by Simon Bond

Google and Facebook continue the global race to acquire fiber assets.

In the past year, these companies that supply much of the world's online content have ramped up their investment in Internet infrastructure. The moves include bringing online new submarine and underground cables they have funded, striking long-term agreements to lease so-called dark fiber, and building their own networking hardware.

In the process, they are beginning to rival some of the telecom companies that count them as clients. Google has spent years piecing together a network of private fiber-optic cables and now controls more than 100,000 miles of routes around the world, said one person familiar with its assets. That is bigger than the size of the continental U.S. network run by Sprint Corp, which covers less than 40,000 miles.

Executives at the tech companies say they are aiming to reduce costs, improve the performance of their Internet services, and guarantee they have enough capacity to support the growing traffic in online video, photos, games and other services generated by their businesses.

If we assume that Google thinks and anticipates well into the future what should we learn from these moves and what does it mean for us?

Online traffic is now soaring, driven by streaming video and smartphones that have expanded the reach of the Internet to millions more people, many of them poor and living in less-connected parts of the globe.

YouTube videos streamed by viewers devour more than half of Google's world-wide network capacity, said a person familiar with its operations. The number of Internet users in India doubled to 200 million in just the past two years, while more than 60 million Asians joined the mobile Internet in just three months, according to network gear maker Ericsson.

The flood of content has led to concerns of bottlenecks in some regions even when newer technology allows Internet companies to send more data through the same pipes. Even so, the broader glut of capacity has yet to dry up, and with the price of bandwidth in steady decline, old-guard telecom companies chastened by the bubble years are approaching investment in new fiber cautiously.

Surging data use is driving demand for spectrum. In 2013, global mobile data traffic grew 81 per cent, reaching 1.5 exabytes per month, up from 820 petabytes per month at the end of 2012, according to Cisco Systems. Through 2018, global mobile data traffic is expected to increase nearly 11-fold, growing at a compound annual growth rate of 61 per cent, and reaching 15.9 exabytes per month by 2018.

Whilst Australia is a big country with a small population a long way away from North America our proximity to the Asian growth engines continues to keep us relevant.

On the local front Telstra remains the gorilla in the room and with the stock currently trading on a fully franked yield of over 5 per cent the company still represents an ideal “parking space” for investment funds in a low interest environment where liquidity continues to be the name of the game in these days of volatility.