Author(s): Peter Bryer
The city of Austin, Texas received a Cyber Monday treat with the introduction of Google Fiber, Google's competitively-priced, gigabit-level Internet service. Google Fiber will provide subscribers with Internet upload and download speeds of one gigabit per second — about a 20-fold increase to current high-speed Internet services in the area. Google is also offering IP-based television services in a package that includes more than 150 channels, the ability to record up to eight programmes at once and one terabyte of cloud storage.
The top-tier gigabit Internet and TV package will cost subscribers $130 per month with a one-year commitment. This includes a set-top box with a two-terabyte hard drive for DVR functions. A gigabit Internet-only service costs $70 per month. For both these packages, set-up fees are waived. Google is also offering free 5 Mbps Internet service to Austin residents, but a one-time set-up fee will cost users $300 or $25 per month for the first year.
Google's gigabit Internet and TV services are priced extremely competitively, with other operators charging similar fees for speeds of less than 75 Mbps. Incumbents in the markets where Google Fiber is now available or soon will be should be prepared for a business model disruption. However, Google's Internet may be fast but its pace of expansion is slow. Google Fiber is currently available in only three markets in the US: Austin; Provo, Utah and areas of Kansas City. Google says it is in discussions with 34 more cities across the US, though tends to take one step at a time. Google Fiber is not for everybody, even if it appears that everybody wants Google Fiber.
CCS Insight believes it's unlikely that Google is preparing to become a serious Internet and television service competitor, but rather will act as a disruptive force to accelerate infrastructure improvements. Google is setting a standard, as it has done with Nexus smartphones and tablets. Google Fiber is a reference design for the company's vision and supports its ad and cloud businesses well. It's game theory in action. In essence Google is saying, "Do it right, or we will."
For Google, there's a value for each connected person. Google has the luxury of a highly-lucrative core business to subsidize the under-connected. Fiber isn't Google's only such effort — the company's Project Loon, for example, aims to bring wireless Internet access to disconnected rural areas using high-altitude balloons. The architecture works in such a way that one or several of the balloons close to an Internet provider will feed connectivity to other balloons to form a mesh network and, according to Google, feed 3G-like connection to users on the ground. Google is currently testing the technology in New Zealand, with the goal of bringing services to developing markets.
Google is disrupting by example. The company is showing that Fiber can be part of a healthy competitive broadband diet, especially in the US, where prices and services are less appealing than in many Western markets. Google Fiber should act as an Internet service accelerant enabling the consumption of more digital content and services.