Sunday, February 15, 2009

The snake in the garden of financial crisis

I worry about the financial crisis, and the hidden costs of our way of life. There is a proverbial snake waiting to strike - lying in wait. It's in the homes of over 40% of all Americans. And if you're reading this, then I can guarantee it affects you as well.

The Internet is a global network of interconnected computers, enabling users to share information along multiple channels. -

The Internet in its current incarnation is approximately 19 years old. During its youth it's growth was fuel by big business and large investments. This is commonly known as the “Dot Com Bubble”. The aftermath of this is the well known “Dot Com Bust”.

This failure left us with an inheritance of left over Internet pipelines, dark fiber as we call it. Connections to the telecoms that are no longer live, and they're more than willing to sell, and sell they did. Relatively cheap infrastructure was able to connect more people and businesses.

Without this huge investment in infrastructure the Internet as we know it would not exist. You would likely not be browsing with broadband, if at all - and perhaps not even have an email account.

With the recent financial crisis rearing its head, I fear lack of investment into the Internet infrastructure, and business. Specifically I feel this could pop another bubble the number of small businesses dependent on the Internet.

As the collapse of the economy pushes in, the assumption always goes to the lower income brackets will re-evaluating luxury expenses. I would argue that this inlcudes the Internet, and the pre-requisite computer to access it. Further than that rural communities will not get the investment of broadband they need to be big players in the Internet economy

Its hard to really pin down any exact numbers or even if this conjecture will come to fruition, but the side effect will be smaller customer bases for on-line businesses. Businesses that likely rely on the people who are no longer on-line, further pushing economic recovery down the line.

This isn't any new logic, no money = no customers = no businesses = no money = nauseum - the difference is, there are so many points of failure for internet businesses that make them currently artificially inflated, leaving them setup for massive failure, the carpet could be pulled out from under them, and in turn us.

On the plus side, cellular phone companies pushing their networks are competing with Internet connectivity, and as long as cost is kept low we can only win.

Wireless networks are easier to deploy over large areas, and will cellular technologies most of the infrastructure is already there.

In-fact I'd make a prediction that cell phones will be the biggest connectivity option of the next 5 years, which I'd predict regardless of the economy. Taking economic forces into the equation, you can see that they end up being the cheapest option for many, looking to replace a broken computer, lost Internet and general communications a cell phone is the easiest solution.

I suppose what I'm getting at is, if we're not careful the infrastructure that could bring us back from the brink, could be the same infrastructure that sends us off it. Indeed a snake lying in wait, a double edged sword. A perfect weapon if wielded correctly. But it seems like every other financial expert is completely ignoring what could be gained from it.

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