Search and advertising giant Google plans to build and test super fast fiber-optic broadband networks in a few communities around the U.S., promising up to a one gigabit per second service — a hundred-fold increase over what most Americans currently can subscribe to.
A 1 Gbps could let a user download a HD movie in minutes and is more than 1000 times faster than AT&T’s basic DSL offering.
The company, whose experience running a ISP is limited to a small, free wireless service in its hometown of MountainView, California, called the intiative an “experiment” in keeping with what it urged the FCC to do with its upcoming national broadband plan. The company is asking municipalities to apply to be candidates and said it will offer a competitively priced service to 50,000 to a half a million people.
The announcement is not good news for the nation’s ISPs, which have long had a sour relationship with Google. Although Google interconnects with networks just as any other participant in the internet does, ISPs — including AT&T — have complained that Google properties such as Youtube should pay more to ride on their networks.
For its part, Google sees high ISP subscription fees and the U.S.’s slow connection speeds as hindrances to more profits. In the simplest equation, the more people who are online and the faster their connection, the more money Google makes from little text ads on the net. Any company who wants to make money anywhere between a user and an online ad has to fear that Google will try to drive the profits out of its business, whether that be a hardware vendor, a software company like Microsoft or an internet service provider.
Google is doing at least three things here:
1) It’s demonstrating to the public and to regulators that really fast broadband isn’t nearly as hard as companies like AT&T and Verizon pretend it is.
2) It’s sending a warning to large telecoms that they better start working to reduce prices and increase service or they might face a competitor they dont’ want to go up against, and
3) By partnering with municpalities, it’s learning/showing the nation how to bypass the current dominant telecom players by creating municipally-owned fiber infrastructure that can be rented to multiple service providers, who can then duke it out on price and service. If successful, that could create a model where Google uses its huge cash surplus to finance municipally-owned fiber optic networks, undermining its telecom rivals and speeding up the nation’s internet without ever having to run a consumer-grade network or learn how to do customer support.
If I were an executive at a large ISP, I’d be very unhappy with Google’s announcement. When Google enters a market, it usually destroys traditional ways of making money. ISPs want to find ways to measure internet traffic, and charge users by levels — even as their own upstream bandwidth costs continue to plummet. The rhetoric used to justify those decisions to consumer and lawmakers just won’t hold up if there’s an fairly priced, all-Fiber 1 Gbps connection just down the road.
Which is just the long way of saying that in a land where it costs “$35 a month to get an assymetric, slow DSL line that tops out at 1.5 Mbps, perhaps those traditional profits need to be destroyed.
