Can Broadband Predict Economic Shifts?

Indian telecom powerhouse Reliance Infocomm has signed a deal with China Telecom and will establish a direct cable connection between those two countries. Now the calls will fly directly over Reliance’s FLAG Telecom cables that will connect to China Telecom network in Hong Kong. When compared to meaty issues (such as Feedburner’s two-way RSS,) it doesn’t seem like a big deal, but it could have longer term implications on the bandwidth business.

Why? For starters the calls between the two countries that till recently were routed through Europe/US, will no longer need to travel half way across the planet. This means reduced role for major US carriers like Level 3, MCI and AT&T (currently the world’s largest ISP.) It is a trend that is gathering momentum, and slowly and slowly the network traffic that almost always used to flow through US is becoming more and more regional. Through most of the 1990s it was cheaper to connect the European Union countries through US, but then small regional networks started to siphon off traffic.

Asia network traffic is following the same trajectory. At some point in the future this is bound to have an impact on the US carriers. US is currently the top Internet hub country with 1.4 terabits/second of bandwidth. World’s fattest pipes (metaphorically speaking) are between London and New York, about 320 GB/s of bandwidth.

Will the regionalization of the traffic mean that the price wars will rear their ugly head? Will the prices plunge on the London-New York routes as once again capacity outstrips demand? Some folks who work in the bandwidth business say that the transit fees, that once used to make up nice profit center for global carriers are beginning to head sound.

But going beyond that – is this a general global economic trend? I can even pretend to know anything about global trade, but my broadband prism forces me to think, that this could be forbearer of a global trade shift. I believe that what sea routes, air routes and highways were to the 20th century, broadband pipes are to the 21st century. And from that perspective, things could be shifting away from the US being the hub of global trade. What do you think? I am seeking your intelligence and input to get a better understanding, on what might be just dumb thinking on my part?

PS: David Isenberg, Dave Burstein, Paul Kedrosky, Joe ‘The Stalwart’ Weisenthal, Mike Masnick, Andy Kessler, Carl Haacke, Nicholas Carr, and Pip Coburn…. I will be looking for your insights in particular. Jeff Pulver, you are not off the hook either!