August 2008 Archives

We've been keeping an eye on Georgia all week. It's rather hard not to as the media keeps calling, looking for a juicy story. (It's amusing how the questions can seem designed solely to confirm a story that has already been partially written.) Not being schooled in this "art", we haven't been able to invent any interesting "facts", as the network infrastructure of Georgia has been relatively stable all week. But then today, we did see about one third of the country go away again for an extended period. Since it wasn't the entire country, we didn't rush out and buy oil futures. And since the outaged networks did come back, we're assuming this event was due to a temporary (although perhaps extensive) power outage.

As the world watches events unfold in Georgia, all eyes are on the Baku-Tbilisi-Ceyhan (BTC) pipeline, a major source of European oil that is not under Russian control and is projected to carry 1 million barrels a day by 2009. (See this link for a map of oil pipelines in the area.) What many people don't realize is that the cyber world is often built alongside the physical one. That is, those fiber optic cables that carry Internet traffic tend to follow the world's pipelines, bridges, and railroad tracks. Loss of Internet connectivity can therefore imply the physical destruction of vital pathways for trade. And so it is with some interest that we monitored Georgian Internet connectivity over the weekend as hostilities with Russia escalated. This blog takes a quick look at how Georgia connects to the 'net and what has been happening over the last three days.

Sigh. I had been meaning to write this for a long time. Where did the summer go? Anyway, since you are reading this, you've probably heard something along these lines before: "Oh, you work on the Internet?! You must be rich. The Internet is paved with gold!" Right? The fact is that the Internet can be paved with gold for the content providers (e.g., Google, gambling and porn sites), but for the rest of us, it isn't. Not even close. The truth of this is no more evident than in the Internet transit business, namely, those folks who move all the bits around that ultimately build fortunes for the content providers. It's a commodity business with ferocious competition, whose quality of service is difficult for the average person to gauge. When was the last time you volunteered to pay more for electrical service to your house? Or sewer service for that matter? Or even gave it a second thought? In this environment, the transit providers are under tremendous pricing pressure and have only two options: grow or die. To grow, they can enter new markets and/or buy up the competition. Sometimes they purchase licenses to Renesys' Market Intelligence to help them explore the marketplace. To die, all they need to do is stand still.

This blog entry is motivated by France Telecom's recent failed bid to purchase TeliaSonera, and explores the characteristics of both companies and what they would have looked like as a combined entity. Mergers in the industry are never good for Renesys (fewer potential customers), but we do have the data to consider some of the implications. Let's get started.