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Also: UTStarcom spinning out IPTV business; FCC maps out the Connect America Fund; AT&T and Verizon turn down rural broadband cash

Google Fiber's Drive for Density

Jeff Baumgartner
LR Cable News Analysis
Jeff Baumgartner
7/27/2012
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Welcome to the broadband and cable roundup, T.G.I.F. edition.

  • While it's "unlikely" that Google Fiber's US$300 upfront construction fee will cover all the costs of the fiber drop materials, required in-home boxes and devices (including the Nexus 7 tablet) and the truck roll and installation labor for each new customer that takes the company's broadband/TV bundle, Sanford C. Bernstein & Co. Inc. notes that Google (Nasdaq: GOOG)'s customer acquisition model should at least make the effort economically palatable. Getting people in a given "Fiberhood" to pre-register ensures that Google Fiber will reach a minimum customer threshold in the initial deployment period, giving it the kind of density that will help it to maximize the number of installs that can be done per day. But the firm, which counts Time Warner Cable Inc. (NYSE: TWC) among the big cable stocks it covers, is skeptical about whether Google's approach will attract a lot of customers and if the project can be turned into a profitable business "without material subsidies." (See The Google Fiber Threat and Google Fiber Bundles TV, Shuns Data Caps.)

  • But Google tells GigaOm that its deployment and customer acquisition model will put it in the black, claiming that the upfront fees will cover the bases. The story also explores several ways Google Fiber is shaving costs, including the reliance on bulk deployments in those aforementioned Fiberhoods, and the use of home-grown network gear and in-home devices, including the storage box that will serve as the home's DVR -- a decision that keeps Google from having to buy more expensive boxes from sources such as Cisco Systems Inc. (Nasdaq: CSCO).

  • And yet more Google Fiber stuff ... Google's giving Kansas Citians a chance to test drive its 1-Gig and TV services, while partaking of some tempting refreshments, starting Saturday (July 28) at a facility called Fiber Space. The catch? It's by appointment only. Tell them you're with Marissa Mayer. (See New Yahoo CEO: Cable Friend or Foe?.)

  • In a bid to improve margins and shed costs, UTStarcom Inc. (Nasdaq: UTSI) will unload its IPTV equipment business and turn it into a privately held, standalone company to be led by current UTStarcom CEO Jack Lu. COO William Wong has been tapped to take over Lu's current role at UTStarcom once the company has done the splits. The vendor's IPTV business, which includes both infrastructure gear and software and set-top boxes, accounts for about one-third of UTStarcom's revenues, which totalled $46.7 million in the first quarter of this year. The company said the divestiture, expected to close by the end of August, will reduce annual expenses by $17 million.

  • The Federal Communications Commission (FCC) says nearly 400,000 residents and small businesses in 37 states will get high-speed Internet within three years as a result of the first phase of the Connect America Fund. The full goal is to connect 7 million Americans in rural, unserved areas in six years. This map illustrates how the funds are being allocated in the initial go-round:



  • But some big carriers aren't joining the fun. AT&T Inc. (NYSE: T) and Verizon Communications Inc. (NYSE: VZ) declined the funding they'd been offered to help bring broadband to rural America during phase one, reports Telecompetitor. AT&T said "no thanks" to $47.8 million, noting that it's evaluating its options for rural broadband, while Verizon turned down $19.7 million, while at the same time saying it supports Universal Service Fund reforms. Who says these companies aren't all heart?

  • Cable veteran Michael Pohl has been named chairman of advanced video advertising vendor BlackArrow Inc. , succeeding Larry Kramer, who's off to be president and publisher of USA Today. Pohl, a BlackArrow board member since last year, used to chair the board of BigBand Networks Inc. and was CEO of nCUBE Corp., two video tech companies that are now part of Arris Group Inc. (Nasdaq: ARRS).

    — Jeff Baumgartner, Site Editor, Light Reading Cable

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    AESerm
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    AESerm,
    User Rank: Light Beer
    12/5/2012 | 5:25:57 PM
    re: Google Fiber's Drive for Density


    Maybe something other than big heart that led T and VZ to decline the $. After all, Fairpoint only took 1/2 of what it was offered, Centurylink about 1/3 and Windstream about 1%.

    fgoldstein
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    fgoldstein,
    User Rank: Light Sabre
    12/5/2012 | 5:25:54 PM
    re: Google Fiber's Drive for Density


    That's the question the PCCs asked themselves.  If you're VZ or ATT, you're now a wireless company with some wireline systems that provide backhaul to the cells.  They're milking hte heavily-depreciated wireline plant to death.  They don't want the rural business at all.


    If you're Windstream, you're becoming a big national CLEC funded by a rural USF ILEC, but the rural ILEC stuff is just not so interesting any more.


    If you're Frontier, you're not much more than a rural ILEC and will take any money that improves those profit margins.  No wireless, not much urban turf, so CAF is addressing what you do for a living.  So they're the major Phase I recipient.


    If you're CLQ, it's all bluster, whining about WISPs, but you've got a worn-out old plant and you're just milking it for whatever it's worth, investing where the margins are good but not much more.


     

    kaps
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    kaps,
    User Rank: Light Beer
    12/5/2012 | 5:25:49 PM
    re: Google Fiber's Drive for Density


    Didn't see any mention in the Google Fiber news this morning about businesses potentially using the service to power Wi-Fi. Is the google service consumer only?

    kaps
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    kaps,
    User Rank: Light Beer
    12/5/2012 | 5:25:49 PM
    re: Google Fiber's Drive for Density


    Didn't see any mention in the Google Fiber news this morning about businesses potentially using the service to power Wi-Fi. Is the google service consumer only?

    kaps
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    kaps,
    User Rank: Light Beer
    12/5/2012 | 5:25:48 PM
    re: Google Fiber's Drive for Density


    I'm just thinking out loud here but... fiber backbone... set-top boxes... White Spaces and Wi-Fi wireless development and gear... Moto handset technology... Wireless OS in Android... 


    What's missing? Looks like a potential new wireless/wired ecosystem to me.

    kaps
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    kaps,
    User Rank: Light Beer
    12/5/2012 | 5:25:48 PM
    re: Google Fiber's Drive for Density


    I'm just thinking out loud here but... fiber backbone... set-top boxes... White Spaces and Wi-Fi wireless development and gear... Moto handset technology... Wireless OS in Android... 


    What's missing? Looks like a potential new wireless/wired ecosystem to me.

    joanengebretson
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    joanengebretson,
    User Rank: Light Beer
    12/5/2012 | 5:25:48 PM
    re: Google Fiber's Drive for Density


    On the webcast Google said they would be announcing more re a business offering in the future. Your idea about using the gigabit service to power WiFi is an interesting one. I'm sure a lot of people will be looking forward to see what Google comes up with for the business market.

    patentchoi
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    patentchoi,
    User Rank: Light Beer
    12/5/2012 | 5:25:41 PM
    re: Google Fiber's Drive for Density


    Will this service be in Beta for the next 7 years :-)


     


    Seriously what kind of SLA do they provide ?

    steve q
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    steve q,
    User Rank: Moderator
    12/5/2012 | 5:25:40 PM
    re: Google Fiber's Drive for Density


    I see this a bad move for Verizon if they do not show the world that there Fios data network is the best. People will end up to move to other carrier even if fios is much better. Verizon will gain more customer away form the cable company like comcast and time warner,if they join with goggle like they did with the redbox the cost to verizon is nothing then the cost and hope for a better service to those customer with the AWS the verizon wireless service will not make a grade to what fios is to customer and our busines custome that need speed not hope. That 4g will give.

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