There's been a rising chorus lately about how Google should dump YouTube. Such as this article at TG Daily. What people are missing here is the big picture, like Google's relationship to the Internet Service Providers (ISPs) in the world. The largest expenditure for any ISP is their bandwidth charges: getting bits from the outside world. The more bits they get from the outside world, the more they have to pay. This may be per-gigabyte or peak-metered usage from their upstream bandwidth provider. What type of content consumes the most bandwidth, thus costing ISPs the most money? Video. Nothing else even comes close. One of the things Google is doing with YouTube is running up the monthly bandwidth bills of ISPs. Now Google can come along with their new datacenter in a shipping container that's been rumored for years. Google can put these adjacent to an ISPs server room and cache all of YouTube videos there. Thus the bits for YouTube videos will flow from the ISPs server room to the customer. No outside bandwidth will be needed, thus saving the ISP major dollars. What's in it for Google? Essentially taking over the ISPs network operations, which Google can do better and cheaper than the ISP due to pure scale. The ISP will outsource more and more operations to Google and their magic datacenter in a box. At that point Google makes a major profit. Google won't own any ISP proper, thus won't run afoul of the Federal Trade Commission. All they'll be is an outsourcer, running video and content caching, email, web hosting, etc. for the ISP.

In short: Google is using YouTube to drive up the ISPs monthly bandwidth bill so then Google can ride in as the White Knight and save the ISPs a lot of money. All an ISP has to do is give Google a little money for services instead of giving the ISP's bandwidth provider a lot of money for bandwidth.

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