The Return Of Google Network Rumors

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Fresh off of one takeover, Google finds itself the focus of another whispered rumor, this time involving broadband provider Level 3 Communications.

The basic version of the story contends Google may want to acquire the communications provider that powers YouTube and its millions of streams delivered per month. A story at Denver Business Journal said rumors about the possible takeover have been tickling eardrums on Wall Street.

One analyst cited in the report took a negative view of the rumor:

Donna Jaegers, an analyst with Denver-based Janco Partners Inc., immediately dismissed the rumor.

“I severely doubt that,” she said. “Level 3 has a lot more capacity than what Google needs.”

Jaegers also said Level 3’s debt load is too high to make it a logical acquisition for Google.

A few people said the same thing about Google buying YouTube, too. There is another reason Jaegers could be humorously wrong – the fabled GoogleNet.

But one of the people who has done his share of GoogleNet speculating agrees with Jaegers. GigaOM publisher Om Malik commented on the rumor:

Google’s tactical admission of middle age has everyone guessing who they are going to buy next. The kookiest of them all is Level 3 Communications, since they have all that fiber and connections within connections etc etc.

Sure Google could use all that fiber to build a big-honking GoogleNET but the deal is expensive. $6.3 billion in debt, and $6.18 billion in market capitalization. Yeah, that is too much for Google to take on.

Of course, Google did pick up YouTube, which reportedly burns through a million dollars a month in bandwidth costs. Google doesn’t make the YouTube move unless the company thinks it can recoup the investment.

Smarter people than me would have to determine if Google could light up its dark fiber purchases with Level 3 at the center of Google’s web. How much would Google save on its bandwidth costs if it picked up Level 3? Would Google launch a national wireless network of dirt-cheap VoIP phones carrying Google click-to-call advertising on their Google-branded browsers featuring geo-targeted mobile advertising?

Of course, it could be just a game to pump up Level 3 shares in the short term too. Shares lost 7 of the 12 cents they gained since Friday. That negative net income Level 3 reported for the past quarter, and the past couple of years, may make Level 3 open to a partnership with Google, if not the rumored takeover.

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David Utter is a staff writer for WebProNews covering technology and business.

The Return Of Google Network Rumors
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