Google Fiber's Future Looks Limited

Analysts foresee a slo-mo rollout for Google's gigabit fiber service

May 21, 2013

2 Min Read
Google Fiber's Future Looks Limited

Google is destined to remain a small player in the broadband service market, unable to dislodge cable companies such as AT&T Inc. and Comcast Corp., according to analyst Dexter Thillien of IHS iSuppli. Outside of a few select metro areas, the costs and risks get too high for Google Fiber's 1Gbit/s broadband service, Thillien writes in a report issued Tuesday. "While the deployment of Google Fiber to the cities may capture attention, the company's plans are minuscule compared to what its competitors undertake in the overall market," Thillien said in IHS's press release. "AT&T and Verizon have spent many billions of dollars establishing fiber networks in larger population centers, something Google is unlikely to be able to match."Google's push so far, into four relatively small metro markets -- Austin, Texas; Provo, Utah; and the twin Kansas Cities -- has, in some ways, been opportunistic, enabled largely by the availability of dark fiber that it could buy up on the cheap. The company also has encouraged local governments to compete with each other in providing Google with incentives.IHS is not the first to warn against expecting Google to light up fiber across the nation. Last month, analysts at Alliance Bernstein said in a report that they remained "skeptical that Google will find a scalable and economically feasible model to extend its build out to a large portion of the U.S., as costs would be substantial, regulatory and competitive barriers material, and in the end the effort would have limited impact on the global trajectory of the business." A nationwide rollout would cost Google a good $11 billion over 5 years, the analysts concluded. Still, IHS points out, Google is evidently determined to test the market and learn more about what consumers will do with gigabit service as a way to design new services and ad-placement strategies. In addition, it's safe to say that Google is out to pressure incumbents into generally improving their broadband offerings.Incumbents are hardly sitting on their hands, Thillien notes. In Austin, for instance, AT&T has moved to broaden its fiber coverage -- partly, IHS figures, as "a warning to Google and regulators … signaling to the government that there is no need for two different types of regulations -- one for incumbents, and another for new participants."Technology bloggers have openly salivated over the prospect of paying just $70 a month for Google's gigabit Internet service, but they may have a long wait ahead of them. While IP bandwidth is abundant in many European and Asian markets, U.S. consumers look stuck with whatever established telcos and cable operators decide to offer. Not even the Google giant can crack this nut. It may be a job for the government.— John Verity, contributing editor, special to Light Reading

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