Google Fiber Is a Massive Threat to Cable

Google Fiber full planGoogle Fiber is a fascinating thing. It picks up where Google left off several years ago with municipal WiFi. It’s also the second coming of Google TV in a certain way. And it’s much, much faster than anything else available from competitors.

The fastest available ISP in my area is Comcast, which offers 105 Mbps for $114 per month. Google Fiber is 10X faster at 1000 Mb per second. And AT&T U-verse only reaches download speeds of 24 Mbps.

It’s not at all clear that Google is serious about expanding the footprint of Fiber. Right now there are only a small number of cities being rolled out (see graphic below). Yet the the fact that Google Fiber is coming to Austin, TX has spooked TimeWarner Cable. The company responded by offering free WiFi to subscribers throughout the city:

We’ve been rolling out our free WiFi network across our footprint for some time now, as part of our larger strategy to offer significantly more value to our Internet subscribers. Austin was in the game plan for 2013. But Google’s recent announcement encouraged us to deploy our network more aggressively now. As I mentioned a few weeks ago, we’re ready to compete.

Google Fiber cities

For its part AT&T said it was intending to build fiber to the home in Austin. However it’s important to point out that this wouldn’t have happened but for the threat of Google Fiber. AT&T has totally neglected its network in the area where I live and as a consequence we get terrible service.

Cable companies have  in the recent past used bundling (TV, voice, internet) to entice and retain customers (to avoid “cord cutting”). The central problem for cable companies is that demand for voice services (landlines) and even TV are waning. According to the US Center for Disease Control, almost 50% of US households now either have no landline or use mobile phones as their primary phones.

Other than live sports (and HBO) fewer and fewer people are interested in cable; they can get most of the video content they want from Netflix, Hulu and set-top boxes (e.g., Apple TV, Xbox, Roku). Over the course of the next decade cable TV subscriptions will continue to decline; the question is at what rate of erosion?

The internet remains critically important to everyone. Once the internet subscription shifts to another provider there’s almost no reason to continue to do business with “the cable company.”

Unhappily, in my area, there are really only two residential internet providers: AT&T and Comcast. I hate them both.

I was a Comcast subscriber. At the time the service was expensive, slower than it is today and customer service was poor. AT&T lured me away with promises of great speeds (for the time) and lower cost. They utterly failed to deliver the promised speeds. And their customer service is very “challenged” shall we say.

Now I’m looking around for ISP alternatives — and there aren’t any. If Google Fiber (or a comparable service) were available I would subscribe in a heartbeat. I don’t think I’m alone.

If Google were to commit to building out a nationwide network — it would take years for the company to do so — it would see lots of defections from other, slower providers and especially cable TV. I don’t think Google is going to pursue a national or even significant regional footprint, but I hope I’m proven wrong.

People hate their cable and phone companies as a general matter. Accordingly I believe there’s potentially enormous pent-up demand for something like Google Fiber. Were it to become nationally available, incumbent cable ISPs would likely see large numbers of defections and subscribers go out the door.

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4 Responses to “Google Fiber Is a Massive Threat to Cable”

  1. Chuck M says at

    It’s rough how difficult AT&T and Comcast make internet life in SF. Hopefully Google will one day expand out of the south bay and up to the city. Fingers crossed

  2. Greg Sterling says at

    Agree. We’re in G’s back yard. 

  3. Brad Simonis says at

    Interesting that your title is “Google Fiber Is a Massive Threat to Cable” but your article states that you don’t think Google is serious about taking Fiber nationwide. I think that’s exactly what they are up to, even if it takes years. They have the resources (money) and their ultimate plan seems to be to take over the world (and monetize it along the way), so this strategy aligns well with that.

  4. Greg Sterling says at

    Threat I think is an accurate term. Whether the threat comes to fruition is a matter of Google’s commitment. I too hope that they’re serious and they expand nationally and deliver the service to more communities.

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