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Google to big ISPs: Fiber is good for you

Mark Sullivan | Nov. 4, 2013
Even if the local ISPs spoil Google's fiber-fast Internet business, Google still wins.

Google Fiber van

Lest you're holding on to any belief that big ISPs like Time Warner and AT&T care the least bit about making available the best technology at a fair price, just look at the situation in Austin, Texas, and Kansas City to learn otherwise. Before the threat of Google Fiber arrived, broadband in those places was as slow and expensive as it is everywhere else.

When Google Fiber launched in Kansas City, Time Warner Cable announced it will increase its fastest service to 100 megabits per second (mbps) in KC, and says it'll match anything Google rolls out in Austin.

When Google announced plans for gigabit-fast fiber broadband service in Austin, AT&T immediately spelled out plans to offer fiber-based gigabit-per-second broadband service there.

All of a sudden, Google Fiber isn't the only superfast service in town. Now, Google has to compete against two big incumbents also promising really fast broadband in Austin and KC. This, after Google pledged to spend many millions to bury fiber optic cables in those cities.

That makes Google sad, right? Not necessarily, says cable industry analyst Craig Moffett in an October 25 investor brief.

Moffett suggests that Google may have known all along that incumbent ISPs would be forced to match Google's gigabit broadband offer. For months and months all the analysts and tech pundits seemed to focus solely on the question of whether or not Google's fiber Internet and TV services could actually make a profit.

Moffett is the first analyst I've read who suggests that Google's real intent may be to create competitive and regulatory environments in which other ISPs can sell gigabit-fast Internet.

Here's Moffett on Google's plans in an October 25 investor brief: "Their goal—or, their Plan A, at least—appears to be nothing less than to ensure that there are at least two high-capacity broadband networks in every market."

"It would be absurd to suggest that they plan to overbuild the whole country themselves (although we have heard some suggest precisely this). Instead, it seems clear that they are hoping to show the way for others by demonstrating that a fiber overbuild can indeed be profitable."

Both Google's and AT&T's gigabit services are set to debut in Austin mid-2014, although AT&T says it'll begin selling a 300-mbps service in the interim, in December.

Sad, happy, or EVIL?
So Google may lose money in the short term on its fiber business, but if it can lure, force, or entice other ISPs to sell dramatically faster broadband across the country, it would effectively be giving all its other services superpowers.

Google's core business is selling ads targeted to consumers based on the keywords used in free services like search, email, social networking, and streaming video. Precicely targeted ads backed by the power of Google's Big Data infrastructure, running on Google's insanely popular services. If those services run faster, better, and reach more people, Google benefits.


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