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Is Google your next cable company?

Mark Sullivan | April 29, 2013
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.

And even after that big spend and time commitment, Google would be only a mid-size operator. Charter passes 12 million homes today, Time Warner Cable 20 million, and Comcast 53 million.

Then there's the process of going city-by-city and suburb-by-suburb trying to get permission to dig up the streets to drop the fiber and sell the services. This might remind some Googlers of the headaches of getting the people of San Francisco to sign on to the free Wi-Fi plan back in 2005.

Google already gave up the telephone service part of its planned triple-play offering because satisfying the regulations and tax rules involved in selling that service was just too much.

Then there's the political aspect. If the experience of the people who built the UTOPIA municipal fiber network in Utah is any guide, Google may face all manner of obstructionist maneuverings by big cable and telco ISP lawyers and lobbyists in city halls, county courthouses, and statehouses. At every turn, they would attempt to slow down or increase the costs of the fiber build.

Perhaps most seriously, will people know what to do with gigabit-per-second speed? It's likely that Google will be playing the role of "first mover" by first planting the fiber then hoping that developers design Web apps that fully exploit its speed.

And as ARS Technica points out, the actual experience of using Google Fiber Internet service today isn't much different from regular old copper-based broadband service. That's because most of the infrastructure that makes up the Internet is still geared for slower broadband speeds. Just because the last mile, the on-ramp, is superfast doesn't mean the superhighway is all that super yet.

Why?

Surely Google knows all this, so why would it want to do it? There must be some pretty important reasons, and I have an idea of what they might be.

Google has always been an over-the-top player, meaning that it has relied on broadband ISPs like Comcast and AT&T to reach its customers with its services. In the beginning, that service was search. Then came advertising. Then came other services like Gmail and documents. Now it's video and apps and music and social networking and a hundred other things. And all of those things, in one way or another, are designed to keep people on Google properties and bolster the company's ad business.

But if even one big ISP suddenly banned Google's services, Google's business model would fail. No ISP would be crazy enough to do that, but the ISPs could do other things short of banning to make it more expensive for Google to bring its services to consumers, depending on what the regulatory environment would allow. They could limit bandwidth for certain types of Google services, or charge a tariff for delivering large files like movies. Larry and Sergey no doubt see it as a potential threat to the business, and one that could materialize in a number of different ways.

 

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