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Google gets serious about rescuing broadband

Bill Snyder | June 6, 2014
U.S. broadband service is slow and expensive, but competition from Google will get us the speeds we really need

Worse, the two biggest landline providers of broadband -- AT&T and Verizon -- have been excruciatingly slow to build out true FTTH networks. (Although AT&T's Uverse is billed as FTTH, it isn't. It's a hybrid of fiber and copper.) As a result, Netflix reports that its users -- who consume about a third of current Internet capacity -- get far worse performance from AT&T and Verizon than they do from the Google Fiber service now available in a handful of cities.

Google Fiber now looks like a serious, sustainable business
The search giant had been experimenting with FTTH projects in several cities, notably Kansas City, but many analysts and observers (including me) didn't take the Google Fiber effort seriously. FTTH is very expensive to build, is burdened with regulatory hurdles, and requires that the provider offer a good deal of customer service and support, which Google has never done very well.

But in February, Google said it is working with 34 cities across the country to expand its FTTH service. Not all of those cities will ultimately get the service, but the move was a clear signal that Google want to compete with the carriers in major markets.

The announcement was met with some skepticism from analysts, but in early May the Bernstein analysts published a bullish report on Google's plans. They conducted a door-to-door survey of Google's first Fiber customers in Kansas City, which showed that Google could get 50 percent market penetration of its 1Gbps broadband service in the next three to five years with service that provides 100 times faster download speed than the U.S. average.

What's more, the Bernstein analysts said Google Fiber could be profitable and they believe Google is serious about the effort. "We don't think Google Fiber is an experiment, a regulatory ploy, or just a bluff to keep incumbents in check or get them to upgrade their networks. We believe the potential to build a large, profitable business is one of the main motivations for Google," they wrote.

AT&T has begun to ramp up its FTTH efforts, saying in April it may roll out 1Gbps fiber-optic service to as many as 21 new metropolitan areas, including Atlanta, Chicago, Los Angeles, San Francisco, and San Jose. It's hard to believe this had nothing to do with competitive pressure from Google.

Google's next broadband frontier may be in space
Could a fleet of satellites extend broadband to connectivity-short parts of the world? Google appears to think so, according to reports this week by the Wall Street Journal. The paper says Google plans to spend $1 billion on a fleet of satellites that would connect the unwired regions of the world.

 

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