The Digital Skeptic: Sandy Shows Where Web Is Weak

HARRISON, N.Y. ( TheStreet) -- Note to whomever we send to the White House tonight: Besides the national debt, foreign policy and unemployment, here's another uber-problem to solve: The "information superhighway" has turned out to be anything but super durable.

Although I am ridiculously fortunate to have escaped with only a few downed trees and a week of lost power here, Hurricane Sandy has taught me a big investor lesson: What passes for Internet infrastructure -- you know, the mishmash of the real wired, wireless, power and computer technologies virtual things run on -- is nothing more than a techno bucket of bolts.

And considering the cost, complexity and uncertainty in doing business on the Web, it is no wonder information giants such as Google ( GOOG), Facebook ( FB) and Amazon ( AMZN) see their margins shrink.

The World Wide Web will need a worldwide rebuild before anybody ever makes any real money with the thing.

The nonworking Web
The issue with the Internet is, of course, there is no single point of contact -- or responsibility -- for keeping the Web working. We all use a mix of cellphones, wired Internet and enterprise service providers to access our digital content. Most of the time the thing hums along, safely out of sight underneath the Web's digital hood.

But because I run a cloud-based content shop -- and test cloud-based content tools in the process -- my colleagues and I were in the fascinating position of touching essentially every Web provisioning technology as the storm swept through.

We used 3G and 4G cell modems and cellular voice service from Verizon ( VZ), Clear ( CLWR), AT&T ( T) and Sprint ( S) to file stories and check facts. We made calls from various broadband phones such as those from Vonage ( VG). We accessed the Web with Verizon fiber as well as Time Warner ( TWC) traditional cable and many others.

And as Sandy ravaged our network, we saw firsthand how these platforms wobbled from nonfunctioning to barely functioning to high-functioning -- and back again -- seemingly at random.

Home-fired fiber
Here is just one example of the stubborn issues Sandy revealed: While 100-foot oak trees crushed power lines and homes, somehow Verizon fiber networking lines stayed connected to my home office. The catch is that fiber plants such as those Verizon sells need external power to function. Verizon tries to do the right thing; it installs its FiOS product with a battery backup for emergencies. But in battery mode, it turned out phone service worked, but data would not.

At times, this required -- no kidding -- a fully running back-up generator, which I'm lucky to own. But of course, gas is so dear these days it's simply nuts to run a 5,400-watt generator to power a 20-watt data line.

Sometimes that left the grim choice of accessing the Web via a cell modem or phone, which varied heavily by carrier and conditions. Overall, Verizon cell service was reasonable for making calls, but not for data access. AT&T provided reasonable data, but email was not reliable. Sprint offered solid data service, but the Web and phone calls struggled.

The only truly reliable digital communication solution? Low-tech text messaging.

The no-margin Internet
We were lucky. It all worked. Emails got sent. Stories got filed. And we are still in business. But it took far too much time, and I already feel the margin pinch this month. And with that pain, my contempt for managers at Web giants such as Google, Facebook or Amazon has softened.

I now understand exactly why margins do nothing but go south at these firms. The Internet is such challenging a place to function that of course it's tough to make money. Something is always falling apart. Strictly speaking, Jeff Bezos deserves a prize for wringing the few cents out of the dollar he does at Amazon.

Honestly, the Web makes Amtrak look reliable.

And I'm not alone on picking up on the Web's "just getting by" vibe. Manchester, N.H.-based Renesys, a global Web analytics firm, said that though in Manhattan just 10% of the network was taken offline, the effect on the Internet was profound.

"Silencing 10% of the networks in the New York area is like taking out an entire country the size of Austria in terms of impact on the global routing table," the company wrote in its blog. "The 90% that survive are in data centers, running on generator power supplied by engineers who do not sleep much."

Sandy showed me that the Internet is just like those lovely homes on the Jersey Shore: Great to hang out in, but far more expensive than they look to run.

And investors betting on these properties should understand that when the wind comes up, they will do only one thing: sink down in the sand.

This commentary comes from an independent investor or market observer as part of TheStreet guest contributor program. The views expressed are those of the author and do not necessarily represent the views of TheStreet or its management.

More from Technology

Flashback Friday: Amazon, Chip Stocks, Memorial Day

Flashback Friday: Amazon, Chip Stocks, Memorial Day

Some Companies Are Already Feeling the Effect of GDPR

Some Companies Are Already Feeling the Effect of GDPR

Experts Break Down GDPR Risks for Investors

Experts Break Down GDPR Risks for Investors

Netflix Ready to Surpass Disney as America's Most Valuable Media Company

Netflix Ready to Surpass Disney as America's Most Valuable Media Company

60 Seconds: What the Heck is GDPR?

60 Seconds: What the Heck is GDPR?