Will the new infrastructure be “unfinished”?Inspiration from Google’s two major “failures”

Introduction: In this round of vigorous investment in new infrastructure, we must not only prevent the “deification” of new infrastructure, but also prevent the formation of some “unfinished” new infrastructure projects. Perhaps we can take history as a mirror and analyze the experience and lessons of some similar new infrastructure projects at home and abroad to discuss the main body of new infrastructure construction and the pace of advancement.

New infrastructure is very hot, and many market players want to take the opportunity to get a piece of the pie. In this round of vigorous new infrastructure investment boom, we must not only prevent the “deification” of new infrastructure, but also prevent the formation of some “unfinished” new infrastructure projects.

Perhaps we can take history as a mirror and analyze the experience and lessons of some similar new infrastructure projects at home and abroad to discuss the main body of new infrastructure construction and the pace of advancement.

Google’s two major “failures” in infrastructure

As one of the most powerful Internet companies in the world, Google has emerged as an innovator and disruptor in many fields. Of course, in order to innovate and disrupt, Google has also paid a lot of real money, and some of them have invested heavily in projects that eventually quit.

Among them, the two major infrastructure projects of smart city and urban optical fiber are the most typical, and their lessons also bring us a lot of reference for us to promote investment in new infrastructure projects.

(1) A grand and ideal smart city project

Recently, Sidewalk Labs, a subsidiary of Google, announced the abandonment of Sidewalk Toronto, a Toronto waterfront project with a total investment of more than 1.3 billion US dollars. This world-renowned high-tech smart city project has died.

The concept of Sidewalk Toronto is to use hardware and software integration technology, through the installation of a large number of sensors, to connect traffic, buildings, public spaces, pipe network infrastructure, etc., through technology and data, to collect traffic, noise, air quality and other aspects of data, And monitor power grid performance and garbage collection, and finally use big data analysis to better understand people’s living, travel and other issues, and use new technologies to accurately match the supply and demand of urban services to improve the urban life experience.

Through this project, Google integrates urban design with the top-level design of smart cities, and tries to use its own scientific and technological achievements to solve the problems of urban operation, transportation, housing, and energy, thereby achieving a subversive redefinition of the urban planning model. That is, when the city is equipped with a brain, it is also equipped with the most advanced limbs and sensory systems.

Scenes shown by Sidewalk Toronto include:

Driverless public transport, fewer private cars, more public spaces;

Smart urban infrastructure, safer roads, and more user-friendly design;

Modular housing construction system, faster installation and reconstruction, lower housing prices;

Sustainable construction materials, greener construction, lower carbon emissions and more.

It can be seen that the project to be built by Google integrates the most advanced ICT technology and the most scientific urban design concept, and is committed to showing people an ideal smart city and creating a model of global sustainable community. However, from the start to the withdrawal of this project, the progress of the project has not been smooth. After a long-term and continuous game with local residents, the government, and social organizations, the design and planning have been greatly revised, and gradually they are far from the final concept.

For example, local residents are worried about the planned sensors and cameras all over the city, believing that this is a serious violation of personal privacy, and Google has been forced to change the city’s data use policy and limit data collection to the city’s minimum, which is far from the The previously expected smart city operating model.

The reason for the project’s death, Google’s official reasons are: the impact of the coronavirus and “unprecedented economic uncertainty.” In fact, the project has been delayed several times, stumbling along the way, doomed to the final end of the project. As early as October 2016, Sidewalk Labs announced that it would help more than ten cities in the United States become smart cities, and this rhetoric seems to be unfulfilled at present.

(2) Subversive Google Fiber

Google’s other hugely expensive but eventually exited “failure” was its fiber project. Last year, Google announced that its fiber-optic business would be withdrawing from its main city of Louisville. The decision saw the Google Fiber project inch toward failure and a complete exit.

This originated from an experimental project 10 years ago. Google decided to officially commercialize it in 2012. In the first few years, it can be said to be brilliant, with a subversive attitude, but then it was not smooth, many executives left, layoffs , seeking to sell, switching to wireless base stations, exiting in multiple cities, etc…

According to Google’s financial data, Google Fiber’s “Other Bets” division lost $3.4 billion in 2018, mainly due to Google Fiber, and this loss has been difficult to reverse. In the eyes of many, Google Fiber is Google’s “biggest failure.”

Of course, there is some truth to the Google Fiber project appearing as a “disruptor” in the beginning, because it has successfully provoked the “gigabit bandwidth” war and promoted the progress of fiber in the United States. Before Google entered the broadband market, traditional operators were not motivated to deploy high-speed optical fibers. However, under the stimulation of Google’s optical fiber project, operators such as AT&T and Comcast accelerated their investment in optical fibers. According to the data of the American Internet and Television Association, 1Gbps The Internet penetration rate in the United States reaches 80%.

High investment has not resulted in a better user experience. For example, a blizzard in Kansas last year severely affected Google Fiber, and users in some areas have been disconnected for more than two weeks. In today’s information society, being disconnected from the Internet for two weeks is undoubtedly an unbearable state of “isolation”.

Inspiration from Google’s two major infrastructure projects to new infrastructure

In April this year, the National Development and Reform Commission for the first time clarified the connotation and scope of new infrastructure, mainly including information infrastructure, integration infrastructure and innovation infrastructure.

Judging from this, Google Fiber can be compared to information infrastructure, and Sidewalk smart city can be compared to converged infrastructure. We can learn some lessons from the investment and exit process of these infrastructures, from the perspective of construction subject and promotion rhythm.

(1) Construction subject: which organizations or institutions will invest in new infrastructure

New infrastructure is a typical infrastructure. In the process of promotion, the main body of investment, construction and operation must be clearly defined. In many cases, the infrastructure is often invested, built, and operated by the way, and there is also a situation where the three main entities of investment, construction, and operation are separated. In this case, a perfect business model arrangement is required.

As infrastructure, investment, construction, and operation are a long-term process and require large-scale investment. In order to cater to the hotspots, a large number of such entities are titled as the theme of new infrastructure in external publicity, but they are not necessarily suitable as entities for investment, construction and operation.

Analyzing Google’s experience and lessons in infrastructure projects such as smart cities and optical fibers, some people may ask a question: Is Google suitable to be the main body of investment, construction and operation of these infrastructure projects? Judging from the results of the final withdrawal of the two types of projects, perhaps Google is not suitable to undertake this subject for the time being.

Taking optical fiber as an example, the author once gave the enlightenment brought by Google’s biggest “defeat” – the “vampire” that had to be rid of in 5G operations! The article analyzed the reasons for the failure of Google Fiber, an important reason is OPEX (Operating Expense), that is, the management of operating expenditure costs, OPEX is the key to the operation of the “heavy asset” model of infrastructure.

It also provides gigabit fiber services. Although the traditional operators AT&T and Comcast began to lose customers due to the impact of Google Fiber, these manufacturers did not lose money in the fiber battle in the past decade. It can be seen that traditional operations rich experience in this area. As early as the end of 2016, an analyst from a technology media in the United States analyzed five reasons for the failure of Google Fiber, including marketing, price setting, partner selection, service inconsistency, etc., to a large extent, these reasons are similar to OPEX has a close relationship.

Therefore, in the promotion of new infrastructure, in most cases, the participants are those with relevant infrastructure investment, construction, and operation experience. In this process, there may be some entities with the ability to innovate and subvert, but such innovation and subversion still have to follow the laws of the infrastructure itself and have a perfect business model. For some entities that have been adapted to “asset-light” operations for a long time, they cannot successfully enter the new infrastructure field without strong financial resources. Before entering new infrastructure investment, they should maintain a cautious attitude to avoid repeating the mistakes of Google’s infrastructure investment.

(2) Promoting rhythm: coordination of new infrastructure and new technologies

In the view of the National Development and Reform Commission, the “new” of the new infrastructure lies in the fact that it is guided by new development concepts, driven by technological innovation, and based on information networks, to meet the needs of high-quality development, and to provide services such as digital transformation, intelligent upgrade, and integration innovation. infrastructure system. So, must new infrastructure incorporate the latest and most advanced technologies? How to coordinate the pace of new infrastructure development with the pace of new technology development?

Wang Peng, director of the Smart City Laboratory of Beijing Big Data Research Institute, mentioned the lessons of Google’s smart city: “Building a complete new technology utopia in a short period of time, or building a city brain in one step, is building a castle in the air; all The development of modern cities is essentially a dynamic game between the government, enterprises and citizens, and arrogance and contempt for any subject will be a fatal hidden danger.”

Taking this as a reference, the three major aspects of the new infrastructure defined by the NDRC are all fields with a large number of advanced technologies, but the final implementation of technology is still a staged process, and the infrastructure involves too much. The integration of economic, social and other factors.

The old infrastructure has an immediate effect, but the role of the new infrastructure is in enabling the digital transformation of the national economy. At present, 5G, industrial Internet, artificial intelligence and other infrastructure are in the early stages of deployment. Job creation has yet to emerge on a large scale. To a certain extent, the new infrastructure is a process of “long-distance running”, and its role in promoting all walks of life in the national economy is also a process of gradual penetration.

Taking 5G as an example, the author once made a detailed comparison of 5G and 4G investment data in the article “Revelation: 90 billion 5G large orders have all landed, but all aspects of 5G in the early commercial stage are slower than 4G”. In terms of construction and user development speed, the rhythm of 5G in the first two years of commercial use is slower than that of 4G. As a leader in new infrastructure, 5G has not shown a rapid and frenetic investment rhythm, but has steadily advanced. This promotion rhythm includes the requirements for the coordination of network construction with technological progress, industrial ecology, industrial applications, and business models.

In the 2020 government work report, the construction of “two new and one heavy” is proposed, that is, new infrastructure, new urbanization, transportation, water conservancy and other major projects. There is no doubt that new infrastructure has become the key investment area of ​​the year. The new generation of information networks and 5G applications are clearly highlighted in the government work report.

The policy support has been very clear, and the market promotion also needs to be carried out steadily. It is emphasized again that we must not only prevent the “deification” of new infrastructure, but also prevent the formation of some “unfinished” new infrastructure projects.

The Links:   ACX704AKM SEMIX302GB128DS