Google's fiber-optic plans spur new phone talk

According to Australian tech trade Communications Day, Google may be planning to fund a new trans-Pacific fiber-optic cable, part of its growing in-house telecom network. (A Google rep neither confirmed nor denied the plans.) Why would Google want to lay cable on the ocean floor? Google already owns a considerable fiber network, used for in-house needs at present. But its telecom activities, which now include bidding on wireless spectrum in the United States, arouse suspicions that it might be getting into the phone business. Nonsense.

Google would like people to think it's getting in the phone business. The mere prospect of Google as a competitor causes panic among entrenched phone and broadband providers like AT&T and Verizon, and accomplishes two important goals: One, it helps persuade those companies to bend to Google's public-policy whims, like "network neutrality." And two, it lets Google's sharky telecom purchasers negotiate better terms when they do buy fiber-optic capacity. (Serving up those YouTube videos does chew up a lot of bandwidth, after all.) By owning some of its own fiber, Google knows how much it really costs to run a network — and how to lowball its suppliers.