Google, Facebook, Microsoft follow Ford's vertical integration path

9 July 2016 by Steve Blum
, , ,

Another big, transpacific fiber cable is now lit. Less than two years after it was announced, the FASTER consortium has completed construction of a link between Bandon, Oregon and two landing sites in Japan, with a further extension to Taiwan. The group’s membership includes Google as well as several Asian telecoms companies, including China Mobile International, China Telecom Global, Global Transit, KDDI and Singtel. NEC built it.

Google is taking one-sixth of the capacity, 10 terabits per second out of a total of 60 Tbps.

Ten terabits per second is a lot of bandwidth, but it’s consistent with Google’s current consumption. Companies with major web platforms are investing in transoceanic cables, as well as domestic middle fiber capacity, because their internal data transport needs are on the same scale as the big, common carrier telecoms players. Facebook, Microsoft and Telefonica are investors in the planned Marea cable between Spain and Virginia, which will have nearly three times the capacity of the FASTER link. Construction on that project is expected to begin in August.

The distinction between a web platform and a traditional telecoms company is becoming increasingly irrelevant – when you send a message via Gmail or respond to a Facebook post from the other side of the world, it’s transported primarily on internal networks.

It’s simple vertical integration. When a company’s needs scale up to a certain point, it makes economic sense to own a resource rather than buy it. It’s no different than car companies, like Ford, that jumped into the steel business a hundred years ago.