"Competition is the main driver for improved services, and this will continue to be the case," adds Ian Keene, research vice president at Gartner. "But Google has discovered that rolling out its services is taking longer than they first thought. If they carry on at this pace, they will not be a threat beyond a handful of cities; not for the foreseeable future, anyway. However, where they are active, we will and have seen the competition fight back with improved subscriber offers."
For example, after Google announced plans to deliver gigabit Internet to Austin, AT&T announced plans to up its game in Austin. AT&T has promised to provide ultra high-speed gigabit Internet (called GigaPower) to its Austin users in December, with initial symmetrical speeds up to 300Mbps and an upgrade to the 1Gbps by mid-2014 (at no extra cost, of course).
But it's still too early to tell whether Google's efforts will prove to be economically feasible, or whether Google will continue to expand beyond the three locations already identified. "Google, like many others, has learned that the enormity of the costs involved in building broadband infrastructure creates a dilemma," says telecom analyst Craig Moffett. "It is extraordinarily difficult to earn a reasonable return on building an infrastructure to compete with cable. Verizon tried with Verizon FiOS and, after reaching only 14 percent of the country, eventually conceded that further expansion was just not economically justified."
Moffett explains that at least Google is giving it the old college try; but the markets they have chosen, so far, are all unique cases. "For example," he says, "In Provo, they're building on a network that was already there. In Austin, we'll get a better sense of what the economics might actually look like. At this point, I think it is reasonable to conclude that fiber-to-the-home deployments like these will remain the exception rather than the rule."
How it works
With more than 1,100 applicants, Google could choose the communities that offered the most advantageous terms and conditions. These installations require access to utility poles, roads, and even substations in order to lay their fiber networks, so applicants had to be willing to expedite that process.
In the case of Kansas City, Google only extends fiber to neighborhoods with a certain number of pre-registered customers.
According to Wandres, locations must be fiber friendly, technological leaders, and residents must show a genuine willingness to work with Google; that is, to be flexible, move quickly, and cut through the red tape.
"It's a long process and requires a lot of work," says Wandres. "There must be a strong demand for fiber among the user base (for those who are excited about a technological hub) and for entrepreneurs who can advance the technology. In Kansas City, the Mayors' Bi-state Innovation Team came up with a playbook for how Kansas City could benefit from fiber. And there's another group now tasked with following through on those plans.''
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