ANALYSIS: Stepping up to the plate: Google Fiber
30 August 2012 | Kavit Majithia
Google’s fibre roll-out in the US city of Kansas has received unprecedented global attention.
The project unveiling in late July was followed less than a week later with news that Google had already expanded the service by a second phase of registration for homes in north and south Kansas City.
Kevin Lo, general manager at Google Access, confessed he had been “blown away” by local reaction to the new broadband service.
Google claims to now offer 1,000Mbps speeds to consumer customers, 100 times faster than the average broadband available, in addition to offering a package for triple play in the cable TV market. The question for operators, and indeed the cable TV market, is how much of an offensive Google’s latest play is on their traditional business models.
Paul Budde, leading telecoms analyst and managing director at BuddeComm, claims the move “throws a spanner in the works” for companies that believed copper and cable connection were sufficient enough for the foreseeable future.
Given the early explosive demand for the service, which is due to become fully available in September, operators with interests in Kansas may feel that they have missed an opportunity.
Budde rather controversially claims the larger operators and cablecos in the US “have managed to influence the finetuning of the regulatory system in their country totally to their own advantage”, but says Google has managed to sidestep this largely because it will not offer voice services as part of the package.
The internet powerhouse has also not indicated yet that it plans to build beyond Kansas, which may also help it to avoid any scrutiny from the FCC or indeed the bigger players in the market. From a competition point of view, it will be interesting to see whether Google presents business models on fibre that can be applicable to other states.
Budde states that he doesn’t expect any strong reaction from any of the leading US operators on the development, and with AT&T he was spot on, after the company declined to comment on Google fibre to Capacity.
Leading US telco Verizon, on the contrary, went on the defensive in reaction to Google fibre, implying to Capacity that Google’s Kansas City project was hardly comparable to Verizon FiOS in terms of impact, as FiOS has a reach of 12 states.
Bill Kula, director of media relations at Verizon, outlined the benefits of fibre in the US market. “Fibre networks deliver the optimum broadband and TV experience for consumers.
Google’s use of fibre validates the decision we made years ago to build a powerful all-fibre network to meet the communications needs of consumers today, and years to come.” Google’s “small fry” Kansas City project, as described by Budde, can now claim validation from the US’s biggest operator, which is no small feat.
Kula stated that “it was difficult to gauge Google’s future intentions because we’re not privy to Google’s infrastructure expansion plans”. And while Budde appears to be hoping for a Google offensive on the entire US fibre and cable market, Michael Kende, analyst at Analysys Mason, doubts that it is actually a business that Google wants to get into.
“To be honest, they get enough bang for their buck without becoming an operator,” he says. “They have actually spent a lot of money on infrastructure on data centres and now fibre, but simply not on the scale that telcos do it.”
Kende says the same questions asked now were being asked of Google when it made bids on 700MHz spectrum in the US. After initial interest the company decided not to pursue the auction and spectrum went to Verizon.
While questioning whether Google is indeed looking to expand the service in the US, Kende notes the obvious potential the project has for Google in Kansas, and the ease it could be rolled out in other US cities.
“I’m not sure if this play is openly calling out Time Warner and Comcast in the pay TV market, but it’s certainly an indication that Google can and will make the internet faster. I wouldn’t be surprised if they tried to obtain the licences to roll out in a second city.”
It’s certainly a message to Washington, consumers and competitors that such packages and advanced technology is now becoming a lot more feasible to roll out in the US.