Larry the cable guy
FIRST stop, Kansas City. Next stop, Austin. On April 9th Google said that it had chosen the Texan capital as the second location for Google Fiber, an ultra-fast broadband network. Google will offer the same deal there as in Kansas City, where it began connecting households in November. For $70 a month it promises both downloads and uploads at a gigabit per second, fast enough to send a high-definition feature-length film in a few blinks, and a terabyte (ie, a shedload) of cloud storage. Television, with a Nexus tablet that serves as a controller, costs an extra $50. Google Fiber also offers a free version (after a connection fee). At five megabits per second for downloads, it is only a little slower, by Google’s count, than the average for which Americans now pay.
Analysts at Sanford C. Bernstein, a broker, estimate that in Kansas City Google will spend $84m to pass 149,000 homes. (Connection will cost a few dollars extra per home.) If it expects to make a mint from selling broadband and television, it may be disappointed. According to Pivotal Research Group in New York, in essence no one has ever made a financial success of building additional cable networks in America. Incumbents that are entrenched in lots of cities can cut prices and improve services to see off isolated entrants.
But sweeping aside America’s leading broadband and cable-TV suppliers is probably not what Google has in mind. More likely, it wants to spur them into speeding up their own services. The goad is working: on the same day as Google said it was coming to Austin, AT&T declared that it too planned to bring gigabit-per-second broadband to the city. “Users who have faster connections do more,” said Kevin Lo, general manager of Google Fiber, who also welcomed AT&T’s announcement. The more they do online, using Google’s search engine, watching videos on YouTube and so forth, the better for Google.
By having its own service Google will also buy a direct link to consumers, from which it can learn a lot about how they will use ultra-fast connections. Austin, a high-tech hub, may be a good laboratory. The search company will be able to dabble with experiments in television advertising, which it knows much less about than it does about the online variety. Its investment in wires may be money well spent.
