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Posted by Dan Bieler on October 11, 2012
The other day I had an interesting discussion with Google about their Fiber-to-the home (FTTH) infrastructure. Google’s reasoning behind the move into the network infrastructure space stems from the belief that online growth and technology innovation are driven by three main factors:
The pricing point for Google Fiber is US$70 per month for 1 Gbit/s access. Users can also pay US$120 per month for a 1 Gbit/s offering that includes 1 terabyte of Google Drive storage and Google’s Internet HDTV product and Video On Demand (VoD) offering. This compares pretty favourably with competing offerings. In addition, Google offers citizens to pay for their own Internet access construction fees. They can either pay a US$300 one-time lump sum, or US$25/month for one year and then US$0/month after that, and they'll have the Internet free for 7 years at the average US broadband speed of 5 Mbit/s.
In order to support and boost a true transformational user experience, Google develops its own hardware. Existing technological solutions often do not support the speeds that Google Fiber delivers. For instance, Google builds its own router gateway to support its true gigabit speed. Also, Google’s tablet, the Nexus 7, is the default remote control for the Google Fiber TV and VoD solutions. The hardware devices in this ecosystem are cloud configured, which in turn further enhances the user experience. In this sense, Google is moving to the broader broadband ecosystem.
Kansas City acts as a test bed for Google Fiber and Google is cooperating with the municipal government to roll out its FTTH infrastructure. Although the focus at present is on Kansas City only, over 1,000 other cities have applied for Google Fiber, highlighting the underlying demand for high-speed Internet access.
In my view, Google’s venture into end user network infrastructure throws up two important points:
Google Fiber is ultimately a big cloud-push for the home (and business) network as it transforms the broader user experience. Depending on the scale of Google Fiber beyond Kansas City as well as the reaction by competing carriers, there are good reasons to believe that Google will strengthen its position in the home and business as a result of the Google Fiber initiative. In turn, this intensifies competition for the likes of Apple, Microsoft, and Amazon, as well as carriers. So, is Google going to pursue this project aggressively? How far will it go, and how fast? My take is that Google will treat Kansas City as a test for a new business area. I see Google rolling out their hyper-broadband in selective areas with higher-purchasing power. If this strategy works, Google will push on. And if it looks unattractive, Google will “cut the fiber.”
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