Friday, October 05, 2012

More Google Fiber analyses


Two more interesting analyses of the Google Fiber project (about which more here), following on from this previous post. An article in the Wall Street Journal ("Web rivals want what Google got") reports that rivals are seeking the same concessions Google obtained from Kansas City to support their network builds:
"For the past few months Time Warner Cable has been negotiating with Kansas City, Kan.,to get a "parity agreement" granting it the same concessions as Google got, the city and the company says. Time Warner Cable has already signed such a deal with Kansas City, Mo. AT&T also has approached Kansas City, Mo., for the same deal, according to a person familiar with the matter."
The permission granted to Google to prioritise roll-out areas based on demand has also been criticised, with rivals having to provide more complete coverage:
"Several cable executives complain that the cities also gave Google the unusual right to start its fiber project only in neighborhoods guaranteeing high demand for the service through pre-registrations. Most cable and phone companies were required by franchise agreements with regional governments to build out most of the markets they entered, regardless of demand."
According to the article, Kansas City is asking AT&T and Time Warner Cable for offers similar to those made by Google to provide free connections to public sites such as schools. There is no mention whether AT&T and Time Warner Cable would be prepared to offer a "free" consumer Internet service like the one Google is offering, where an Internet service of up to 5Mbps down/1Mbps up is provided free for a period of not less than 7 years once a one-off connection fee of $300 is paid. The article does consider whether Google's fiber ambitions reach beyond Kansas City, quoting a Google spokesperson as saying "right now we're focused on Kansas City, but we hope to expand to other communities in the future."

An article in the Kansas City Star suggests that Google will have to demonstrate that 1Gbps speeds are a "must have" and turn a profit if the project is to be considered a success and have a wider impact:
"If consumers start to demand the new speeds, that could coax, prod or shame the cable and telephone companies to deliver them elsewhere. If Google demonstrates it’s lucrative, the sellers of old-school Internet connections could rush to turbo-charge their service. But if we use Google’s service as just another way to watch TV and a mildly better way to surf the Web, any rush to broader broadband could end with Kansas City."
The article also offers some analyses of take-up of the service and also what could be a potential flaw in Google's plans - the provision of a free service:
"The Google Fiber business model is intent on only taking the service where great demand exists. Its late-summer rally to identify such places qualified 180 out of a possible 202 neighborhoods. But those numbers could be suspect. Community groups worked hard to get people to pre-register, even putting down the necessary $10 for some households. People who need $10 to express an interest in service aren’t the best candidates to sign a two-year contract to pay $120 a month for TV and Internet. That could undercut Google’s plan to quickly and cheaply wire large numbers of customers. Google’s also offering free Internet hook-ups (after a $300 installation fee) of 5 megabits per second — speeds far slower than its other plans, but typical of what most homes buy today. The hope is that those people will upgrade. Their “free” service is essentially subsidized by the high-end subscriptions. What if customers decide the slower Internet is fast enough, particularly at a price that can’t be beat? Not only would that slaughter Google Fiber revenues, it would lower the number of people Web surfing at warp speed. That, in turn, could dash new innovations that depend on large numbers of high-end users."
This YouTube video of a speed test of Google's service is impressive, but it's questionable the extent to which the applications demonstrated here require gigabit speeds. This is the old chicken and egg conundrum: which should come first, the applications or the bandwidth? Some more thoughts on this here; we'll just have to wait and see.

I'm hopeful Google's project will be a success, both in terms of demonstrating a "must have" user experience and proving the viability of such investments.

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