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Summary:

Google’s tactical admission of middle age has everyone guessing who they are going to buy next. The kookiest of them all is Level 3 Communications, since they have all that fiber and connections within connections etc etc. Wall Street is buzzing with rumors about this, based […]

Google’s tactical admission of middle age has everyone guessing who they are going to buy next. The kookiest of them all is Level 3 Communications, since they have all that fiber and connections within connections etc etc. Wall Street is buzzing with rumors about this, based on some analyst firm’s contention that the deal would make sense. Janco Partners analyst Donna Jaegers tells Denver Business Journal that it is just crazy talk. Sure Google could use all that fiber to build a big-honking GoogleNET but the deal is expensive. $6.3 billion in debt, and $6.18 billion in market capitalization. Yeah, that is too much for Google to take on. But then they bought YouTube!

  1. Like I commented in your Goobed post, “From way out in left field… might this move be confirmation that Google is building a monster network to serve all these bandwidth-hogging goodies? I can think of a few nets, say AT&T and Comcast, that will balk at giving this gorilla a free ride. Battle of the TV 2.0 titans is next.”. The problem with L3 is that it’s a wholesaler, it doesn’t own eyeballs per se and the bulk of its revenue relies on the very people that YouTube/Google pisses off, telcos & cablecos.

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  2. Perfect play Om
    Imagine the strength of Google voices offering with a carrier of level 3’s strength behind them plus with IPTV estimated figures looking strong this is a marriage made in heaven.

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  3. This is simply nutty (more nutty by far than $1.6 billion for YouTube). Why pay billions for access to fiber when you can rent it for millions?

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  4. Ok, what is The Next after Web 2.0 ?

    If Web 2.0 is syndicating, sharing and taking the internet to its elementary pieces, then the Next is applying activates between the elements of Web 2.0.

    If Content in Web 2.0 is an elementary piece, then the Next elementary piece is the relations per se, which are combined in the content, between such contents and which are linked by/via/to it.

    Imagine peers having their private “knowledge base” on each of their machines. Imagine each of the peers employs each other’s machines, but contrary to grid computing or distributed computing, they do so in short pulses and in a developed reaction, in which each of the peers forms and not only performs the tasks, while earning and ranking the trust of the others.

    If sharing in Web 2.0 is exercised by delivery of contents, then another scale of processing the information is opened up for such communities.

    For more about this concept, please visit my site.

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  5. Is GooTube building a Video ISP?…

    GigaOm picks up on the rumours about Google buying Level3. It is already clear that Video IP over PC is here to stay, but I think the next step is over the TV – (and imho it is looking less and less likely it will be over IPTV).

    In our tests of th…

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  6. google is absolutely building an isp. want proof? go to their job listings and search for “ISP”

    and the billions it will cost to do so will be mice nutts when compared to the revenue they’ll drive from each user. how much advertising can they deliver to a user over the course of a users lifetime? not sure what the number is but surely it surpasses whatever the cost is to build.

    for clarification to Josh’s comment on why buy for billions when you can rent for millions? the short answer is by owning you have the ability to scale almost infinitely by dropping DWDM gear into the network and lighting up more capacity as you need it. when you “rent” fiber it is typically done by renting a lightwave. owning the network from end to end creates opportunities only dreamed of by @home network.

    they can pull it off and create this ‘global village’ but it isn’t as simple as buying a network and being done with it. they need to have the cooperation of alot of parties and that includes vendors of theirs which have been pushed way too hard by google…ask any colo vendor if they will even do business with goog and you will likely get a two letter response. cost of power isn’t the only reason they’re building their own datacenters. remember when you used to get told to ‘treat others as you expect them to treat you’? well somewhere along the way someone forgot to explain this to google.

    having said that, i believe a bit of humble pie will go a long way and schmidt has been around long enough to understand that things change and just as there was solaris there will also be linux.

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  7. Opening Bell: 10.11.06…

    Sponsored by Bloomberg.com At Alcoa, Lower Metals Prices Curtail Increase in Earnings (WSJ) We’re on the cusp of earnings season, so it makes sense to kick things off with the company who’s ticker is AA. First, the good news. Earnings…

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  8. RE: Tom’s comment above, goog may be building a backbone but the real crux is the access networks that they’ll need to connect to to reach end-users. The folks who own those networks have already shown that they don’t want to play nice. Build or buy, that is the question.

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  9. hey, Potter. 100% agree with you about the last mile and getting those folks to agree or participate if you will. but…in mt view they have basically gone around the last mile by installing wifi which they offer at no charge. you are right about certain networks not wanting to play nice especially to google. there is also the possibility that goog thinks the networks should be paying them to access the content and svcs that they provide to the network providers end customers…ie, if goog shut down routes to comcast for instance because comcast wasn’t playing nice, the ones to suffer are the comcast subs and ultimately comcast will be forced to play nice or they’ll likely lose their subs to someone who will play nice or that in and of itself will provide even more justification for goog to duplicate the wifi initiatives they’re doing in mt view and sf. earthlink seems like a logical play too in addition to l3 and they(earthlink) have many end users customers and lease fiber from l3 so that expense would go away if everything came under the goog umbrella.

    lots of what if’s but think of larry and sergey’s long term vision and all this kinda makes sense. what industries are going to be the victim of capitalism at its finest? IMO, the three traditional media networks stand the most to lose as what google is building has the potential to be a much more efficient, targeted and trackable in realtime system for delivering advertising…

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  10. The money would be much better spent lobbying governments to build fibre to the home and blanket coverage of wifi/wimax.

    And the single most important google development should be a web browser of their own to deliver their applications. Roughly 75% of google users require a microsoft browser to access Google. And of course 95% use a microsoft operating system to access google.

    Buying Level 3 or any other carrier is as far away from a cultural and strategic fit as an oil company buying an IT system integrator.

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