Battle for the Cloud - Remote data storage - In Five Acts

Pre Show

It’s opening night and the show is about to begin. The performers are warming up, getting ready for the spectacle of a lifetime. Google, Amazon, Microsoft, and Apple (GAMA): all hold important places in our show. They will be fighting for the favor of consumers and control of the coveted consumer cloud market. Perhaps though, the most interesting conflicts won't come from the these companies' infightings, but from the battles these companies will presumably wage against the gatekeepers of the cloud, internet service providers (ISPs) and mobile carriers.

The lights dim and the show begins.

ACT I

Internet traffic is going up, way up. Ballooning internet consumption is largely due to GAMA cramming more devices and content down consumers’ throats than ever before -- iPhones, Windows Phones, Android Phones, iPads, Microsoft Surfaces, Nexus 7 tablets, Kindles, Macbook Airs, Ultrabooks, Chromebooks, Apple TVs, Xbox 360s, Nexus Qs; It’s enough to make your head spin -- Exacerbating matters, storage space in these devices is shrinking. Google’s Chromebook contains only 16GBs and the basic Nexus 7 tablet only 8GBs, making Apple’s basic Macbook Air (64GB) and iPad (16GBs) look like giants despite their diminutive sizes. This trend of shrinking storage is forcing users to constantly connect to the cloud and use increasing levels of data just to access basic content. On its face that not a problem, but then...

Enter ISPs and mobile carriers (Stage Right)

Three out of the four major mobile carriers in the United States limit data usage in some way. While tiered plans are a tool for profit, they have a practical purpose too. As G. Taylor reported back in May, mobile carriers are running out of network space and can’t build more fast enough. Regardless of if that makes limits excusable, limits are real and are growing past mobile carriers. Only two of the ten top ISPs, Verizon (#6) and Cablevision(#8), provide broadband plans without caps -- Time Warner (#3) is experimenting with a 5GB optional capped plan in Southern Texas -- and this is a problem. A problem because while claims that caps only affect 1% of customers are true, it is these 1% of customers that have bought what GAMA is selling and are living in the cloud. Fade to black.

ACT II

GAMA loves this 1% and want everyone else to be more like them. The 1% is big business for GAMA, consuming large amounts of data, downloading video games and HD videos like there’s no tomorrow, and opting for internet services like Netflix, Hulu, Google TV, and Apple TV over cable/satellite. The 1%’s consumption habits make them GAMA’s wet dream. Subsequently those habits are also why ISPs hate the 1% and secretly wish they would fall off the planet. While ISPs and mobile carriers usually share mutually beneficial relationships with GAMA, as GAMA tries to guide the other 99% of the population to behave like the 1% both sides are inching closer to war.

The biggest battle ground is Television. If GAMA has its way and all Americans switch to online television it would mean near death for ISPs. Networks would be crippled by the 114 exabytes of video data generated each month(390GB of per person), and ISPs largest revenue source would be lost costing cable/satellite companies over $150 billion annually. ISPs have a vested interest then preventing people from going online. Which could explain why all but two of the ISPs with data limits have their maximum caps set below the 390GB threshold for average TV consumption. (#7, Cox’s top limit is 400GB and #5 Charter’s top limit is 500GB). Smash to black.

ACT III

The lines are drawn. ISPs and mobile carriers lose profit as more users drop cable and phone services, and networks aren’t growing fast enough to support increasing demand, “forcing” ISPs to implement data caps. GAMA makes more money as consumers buy more of their products and spend more time online, but growth is being stifled by ISPs and mobile carriers. What happens now?

In May, articles circulated speculating that Apple might jump into the mobile carrier game. The story was given new credence by veteran wireless industry strategist Whitey Bluestein. If Apple is planning a move this year they are waiting for the release of the new iPhone. But beyond the musings of Bluestein and a 2011 extension of a 2006 patent, nothing indicates that Apple will take the plunge. If anything, data suggests Apple won’t because of the $381 subsidy mobile carriers pay for every iPhone they sell. -- It should be noted that Apple CEO Tim Cook recently stated that Apple isn’t concerned about carriers pinching this subsidy in the future, so it could be a non-issue.

Google’s also had some interesting recent activities. No, not their TiSP hoax, I’m talking about Google building a 1GB/s fiber optic network in Kansas City, and sponsoring Boingo to provide free WiFi at select subway stations in New York through September. While both are probably just about good publicity, one can’t help but wonder about the company’s ultimate intentions. Google profits from people using the internet and android devices. If Google could leverage fast, reliable, and affordable internet to boost users, maybe it wouldn’t be such a bad idea to become an ISP.

From nowhere. Enter the Department Justice Department, and Congress (Stage Left).

It turns out GAMA isn’t the only one suspicious of ISP intentions. The Department of Justice is already investigating whether cable providers are improperly suppressing internet video competition, and recently Reuters reported that two US Congressmen are proposing Congress “examine whether major wireless carriers and cable companies are stifling the growth of online video services.” Nothing definite can be drawn from this yet, but this kind of negative attention doesn’t look good for ISPs.

What happens next between Mobile carriers/ISPs and GAMA remains unclear at this time, and speculation seems a touch premature. But have no doubt, the climax of this twisted little play will be spectacular, if not unexpected.

Fed up with mobile carriers, will Apple follow its closed ecosystem roots and provide it’s own cell service? If Google is considering becoming an ISP what will they gain and how will they navigate the problems plaguing other ISPs? If the Federal Government steps in will caps be left alone, raised, or struck down altogether? Will ISPs and mobile carriers step down and get along with GAMA? And what will it all mean for the future of the internet and computing?

ACT IV & V still to come...

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