Monday, January 20, 2014

A Cloud over the Internet

Cloud computing could not have existed without the Internet, but it may make Internet history by making the Internet history.

Organizations are rushing to move their data centers to the cloud. Individuals have been using cloud-based services, like social networks, cloud gaming, Google Apps, Netflix, and Aereo. Recently, Amazon introduced WorkSpaces, a comprehensive personal cloud-computing service. The immediate benefits and opportunities that fuel the growth of the cloud are well known. The long-term consequences of cloud computing are less obvious, but a little extrapolation may help us make some educated guesses.

Personal cloud computing takes us back to the days of remote logins with dumb terminals and modems. Like the one-time office computer, the cloud computer does almost all of the work. Like the dumb terminal, a not-so-dumb access device (anything from the latest wearable gadget to a desktop) handles input/output. Input evolved beyond keystrokes and now also includes touch-screen gestures, voice, image, and video. Output evolved from green-on-black characters to multimedia.

When accessing a web page with content from several contributors (advertisers, for example), the page load time depends on several factors: the performance of computers that contribute web-page components, the speed of the Internet connections that transmit these components, and the performance of the computer that assembles and formats the web page for display. By connecting to the Internet through a cloud computer, we bypass the performance limitations of our access device. All bandwidth-hungry communication occurs in the cloud on ultra-fast networks, and almost all computation occurs on a high-performance cloud computer. The access device and its Internet connection just need to be fast enough to process the information streams into and out of the cloud. Beyond that, the performance of the access device hardly matters.

Because of economies of scale, the cloud-enabled net is likely to be a highly centralized system dominated by a small number of extremely large providers of computing and networking. This extreme concentration of infrastructure stands in stark contrast to the original Internet concept, which was designed as a redundant, scalable, and distributed system without a central authority or a single point of failure.

When a cloud provider fails, it disrupts its own customers, and the disruption immediately propagates to the customers' clients. Every large provider is, therefore, a systemic vulnerability with the potential of taking down a large fraction of the world's networked services. Of course, cloud providers are building infrastructure of extremely high reliability with redundant facilities spread around the globe to protect against regional disasters. Unfortunately, facilities of the same provider all have identical vulnerabilities, as they use identical technology and share identical management practices. This is a setup for black-swan events, low-probability large-scale catastrophes.

The Internet is overseen and maintained by a complex international set of authorities. [Wikipedia: Internet Governance] That oversight loses much of its influence when most communication occurs within the cloud. Cloud providers will be tempted to deploy more efficient custom communication technology within their own facilities. After all, standard Internet protocols were designed for heterogeneous networks. Much of that design is not necessary on a network where one entity manages all computing and all communication. Similarly, any two providers may negotiate proprietary communication channels between their facilities. Step by step, the original Internet will be relegated to the edges of the cloud, where access devices connect with cloud computers.

Net neutrality is already on life support. When cloud providers compete on price and performance, they are likely to segment the market. Premium cloud providers are likely to attract high-end services and their customers, relegating the rest to second-tier low-cost providers. Beyond net neutrality, there may be a host of other legal implications when communication moves from public channels to private networks.

When traffic moves to the cloud, telecommunication companies will gradually lose the high-margin retail market of providing organizations and individuals with high-bandwidth point-to-point communication. They will not derive any revenue from traffic between computers within the same cloud facility. The revenue from traffic between cloud facilities will be determined by a wholesale market with customers that have the resources to build and/or acquire their own communication capacity.

The existing telecommunication infrastructure will mostly serve to connect access devices to the cloud over relatively low-bandwidth channels. When TV channels are delivered to the cloud (regardless of technology), users select their channel on the cloud computer. They do not need all channels delivered to the home at all times; one TV channel at a time per device will do. When phones are cloud-enabled, a cloud computer intermediates all communication and provides the functional core of the phone.

Telecommunication companies may still come out ahead as long as the number of access devices keeps growing. Yet, they should at least question whether it would be more profitable to invest in cloud computing instead of ever higher bandwidth to the consumer.

The cloud will continue to grow as long as its unlimited processing power, storage capacity, and communication bandwidth provide new opportunities at irresistible price points. If history is any guide, long-term and low-probability problems at the macro level are unlikely to limit its growth. Even if our extrapolated scenario never completely materializes, the cloud will do much more than increase efficiency and/or lower cost. It will change the fundamental character of the Internet.