will be coming into town?”

The local resident turned to Herb Caen and said, “Excited? Sure. I’m going to use this new train station to get the hell out of here.”

Now, don’t read too much into this, except sometimes, the benefits of new technology are exactly the opposite of what you might think.

Andy Kessler

If anything, I think broadband would be a lagging indicator. Asian intra-regional trade already accounts for 50.3% of the region’s total merchandise exports (Source: wto.org).

“And from that perspective, things could be shifting away from the US being the hub of global trade.”

US exports as a share of total world exports, dropped from 12.7% in 1993 to 9.2% in 2004 – that’s over a 25% fall in a little over a decade. From this perspective, the US was declining as a “hub of global trade” as its dominance of broadband thouroughfares was being erected.

Amazingly, during the same time period, US imports as a share of total world imports rose(!) from 16.0% to 16.5%.

I think most mainstream economists would agree that this disparity – the result of massive borrowing, both consumer and government – is not sustainable. This would lead to a decline in the US share of world imports, and hasten its already declining share of world exports.

Without making an essay out of this comment, broadband statistacs as an indicator of world trade and economic activity would seem to be more reflective of the 1950’s. And now the indicator is simply catching up with trends that have been well underway and apparent for quite a while now in other fields, and that have been masked somewhat by US borrowing.

In any event, it will be interesting to see the results of the inaugural East Asian Summit taking place in Kuala Lumpur this week, where Indian PM Manmohan Singh has called for the creation of a pan-Asian free trade zone that would serve as an analogue to the EU in some respects.

I suspect, as the above commenter states, that revenues from this aren’t a huge portion of their top-line, though I’ll have to check. Still, it’s symbolic the the major transit routes still flow through the U.S., even though it appears to be circuitous and uneconomical.

As I stated, on my blog, I think there are interesting parallels between this, and international finance networks. Money made overseas, still flows through NYC as foreign producers like to park their money in relatively stable dollars. But, as we’ve seen this year especially, the NYC banks take a huge cut of that cash, and, like the broadband map, it doesn’t seem particularly economical to go this way.

Ultimately, this doesn’t look zero-sum to me. There may be some pain for the incumbent telco’s, but a more connected world should benefit everyone. And while shareholders in AT&T, sorry at&t, might not like a price war, I think most businesses would be quite happy to see another one.

That centralisation has, and continues, to decline.

There is a regionalisation of content; driven by local internet brands, the demand for native language content (some of which is stimulated by governemt policy; Italy, Spain, China, Korea, Japan), the global/US brands (Google, Microsoft, Yahoo) have distributed their servers (as volume served has increased) in order to improve survivability and reduce the latencies to end users.

That demand is also stimulated by global population migration. Either economicly driven migration or refugee migration. The UN have a great deal of detail on what populations are moving and where – they also mirror the changes of traffic on the Internet.

Overlaying that are the differentials in economic growth (as you mention). Eastern Europe, Latin America and some Asian countries have some of the fastest growing economies (and fastest growing broadband deployments) and so traffic to and from them is growing faster than on some more established routes like in and out of the US. And yes, I think that economic strength and economic ties are proxies for Internet traffic.

In summary Intra Asia and Intra European traffic is growing faster than traffic into and out of the US. There is a dispersion of traffic that within the next five years will see the US as the smallest of those regions in terms of total traffic – although not by much.

Having said all that there will continue to be substantial growth in all regions and all routes. This is an equalisation of traffic, not a gain in one region and a decline in another – no one will end up with empty pipes. The far bigger problem still, for all carriers, will be how to carry all the traffic.