High Speed Internet is Probably None of Google’s Business

There has been a lot of buzz surrounding Google’s new super speedy 1000+Mbps fiber optic internet service that has recently been introduced in Kansas City.  With Google actually delivering what they’ve promised to their customers, people are feeling optimistic about the future of American broadband speeds.  Internet service providers such as Comcast and AT&T are known for charging ridiculously high prices for bandwidth packages.  Consumers are tired of paying $60 per month for 20Mbps download speeds, and only getting 8.  So the question we are all asking is, “Why”?  Why are we paying so much, yet receiving so little?  The main issue is our second-rate infrastructure for truly high speed internet.  Countries such as Japan and South Korea offer services running at 150Mbps for $60 per month while ISPs in the United States are charging $90 to $150 per month for 50Mbps.  The lack of widespread broadband infrastructure in the United States leaves just 59% of Americans connected to broadband, while Iceland’s adoption rate is 83%.  The infrastructure that is most commonly used to deliver broadband (DSL) uses copper phone lines to deliver its data. The issue with using DSL via copper wire is that the internet speed decreases as the length of the connection increases.

The United States is slowly offering more and more fiber optic connections to consumers, but it’s still not nearly enough for the US to be a leader in broadband speeds.  With companies like AT&T and Comcast often giving customers less than what they pay for, Google decided that it was time to step in.  Now, again, we have to ask the question, “Why”?  Why does Google care so much about about Americans getting faster internet speeds, when they are not even in the infrastructure business?  Are they trying to enter this market as a long-term competitor, or are they simply trying to pressure other ISPs into offering their own customers faster internet?  Chances are, the latter.  Here’s why.  The majority of Google’s revenues comes from advertising.  In order for Google to continue increasing their ad revenue, more people need to have access to high speed internet.  The quicker that Google can show you their ads, the more revenue they’re going to earn.  Now, why would Google want to spend billions of dollars on their own fiber optic infrastructure, when they could have AT&T and Comcast spend the money instead?  They probably don’t.  What Google is doing by offering record setting high speed internet to places like Kansas City and eventually Austin, Texas and Provo, Utah, is putting pressure on the other ISPs to give their customers faster broadband speeds at a low price.

Is it possible that Google wants to run Google Fiber as a long-term business?  Sure.  But that doesn’t not mean Google is saying, “It’s our business”.  AT&T, Verizon, and Comcast are in the business of bearing the high cost of infrastructure renovation.  It doesn’t make much sense for Google to want to do the same, starting from ground-zero.





High-Speed Internet: Is it Still High-Speed?

This past week Google announced that they are expanding Google Fiber to Austin, Texas. Google Fiber is Google’s version of high-speed Internet, which can download at up to 1000 Mb per second, and digital cable television service. This is 100 times faster than any other Internet provider. Google Fiber also gives you one terabyte of storage, which can be used to record up to eight HD TV shows simultaneously. Google provides you with a brand new Nexus 7, that you use as a remote to control your TV.

Google Fiber is currently only being provided in Kansas City, KS and Kansas City, MO. Future cities that will have Google Fiber are Westwood, KS, Westwood Hills, KS, Mission Woods, KS, Kansas City North, MO, and Kansas City South, MO. Google offers three prices for Google Fiber:

Google Fiber Network Box
  • Gigabit + TV: $120/month ($300 construction fee waived)
  • Gigabit Internet: $70/month ($300 construction fee waived)
  • Free Internet (5 Mb): $0/month (for at least seven years) + $300 construction fee

These higher Internet speeds would eliminate those irritating YouTube buffers and would speed up downloading/uploading files. However, are the benefits of Google’s high-speed Internet worth the cost? It is estimated that it cost Google $11 billion to install Google Fiber nationwide, 20 million homes. That comes out to roughly $550 per home. With Google waiving the $300 construction fee, it would take five monthly payments of the highest-priced service, Gigabit + TV, to pay for the installation of Google Fiber to a home. Google would not start making a profit until five months after installing the service to a home. That is a long time to make a profit. This could prevent expansion to other cities.

In order to receive support from city politicians and residents, Google will install Google Fiber to public institutions for free. Hospitals, schools, community centers, and libraries will get Google Fiber installed for free. The rollout of Google Fiber also creates jobs in the Austin area and creates economic growth.

But is Google Fiber really necessary? The current U.S. average Internet speed is 7.2 Mb per second. While 7.2 Mb is not ultra-fast, it is still quite fast. Should Google not be focusing on expanding Internet access globally? Google should focus their Internet operations strategy on providing access to areas where it does not exist. We can wait for Google Fiber until everyone has access to the Internet first.

Should Google be waiving the $300 construction fee? Is this a smart way to gain customers or is Google only increasing its own expenses? Why is Google only expanding Google Fiber from town to town and not expanding nationally at one time? How are other Internet service providers going to compete with Google Fiber and its amazingly fast speed? What would you do with download speeds of up to 1000 Mb per second? Overall, does Google have good product strategy and project management in regards to the rollout of Google Fiber?


Analyst: Google Will Spend $84M Building Out KC’s Fiber Network To 149K Homes; $11B If It Went Nationwide: http://techcrunch.com/2013/04/08/google-fiber-cost-estimate/

Austin Next City for Ultra-fast Google Fiber: http://www.businessweek.com/ap/2013-04-09/austin-expected-to-be-next-stop-for-google-fiber

Google Fiber: https://fiber.google.com/about/

Google Fiber Expands TV, Internet to Austin, Texas: http://www.abcnews.go.com/blogs/technology/2013/04/google-fiber-expands-tv-internet-to-austin-texas

Residents and Businesses Excited for Possibilities Google Fiber Brings: http://www.kxan.com/dpp/news/local/austin/residents-excited-for-possibilities-google-fiber-brings

US Internet Speed Lags Behind S. Korea, Latvia: http://www.abc15.com/dpp/news/science_tech/us-internet-speed-lags-behind-s-korea-latvia