Food for thoughtServersTechnologyUncategorized

The infrastructure gap

By November 21, 2018 No Comments
The internet’s infrastructure concentrates power into limited hands and prices will rise as demand grows. Mogu will solve the infrastructure gap.
It’s only been around for 25 years as a commercially viable industry, but the internet has changed many, many aspects of many of our lives. It has opened new avenues for education and development, created opportunities for innovation and challenged a range of moribund (and to be fair some not so moribund) industries. The problem is that there is a growing infrastructure gap.

Despite its many positive attributes, there are some significant issues with the internet’s current infrastructure. High barriers to entry and power being concentrated in the hands of a small number of global companies is creating the risk of an infrastructure gap. That gap could quickly lead to the development of an oligopoly that inflates prices and holds back innovation.

Wikipedia (itself a creation of the internet), defines an oligopoly as [https://en.wikipedia.org/wiki/Oligopoly]:

“…a market form wherein a market or industry is dominated by a small number of large sellers (oligopolists). Oligopolies can result from various forms of collusion which reduce competition and lead to higher prices for consumers. Oligopoly has its own market structure.”

“With few sellers, each oligopolist is likely to be aware of the actions of the others. According to game theory, the decisions of one firm therefore influence and are influenced by decisions of other firms. Strategic planning by oligopolists needs to take into account the likely responses of the other market. Entry barriers include high investment requirements, strong consumer loyalty for existing brands and economics of scale.”

Focusing on the final sentence, it’s clear where the potential of oligopolistic behaviour can evolve from. The infrastructure of the internet is notoriously costly to create and maintain, it is complex to manage, and it is very hard to scale because of the cost, frenetic upgrade cycle and the significant energy consumption of traditional server infrastructure.

Why infrastructure matters

So why does it matter if an oligopoly develops? So long as most of us can access the internet relatively cheaply and consistently, who cares if there’s an infrastructure gap?

The answer to both questions comes down to cost. When power is concentrated into a few hands, as the definition suggests, there is a very real risk that the price for consumers will be massaged up. This may not necessarily even involve collusion, it could be simply the result of a handful of competitors glancing at each other before setting prices, which is always likely to result in higher cost to the consumer simply because the organisations involved want to avoid a price war. This is particularly true in the case of internet infrastructure sector where server providers need to keep pace with a upgrade cycle.

The problem is that this situation is likely to get worse. It’s been forecast that by 2025, the number of internet enabled devices globally will have trebled from 25 million today to 75 million. Several factors are driving this increase, including the much-heralded Internet of Things (IoT), augmented and virtual reality, cryptocurrency and, quite simply, the rise of consumer demand in more countries worldwide.

As the demand for internet capacity increases, the current infrastructure of the internet means that prices are likely to rise, particularly if an oligopoly has been allowed to develop. The infrastructure gap will grow.

Closing the infrastructure gap

Mogu has created an alternative approach to the traditional infrastructure of the internet. We’ve developed a domestic router that adds its processing power to a distributed server network when it is not being used by the home. Given that the average domestic router sits idle for around 18 hours per day, that creates a potentially very powerful network that can significantly increase the capacity of the global server network.

This also puts us in a position to offer a viable and cheaper alternative to traditional server infrastructure providers. The growth of Mogu’s distributed server network would mean four things:

  1.      Internet prices would fall for individual consumers
  2.      Internet data service prices would fall for firms, governments and research groups
  3.      The server upgrade cycle would be replaced by more efficient use of existing technology
  4.      The internet’s significant carbon footprint would be massively reduced

Mogu is already in the process of making this happen. There is a network of 5,000 Mogu Smart Routers already active across China and we are in the process of extending our reach across Asia. The production and distribution agreements that we have in place mean that our ambition to have 100,000,000 active routers globally by 2023 could even understate what we are going to achieve.

In the end, something needs to be done if we are to spread the benefits of the internet more widely around the world. Given the expected rise in demand for the internet and data services over the next few years, we can no longer rely on simply extending the traditional server infrastructure. Mogu will make a significant contribution to bridging the infrastructure gap.

Mogu is a smart router company that is reimagining the infrastructure of the internet. Mogu will shortly be holding its Initial Token Sale. For further details, please follow us @MoguTech or subscribe to updates at www.mogu.io

Mogu

Author Mogu

More posts by Mogu

Leave a Reply