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Bill Bennett

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Here’s why Facebook and Google are building submarine cables

Facebook and Google plan to build two new submarine cables connecting Asia to North America.

The Echo cable is due to be in operation by 2023. It links Indonesia to the US and will take a new route through the Java Sea. Bifrost should switch on a year later. It runs between America and Singapore. Both have stations on Guam.

The cables replace three earlier planned projects that ran to Asia via Hong Kong. With China cracking down, there are US concerns about spying on cable traffic through Hong Kong.

Capacity increase

Facebook vice president of network investments, Kevin Salvadori says the new cables will increase trans-Pacific capacity by 70 percent. It’s not clear what other cables Salvadori is counting here.

There are other projects. Facebook’s 37,000km 2Africa cable connects 23 countries in Africa, the Middle East and Europe.

When complete is will be the longest submarine cable yet built.

In the past submarine cables have been built by consortia of carriers or outfits like New Zealand-based Hawaiki. Spark, Telstra, Singtel and Verizon own the Southern Cross Cable network.

Private submarine cables

Now Facebook, Google and to a lesser extent Microsoft and Amazon are the biggest builders of submarine cables these days. That’s private submarine cables.

Google has a stake in more than 100,000km of submarine cable. That’s around 8.5 percent of the world’s cable. The company owns almost 17,000km of cable.

Last month it announced its 250Tbps Dunant link across the Atlantic is ready for service.

Facebook is not far behind with around 92,000km of cable. Amazon has 30,000km, Microsoft has 6,600km.

The tech giants own substantial stakes in cables operated by carriers and companies like Hawaiki. They are important customers on other cables.

In 2018 a report at the Motley Fool investment site says:

“Google already has the world’s largest privately owned fibre optic network, which currently handles a massive 25 percent of the world’s internet traffic for its search and YouTube offerings, according to the VP of engineering for Google’s cloud business, Ben Treynor.”

Needs, control

One reason they build private cables or take large stakes in consortia is the networks built for carriers don’t always meet their needs. At the same time they prefer to have control over where a cable goes and how it is run.

It makes sense because they are the biggest customers of submarine cable services. And they have the resources to finance the projects.

Submarine cables need a lot of finance.

Hundreds of millions

For perspective, the 15,000km Hawaiki cable cost in the region of US$300 million. The investment is not considered risky if there’s a proven demand, but banks and other traditional sources are rarely involved.

Hawaiki got over the line when founder Remi Galasso involved entrepreneurs like Malcolm Dick, Eion Edgar and Greg Tomlinson.

Big tech firms need submarine capacity for cloud computing and their content operations. With Amazon and Microsoft, the AWS and Azure cloud services are the main users.

Google is playing catch-up in cloud services. It is spending more than its rivals at the moment as it builds capacity.  Google also has a substantial content business including YouTube. For Facebook the content business is the main driver.

Datacentre traffic

All four tech giants are forever moving vast amounts of data between their data centres.

Alan Mauldin at TeleGeography writes:

“The growth in the amount of capacity deployed by content providers like Google, Facebook, and Microsoft has outstripped that of all other customers of international bandwidth in recent years. Content providers experience high volumes of demand between their proprietary data centres.

The requirements for inter-data centre demand vary by company but are related to database mirroring, search index synchronisation, and cloud computing services and applications.”

In simple language, data such as photos, videos and documents stored on Facebook by one country, say, New Zealand, is backed up elsewhere a few times every day.

Bigger markets

Another reason, tech giants invest in submarine cables is that many countries with large populations have poor connections to rest of the the world.

By giving them better access to the internet and, perhaps, cutting costs, it grows the potential market for Google search or Facebook accounts. More users means more revenue.

One oddity. Google and Facebook don’t sell capacity on their cables. If they did, that would make them telecommunications carriers. Telecommunications companies need licences to operate and are regulated.

In the case of Facebook, that might mean the company would have to take legal responsibility for the content it distributes. Facebook spends a lot of money with lobbyists to make sure this doesn’t happen.

What about streaming companies like Netflix?

You might think that streaming giants like Netflix, Disney or Amazon Prime would take an interest in submarine cables. After all, they distribute large amounts of streaming video data around the world.

They do, but they distribute in a different way. Google, YouTube and Facebook use a lot of dynamic data. People interact with it and it changes all the time.

Streaming companies sell large libraries of movies and TV shows. These are sent to the various countries where they are stored on local servers call Content Delivery Networks or CDNs1.

This is a form of edge computing. That is, the important action all happens close to the point where it is used. This speeds everything up.

When you select a show on Netflix, it is served locally, either from your city or one nearby.

While the Netflix or Disney library looks large from a user point of view, it’s small compared with the huge stores of content used by the other tech companies.

In round numbers there’s about as much data as you would find on 200 or so laptop hard drives.

Even if everything was updated daily — it isn’t — this wouldn’t use a large slice of a submarine cable’s capacity.

Is there a negative angle to this?

Probably not. If there is any downside for users, it would be at the margins.

Let’s say you are contemplating a new submarine cable between two cities. When that happens, the owner looks for customers before it lays any cable. It knows so much capacity can be sold to X and this much to Y. At some point there is enough potential business to give the project a green light.

Five years ago, tech giants like Google and Facebook would be on the customer list. They might be the difference between the project getting over the line, or not. A private link between the two point owned by one of these companies could change the viability.

Perhaps. It’s not something to worry about.


      1. In case you were wondering, the tech giants also use CDNs. ↩︎

Australia’s muddle-headed media law

Google and Facebook are too powerful, but monetization won’t solve the core problems

Source: A New Australian Law Is the Wrong Answer to Big Tech | by Owen Williams | Feb, 2021 | OneZero

At OneZero Owen Williams writes about the Australian government’s proposed legislation that will make online giants pay local media.

He writes:

…the News Media and Digital Platforms Mandatory Bargaining Code, would require social media platforms to negotiate with local media in order to use their content. For instance, whenever Google publishes headlines and summaries on Google News, Google would have to pay a small sum to the newspapers or magazines listed.

European governments have attempted similar laws and rules with little success.

Devastating for traditional media

There’s a huge disconnect with the plan. Yes, the likes of Google and Facebook have devastated traditional media. They, and other world scale media giants, have sucked almost all the advertising revenue that once paid for a vibrant and diverse market of newspapers, radio stations and television channels.

And yet today’s media companies depend on the same tech companies to drive online readers to their sites allowing them to pick up the few remaining revenue crumbs. Without that traffic they’d wither and die.

The analogy that comes to mind is that the media companies have a prescription drug dependency. The medicine reduces their pain and allows them to function, but in the long term it is killing them.

Doomed

Australia’s proposed legislation isn’t only doomed to failure. It will almost certainly end up doing more harm than good. The likes of Google and Facebook need to be dragged into line, but this is not the way to do it.

What would I do? First, I’d flatten the playing field by making sure all revenue sucked out of the local market is subject to tax. If local media companies pay tax, but their more successful rivals do not, they don’t stand a chance of competing. While that train has already left the station, taxing the giants on an equal footing with local publishers might create local opportunities that would not otherwise exist.

Second, I legislate so that the likes of Google and Facebook have the same responsibilities for their content that more traditional publishers have. It’s not good enough for them to wash their hands of damaging and harmful material published on their sites. It’s not as if they don’t have the rivers of gold pouring into their coffers to help them pay for teams of editors.

In the meantime, I’m also concerned the Australian moves could have implications for New Zealand. Like it or not, the tech giants tend to treat us and Australia as a single, unimportant market.

Google’s curious Pixel phone strategy

Nikkei Asia reports on Google’s modest Pixel 5 phone goals:

“Google plans to produce less than 1 million Pixel 5 smartphones this year, sources told Nikkei Asia, signalling a far more conservative outlook for the internet giant’s flagship device than last year.

“Production could be as low as around 800,000 units for the 5G-capable flagship smartphone…”

The Pixel 5 runs Android 11. It supports 5G networks. There’s a six-inch screen, two back cameras; a 12.2 megapixel main camera and a 16 megapixel ultra wide camera. There is a cheaper Pixel 4A model.

A phone that waits in hold for you

One of its features allows you to have Google Assistant wait on hold until a human picks up the phone at the other end.

If Google has plans to sell the Pixel 5 in New Zealand, it is keeping quiet about them. Parallel importers have brought in previous models. The international price is US$700, which translates to around NZ$1300 or $1400 here.

This will be a rough year for phone makers. Yet if the Nikkei report is correct, Google’s own brand models will be a rounding error for the market.

Let’s put the number in perspective. Phone makers shipped 295 million phones in the second quarter of 2020.

A rounding error

Even the most bearish observers expect to see more than a billion units sold during the full year. On those numbers Google won’t account for 0.1 percent of the total.

Samsung, which like Google uses Android, should sell more than 200 million phones. Huawei, which can no longer use Google services expects to sell a similar number.

As the Nikkei story points out, Google’s phone making suffered in the Covid-19 pandemic. But then every phone maker hit the same problem.

The Pixel phones are oddballs. In the US a single carrier, Verizon, lists them. Americans are more inclined than people elsewhere to buy their phones from carriers.

Not a phone business

For Google, phones represents a tiny slice of the business. They don’t need to make money. Pixel phones are more about Google showcasing technology. It’s no accident the wait on hold feature appeared first on a Pixel phone.

They serve to put pressure on other phone makers to continue innovating.

Google may want to keep a toe-hold in the market for strategic purposes. For now, Pixel is not mission critical at Google. It’s a hedge against a possible future.

Phones are mission critical for the big brands: Samsung, Apple and Huawei. For those companies, phones are central. They provide cash flow, and, all being well, profit.

Google’s goal is to push as much traffic as possible through the company’s data collection, if you like, surveillance, services. Pixel helps keep that on the boil.

The company has deep enough pockets to push the button and ramp up production. It may do that one day if it is necessary. Pixel means if that happens, Google won’t be starting from a long way behind the pack.

Huawei Y6P review: Budget phone but no Google

Huawei’s NZ$3001 Y6P comes with a three lens rear camera and a 5000mAh battery. There is a 6-inch screen and 64GB of storage.

You get a lot of phone for $300. Low cost phones always come with compromises. This one is a potential killer. A US technology ban means Huawei can’t sell Android phones with all the Google trimmings.

If you prefer US surveillance capitalism over a Chinese alternative stop reading now. This is not for you. Look elsewhere.

Google free zone

Like the recent Huawei P20 Pro, there are no Google apps. Instead Huawei offers its own app gallery and a new app to help you find apps that run on post-Google Huawei phones. We’ll look at the Petal Search app in a separate post.

A word of warning: there will be popular paid for or subscription Android apps that won’t run on this phone. That said, if you use that kind of software, it’s unlikely you’d be looking for a bargain basement phone.

The phone hardware is promising enough. Huawei says that 5000nAh battery is good for 32 hours of video playback. It will handle 20 hours of web surfing using mobile data. In normal use you should go two or more days between charges.

Charging other phones

Huawei has included hardware that allows you to charge other phones from the Y6P. You’ll need to buy a separate reverse charging adapter to do this.

The adaptor is not available on Huawei’s New Zealand website at the time of writing. Finding one online shouldn’t be a struggle, but it highlights a lack of attention to detail. It’s something you wouldn’t expect Apple to miss.

Almost the entire front of the phone is a 6-inch 720×1600 display. Huawei’s specification sheet says 6.3-inches, but the image doesn’t go to the edge of the display.

Huawei calls its display Dewdrop. That’s a fancy way of saying the camera notch is tiny compared with other phones. It is, but in practice it is no less irritating.

Y6P camera

Phone makers spend a lot of time talking about cameras. This is the main area where the Y6P departs from premium phones. Keep in mind, the Y6P is at least a grand cheaper than today’s top handsets.

There’s a 13 megapixel camera on the back. It comes with a 5MP wide angle camera and a 2MP depth camera for bokeh shots. The front camera is 8MP.

No-one is going to get excited about the phone’s photography. It’s more than adequate, roughly in line with what you might find on a premium phone three or four years ago. This is more than enough for casual photography, but don’t plan to shoot you next movie on the Y6P.

It’s not a fabulous phone. Yet the Y6P is great value. The big problem is that while it looks like and feels like an Android, it isn’t.

Although you can work around the restrictions, you may not want to. There will be readers who enjoy that challenge. You may have better things to do with your time.


  1. If you’re quick you can buy the Huawei Y6P phone for $200. After August 10 the price will be $300. ↩︎

Google pays tax on larger small fraction of total NZ income

Google published its New Zealand accounts for the year to December 31,2019 earlier today.

According to the company’s financial statement Google’s 2019 revenue was NZ$36.2 million. That’s more than double the $17.5 million it made in 2018.

Sales and marketing expenses for the year were $20.4 million. This compares with a shade over $3 million in the previous year.

Which leaves the company with a 2019 profit of $10.6 million. In 2018 the profit was $0.6 million.

More Google tax

It means Google pays more New Zealand company tax than in the past.

Google says its 2019 tax bill is $3.6 million. In the financial statement the income tax expense is listed as $2.5 million. Apparently the lower number is the tax paid during the 2019 year, while $3.6 million represents the total tax the company will pay.

It’s a lot more tax than in the past. Google paid around $400,000 for the previous year.

Yet it is nothing like the whole story. While Google may have booked $36 million of New Zealand revenue in 2019, the figure is only a small fraction of the total amount of business it did in the country.

Does not include everything

A simple back of an envelope calculation shows Google will have booked a total of well over $NZ500 million in advertising last year. The company also has a cloud computing operation, although that is small compared to its advertising business.

The Australian Competition and Consumer Commission (ACCC) estimates Google made around A$3.7 billion in Australia in 2018.

In 2018 Google changed the way it does business in New Zealand to what it calls its ‘reseller model’. Before that the local office was financed out of the Singapore operation.

Governments around the world are moving to close the loopholes that let tech giants like Google and Facebook avoid paying full local taxes in the countries where they do business. The US government objects to this.

New Zealand’s government has said it hopes to be part of an international approach to the tax problem and will work with the OECD. This has been slow to date and many countries, including Australia, are moving to introduce a digital services tax.