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

Jeff Baumgartner, Senior Editor

July 27, 2012

3 Min Read
Google Fiber's Drive for Density

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

About the Author(s)

Jeff Baumgartner

Senior Editor, Light Reading

Jeff Baumgartner is a Senior Editor for Light Reading and is responsible for the day-to-day news coverage and analysis of the cable and video sectors. Follow him on X and LinkedIn.

Baumgartner also served as Site Editor for Light Reading Cable from 2007-2013. In between his two stints at Light Reading, he led tech coverage for Multichannel News and was a regular contributor to Broadcasting + Cable. Baumgartner was named to the 2018 class of the Cable TV Pioneers.

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