When Google announced last summer it was building a fiber network in Kansas City, it was easy to believe that Google Fiber was just an experiment.
But Google has recently announced it's building a similar network in Austin, Texas, and Tuesday night the city council in Provo, Utah voted to sell its $39 million fiber optic network to Google, making Provo the third Google Fiber city.
Some people think that this fiber thing is the beginning of one of Google's biggest undertakings yet, that the company--after getting into the mobile OS and phone business, and maybe the automotive industry--may actually be thinking about becoming a nationwide ISP.
The great disruptor
Google plans to offer consumers gigabyte-fast Internet access for $70 per month, with the option of buying TV service (200 HD channels) for another $50. In Kansas City, you can get 5 mbps broadband for free if you pay a $300 "construction fee" or $25/month. That option will be available in Austin and Provo too, but the fee is only $30.
Google Fiber Internet service is way faster than what we're used to. The gigabit per second Internet service Google will sell is about 56 times faster than the average home broadband we have today (according to Ookla/Speedtest.net stats).
The Google Fiber service is also a far better value. Americans pay an average of $4.25 per month per megabit/second of throughput speed. Google will be charging about 7 cents per megabit/second of speed.
The fastest broadband in the U.S. today is Verizon's FiOS, with a top download speed of 300 mbps. That's probably all the speed most people need, but it's not cheap at $205 a month. That's about 68 cents per megabit/second of speed compared to Google Fiber's 7 cents.
The ISP market Google would enter is ripe for disruption. It's characterized by inflated prices, big, slow-moving incumbents, old technology, and not much competition. Google is good at rethinking the way a service is sold and delivered, then offering a better product at a lower price (sometimes free) than what the incumbents are offering. That's what the company would try to do as an ISP.
The cost of doubling down
But it's going to cost Google a lot to offer the service on a large scale.
One analyst firm estimates that were Google to build and operate a fiber network that passed 20 million homes (not connect, just bring the fiber within reach) for five years, the cost would be between $10-$15 billion. The firm points out that the estimate assumes Google will be able to find new markets where it can reach the same number of homes with the same footage of fiber (or less) as it did in Kansas City.
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