Google's New CAPEX-Reduction Plan: Trans-Pacific Cable

Google and friends are unhappy with existing US-Asia bandwidth and are laying their own trans-Pacific cable. Although we fondly remember the days when we mistook search for a capital-efficient business–and worry that between solving the world’s energy problems and moon plans Google has finally gone off its rocker–the total price tag here is less than we would have expected: $300 million.

Assuming the six partners split it evenly, it’s $50 million apiece (a rounding error on Google’s $600+ million per quarter CAPEX burn). Even if Google volunteers to foot the whole bill, shareholders should survive.

Does it really only cost $300 million to lay a trans-Pacific cable? Why hasn’t Larry Ellison built one?

See Also: Google’s Crazy Christmas Gift to Microsoft and Yahoo


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