Google Fiber: A Threat to Cable Providers

aNewDomain.net—When Google announced it was building an ultra-fast Internet service called Google Fiber in Kansas City, MO, it seemed like yet another of the search giant’s playthings. The major cable providers Verizon, Time Warner Cable and Comcast gave a collective shrug, not viewing the move as a legitimate threat.

Yet after Google recently announced it was expanding Google Fiber into other markets including Shawnee, Kansas, Austin, Texas, and Provo, Utah, the cable heavyweights took notice. The fact is, Google Fiber may turn out to be a profitable endeavor that could transform the public cable and Internet industry.

Google Fiber optic cable

Google Fiber offers gigabit to the desktop with an “Internet connection speed 100 times faster than today’s average broadband, paired with crystal-clear high definition TV,” according to Google. Yet, Google Fiber also provides nearly free Internet service. For an upfront and one-time setup fee of $300, Kansas City subscribers get a 5Mbps connection for at least seven years with no monthly fees. This affordable rate for high-speed Internet has spurred other providers to action.

“Imagine chatting with your doctors or teachers via HD video conference, or collaborating on a work or school project with contributors across the globe in real time, without delays,” Google claims. “Imagine new online billing applications that don’t freeze. Imagine automatically saving all of your work to the cloud in a blink of an eye — and never having to worry about losing files to a computer crash again.”

Soon after Google announced the expansion of its experimental Internet project, Time Warner Cable announced it would build a citywide wireless internet service in Austin, which will be available to customers at no additional charge. Plus, earlier this month, AT&T announced it will build a gigabit fiber network in Austin.

This is certainly due to Google Fiber’s influence, since the major Internet service providers have been reluctant to incorporate super-high-speed services into their offerings. Last year Verizon canceled plans to expand its FIOS fiber Internet service. Time Warner said recently that customers aren’t interested in gigabit speed Internet.

Yet in Kansas City, Google Fiber has already been purchased by about a third of homes in the neighborhoods where it’s offered, reported the Kansas City Star. An estimated 77 percent of Kansas City residents who were offered the service considered switching to Google Fiber and 60 percent were highly likely to do so, according to a Bernstein survey, reports the Star

“These very high purchase intent numbers do not allow us to rule out the possibility that Google will indeed achieve very high penetration of homes passed, well in excess of the typical 20 percent to 30 percent that over-builders have achieved historically in their most successful markets,” the report said.

Chandler Harris is a freelance business and technology writer located in Silicon Valley. He has written for numerous publications including Entrepreneur, InformationWeek, San Jose Magazine, Government Technology, Public CIO, AllBusiness.com, U.S. Banker, Digital Communities Magazine, Converge Magazine, Surfer’s Journal, Adventure Sports Magazine, ClearanceJobs.com, and the San Jose Business Journal.

Jeremy Lesniak
Based in Vermont, Jeremy Lesniak is managing editor at aNewDomain.net and founder of Vermont Computing, Inc. and whistlekick.com. Email him [email protected]
Jeremy Lesniak
Jeremy Lesniak
Tags: Technology
  • Joe

    “Time Warner said recently that customers aren’t interested in gigabit speed Internet.”

    And who the hell did they ask? Nobody would pass up on gigabit speeds.

    • David

      I am not a gamer. I have no current need for that kind of speed.

  • http://twitter.com/NerdUno Ward Mundy (@NerdUno)

    When you’re reportedly making a profit in the 90% range, why would Comcast and Verizon ever want to spend a dime on additional infrastructure. All they care about is the bottom line.

  • Ben

    With Google’s cavalier attitude about rescinding services on a whim, there’s no way in heII I would sign up with them. Sorry, Google, I’m not swallowing your kool-aid anymore. And 5mbps? How is 5mbps 100 times any sort of broadband? GigaOm says average US broadband is 6.6Mbps.

    • voiper

      @Ben: Apparently you missed the beginning of that paragraph: “Google Fiber offers gigabit to the desktop with an Internet connection speed 100 times faster than today’s average broadband” – gigabit is 1000 Mbps (or 1024?) so using your quotes average of 6.6Mbps that’s 151x the speed.

      The 5Mbps offering is a “light” version that only has an install fee and NO monthly fee, and is indeed not 100x faster than other broadband…

  • http://www.facebook.com/sam.walker.3511 Sam Walker

    If customers aren’t interesting in fast internet why does TW offer higher speed plans? Maybe the survey is based on sales of their own higher speed, but overpriced, plans. Some of us would like higher speeds for more than just games and better TV, but the price for even 30mb stops us.
    TWs (and ATTs) main focus now is preventing competition through politics. Of course they don’t want to improve, they have millions of miles of old wire making them a fortune. Fiber is a threat to that because it offers bandwidth not obtainable with the old wire. This bandwidth can allow higher speeds and cheaper access.
    And even you are one of the TW employees who said they do not need high speed, less than $4/month for 5mb internet is a pretty good deal.

  • http://www.facebook.com/ChrisBoardmanMusic Chris Boardman

    threat is to tiered internet sales. destroy the monopoly and cable providers are hosed.

  • W H

    There is a valid concern that Google may abandon their fiber experiments because they abandoned their Free WiFi in their home town of Mountain View, CA where the free Internet service has been so bad over the last 6 months that it’s unusable. Its not because the loading went up which is Google’s PR story (its actually gone down) but because of equipment failures and lack of maintenance. This has been determined by very technical users (it is Silicon Valley) See Google forum -
    https://groups.google.com/forum/?fromgroups#!forum/google-wifi-network
    Subtext Network Update

    What I don’t understand is why Google isn’t offering a combo of high density wireless (maybe WiFi with latest 802.11n or 802.11ac) nodes supported by fiber to the nodes or group of nodes. This should be cheaper than fiber to the home. Although short range fiber costs have come down, any dedicated cabling to the home whether copper or fiber, is more costly due to the lack of multiplexing among many users. Cell phones systems use this concept with fiber to the cell site but don’t have the digital capacity due to larger cells and why would they offer a system where data costs a few percent of what they now charge? Ironically, the cable TV guys could probably provide such a system since they have fiber to local cable distribution but why would they compete with themselves? If Google forces them to do this, then great.

    There is a legitimate need for a competitor against the local duopoly of telephone DSL and/or cable TV modems which have been using inefficient local, copper distribution for the last 60+ years. Internet back bone costs have been coming down, DSL modems can’t cost more than $100 dollars on each end of the twisted pair, yet the phone guys charge $30 plus each month for incremental DSL service. Land line telephones are disappearing and streaming will eventually replace cable TV and satellite assuming we can get the content guys to get paid via a streaming service instead of only on cable or satellite (like iTunes killed DVDs & CDs). At least HBO is thinking of doing this.

    The world doesn’t really need 1Gbps home connections, but robust, and real 5-10Mbps connections. Even in Kansas city, I understand that 80% of users signed up for the 5Mbps free monthly (after $300 intallation). So, people are wondering if Google isn’t losing money (eventually killing the system) because of over capacity. We would all be better off with a lower cost, lower speed system that doesn’t fold a few years down the road.