“Google’s ambitious push to build superfast networks in specific cities, may seem like just another wild idea to come out of the Silicon Valley giant,” Benjamin Pimentel reports for MarketWatch.
“But Google Fiber, as the initiative is called, may just turn out to be a smart long-term business idea, one that poses a serious threat to traditional telephone and cable companies, a Bernstein analyst said Tuesday,” Pimentel reports. “In fact, analyst Carlos Kirjner argues, ‘Our analysis suggests that long-term investors in cable and telephone companies should at least seriously consider the possibility of ‘the frog slowly being boiled,” he wrote.”
Pimentel reports, “Kirjner stresses that Google Fiber poses ‘limited’ short-term threat to the established phone and cable companies. But the long-term risks are clear, he argued.”
Read more in the full article here.
[Thanks to MacDailyNews Reader “Fred Mertz” for the heads up.]
Not sure what would stop the cable and phone companies from installing fiber to keep up.
CEOs putting themselves ahead of the customers.
Verizon (a telco) already has fiber … they call it FIOS … and what’s stopping it from being adopted by consumers is that Verizon’s asking price (monthly fees) is more than most consumers are willing to spend … ie, they set the price too high.
FWIW, part of their self-serving business strategy is the “Triple Play” routine of bundled services, where the consumer is herded by price structure to rationalize getting ( Bandwidth + Phone + TV ), because they’ve set the price for Bandwidth only artificially high.
-hh
FYI – as an example, I just checked my local Telco (Verizon) for their FIOS prices. To sidestep their first year lowballing nonsense, these are all their ‘No Contract’ rates, per month, before local taxes & fees:
$75 – 15/5
$70 – 15/5 + TV
$75 – 15/5 + Phone
$80 – 15/5 + TV + Phone
Yes, you read that first two lines correctly: they charge LESS if you add their basic TV package than just their 15/5 bandwidth service. Of course, there’s probably more taxes/fees if you have TV, so the net result will probably be a wash.
-hh
My FIOS may be fiber optic coming into the house but in all has to squeeze through a single coaxial cable BEFORE it reaches the TV, WiFi, and telephone.
How much will it cost Verizon to upgrade that 50′ of coax compared to Google’s cost of establishing a local presence (installation, sales), acquiring right-of-way, running fiber around your city and advertising for customers?
The correct answer to that question explains why Google Fiber is not going to accomplish what the title of the article threatens.
As with any complex businesses (complicated technology, logistics, business partners, operation, etc.), there is a learning curve when doing something new.
By the time a new competitor develops a lot of experience it can be very difficult for old competitors to make the turn. They are held back by the momentum of old practices, culture, business contracts, etc., even when it would appear to outsiders that they should be able to catch up again easily.
I suspect Google is doing a lot more than just running some fiber. They are figuring out what kinds of local resources, servers, caching, and other technology best matches the increased bandwidth. They are probably also exploring what new kinds of consumer and business services they could provide on top that speed that existing telecom providers are not. Given Google’s unique advantages (huge amounts of data and expertise in creating value with it), traditional telecom ought to be very worried that they are taking the time to experiment with their turf.
Of course they could. But that would also force them to invest in upgrading infrastructure as opposed to simply lining their pockets with profits. They’re also gouging consumers, providing much less service at a higher price than in other countries. Google Fiber has huge potential to be a disruptive force, specially to a company like Comcast which holds a monopoly in 22 of the 25 largest US cities.
The best answer is cost. The analyst never talked about how long it will take to payback the money Google is spending. Gonna be way more than people expect. Both AT&T and Verizon had similar plans a few years ago. Now they found out that people are not go to pay a premium and then it was time to phase out future plans for expansion. Internet is only as fast as then slowest link in the chain. Some sites might only have T-1 or less connections. Paying lots of money for last mile speed does not always work out.
Google starts a lot of things that it never finishes.
If Google Fiber ever does threaten them, it will be far easier for AT&T and Verizon to upgrade their systems than for Google to build a nationwide network from scratch. The incumbents already have right-of-way, workers in the local market, long-term customers on contracts, offices, retail stores, local politicians enlisted in their cause, etc.
Just another pipe dream from the smart, rich, immature boys who run Google.
Please kill them. They so dearly deserve this.
Given how the telco’s and CATV companies have held prices quite high for years/decades … cash cows for them … they’ve set themselves up for being disrupted – – all it takes is a competitor with deep enough pockets to deploy a network, which can be aided by contract agreements that we keep on hearing rumblings about such as Al le Carte TV channel subscriptions via the Apple TV…
The cable companies and Telcos have been running their business in a way that is counter to the interests of their customers and their business is ripe for being disrupted.
I’ve argued for some time that Apple should be the ones disrupting them as at the moment the pipe is the weak link. Apple need the co-operation of service providers to incorporate features like visual voice mail ( does your supplier offer it after all these years ? Many still don’t ). The fees charged by ISPs and cable companies are far too high and the contracts are unreasonable.
Google is going about it in a piecemeal way. What is needed is not an optical cable network in selected big cities, but a truly global system so that a customer can buy into the service and still use it when they travel elsewhere in the world. Few companies could contemplate such a challenge. Apple is such a company and has the vision to understand the long-term benefits.
Sure it will kill them… Operating in just some regions of the US and not the world will do that… /sarcasm
I support any effort to disrupt the cable monopolies. I don’t have cable, I just want to see chaos in the cable industry. Maybe then consumers will get a break.
As much as I hate the cable/DSL companies, the thought of Google owning the pipes makes me want to start planning for life in a cabin in the woods
As you said. The misery quotient of Cable subscriberdom already matches the suffering index of the Wintel gulag, yet neither seems as horrific as the skin-crawling prospect of a vertically integrated Google.
Google is the closest equivalent to evil we have business-wise on earth. But, if this lowers the ridiculous pricing of broadband seen nationwide in the states, I’m all for Google Fiber. Competition will be forced to lower prices in order to compete. Something like this has been much needed… I was hoping Apple would do this instead.
I concur, bpondo. This would be a leap past existing Google service data mining. Every single bit flowing into and out of your home would go through a Google server running Google data parsing and ad delivery software. 1984 meets 2013.
I’d be very surprised if Our Lady of Perpetual Beta were able to pull off a project of such magnitude.
I just don’t think wire is the future. Yes, a fortune has been spent in fibre optic installations but you know what? Fast as it is, I just don’t want to see that white wire or see the router anymore. Cheap, hard to steal wireless is the future. The speed is coming. Oh, if only wireless cloud computing is what Apple will announce at the WWDC. If only Apple could free me from 3G and 4G networks. I just want fast wireless everywhere in the world or deliver everything via satellite. You can do that, too.
Good for Google. Entrenched players need to be shaken up. Too much cronyism in that space.
Google may be able to take high speed internet services, but it will never challenge the cable providers for entertainment services. Google can’t get the deals for carrying all the TV networks and channels like Verizon, Time Warner, Cox, etc. can achieve.
Someone correct me but isn’t Google giving the services away in exchange to mine the data to learn more about their customers habits so they can sell more ads?
That would be an affirmativei
There are other companies like google fiber, I can’t remember the name but I know it is in san fransico areas. But what happens when google has another monopoly
When Google has monopolies on all important information channels then we must be reminded of Richard Burton in the movie 1984. It will be not a good thing.
Google Fiber worldwide would be the best thing Google has done since search and buying YouTube. It would be massive end run around all those entrenched carriers.
Therefore it will likely end up on their Beta scrapheap and sold off.
I’m a huge Apple fan, but you are all delusional about Google getting into this space in a significant way. The scope of work to build this infrastructure is mind boggling. I can see them having a marginal impact in a handful of markets but it could take a decade or two before they had a large enough network to challenge the Telcos and Cable Companies. This effort would be a huge drag on their profit margins and bottom line. I’m curious to see what they can do, but Im not holding my breath.
Most of us see through it. Infrastrucure is not really Google’s thing. When laying cable for some township they are simply opening a fresh channel for advertising. They have lots of other ideas about channels and are not fixated on fibre alone. Their bottom line is in scraping information.
Vacuous Speculation:
But the long-term risks are clear
Google Fiber: The publicity stunt.
vacuous speculation
Is there any other kind?
FiOS has been a margin killer for Verizon. Google has the deep pockets to install fiber, but there’s no way to avoid the problems Verizon ran into. It’s expensive, and people don’t want to pay for it.
Which is why the smart money insists that Google is just playing around, as is their wont.
They seem to me as boys playing on the beach, collecting shells and then discarding them, ruining tide pools for fun, conducting mock sword fights with driftwood, plotting pirate adventures around a campfire at low tide.
Google has no singular goal to guide them to eminence. They can easily maintain the effluvium of cash that sustains their Tom Sawyer experiments. They’re already filthy rich, and they don’t care about politics or world domination, only in seeing what’s possible. Admirable in its entirety except for the part about how the ends justify the means.
Google’s goal is to force the hands of the cable/DSL providers. In Minneapolis, US Internet is installing gigabit fiber in select areas. And it’s taking forever. It’s neighborhood by neighborhood. $100/mo for gigabit internet. I’d pay that.
“High-capacity fiber connections to homes and businesses are not just a social good, but a business imperative, she says, and the lack of them will cripple American efforts to compete in a global economy.” http://www.nytimes.com/2013/05/20/business/media/telecoms-big-players-hold-back-the-future.html?pagewanted=all
The estimate I read said it would cost about $55 Billion over 5 years to build out a Google Fiber type network nationwide. Until Tim Cook & Company decided to give it away, Apple had that kind of money easily. Knowing that pisses me off as an investor.
Well it is because it is subsidised. Gooe pays for this with Add dollars. If thy had to compete on the same rules as the other companies they would not be able to do this. Google glasses, google car, everything is running on Add dollars. But, we can get 1 Gigabit here in Sweden if you live in the right spot and your land lord has connected fibre. It is not very common but it probably will get more common in the future. 100 Mbit is good and more common.