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YouTube's Bandwidth Bill May be Zero
MrShaggy writes "Credit Suisse made headlines this summer when it estimated that YouTube was costing Google a half a billion dollars in 2009 as it streamed 75 billion videos. But a new report from Arbor Networks suggests that even though Google is approaching 10 percent of the net's traffic, it's got so much fiber optic cable it is simply trading traffic, with no payment involved, with the net's largest ISPs. 'I think Google's transit costs are close to zero,' said Craig Labovitz, the chief scientist for Arbor Networks and a longtime internet researcher. Arbor Networks, which sells network monitoring equipment used by about 70 percent of the net's ISPs, likely knows more about the net's ebbs and flows than anyone outside of the National Security Agency."
The question is, though: To whom would they be selling those gobs of bandwidth? The nature of bandwidth, overall, remains geographically fixed; you can't sell (much) of your bandwidth capacity in the united states to a company in Japan; they still need the pipes going, overall, from Point A to Customer B.
At the volumes in which they are dealing with, they don't really have a lot of customers who can conceivably use that much bandwidth. So it's definitely in their best interests to trade with them preferentially.
If the options are A) Trade to defer costs, or B) Try to sell to others and discover nobody else wants to buy a tenth of our capacity, they'll usually find that A) is a smarter business decision.
"To pass through the jungle; silence, courtesy, ferocity, as the occasion demands." -- Kamau, "Proper Passage"
This is what I am hearing:
One person says Google's bill is zero, because they run the infrastructure themselves.
Another person says Google's bill is not zero because they have to maintain the network.
It's all about perspectives: Do you count internal cost or not in the discussion. Obviously it cost "something" for the infrstructure. Is it a fixed cost internally which can be minimized and absorbed or is it an external bill which can increase significanly as the business expands.
I think the point of the article is to debunk inaccurate speculations from traders who have no technical and real commercial knowledge who may be trying to trash Google's stock for short gain. Not necessarily figure out how many Washingtons Google has to shell out.
Then again, where would be the fun of slashdot if we can't go back and forth on the chicken-and-the-edd argument...