Google Fiber to the Home End Game

Google fiber to the home

Google 1Gbps fiber to the home boosts community GDP productivity by 1%, Source FTTH council

steve_sechrist_on_transparentBroadbandSearch engine giant Google is beginning to make inroads, in its fiber to the home (FTH) delivery service with the long term effect that will change the rules of broadband delivery, here in the US (at least for now). The company is using fiber to the home to boost bandwidth and cut cost, providing very high speed access to internet content and data. The move by Google shows firstly, that it can (both the technology and successful business model exists) and secondly to perhaps make the point that others in the space should follow.

Google also cites a study from the fiber to the home (FTTH) council, that both confirms and quantifies the contribution that access to gigabit services offers. The new study from the group looked at 14 communities with broadband gigabit access and found, “…they exhibit a per capita gross domestic product (GDP) of approximately 1% higher than the similar communities with little to no availability of gigabit services,” according to Heather B Gold, FTTH President. She also said, “In dollar terms… they enjoyed approximately $1.4B in additional GDP when gigabit broadband became widely available”. And according to Google, that number may be higher as evidenced by the Kansas City bond ratings hike (upgrade) after Google’s fiber to the home deployment in that metro area.

This positive correlation in improved GDP from access to gigabit availability prompted Gold to say in the group’s press release, “As we look at these study results, we can clearly conclude that every community should be a gigabit community”. Beyond simple productivity gains, the study, conducted by Analysis Group for FTTH said other contributing factors to GDP included infrastructure investment and new job creation/occupational changes.

As Goes Kansas City, So Goes the Nation

For example, in the Kansas City, MO market, first to roll out its fiber to the home delivery service, Google delivers wicked fast 1Gb/sec internet service based on its new fiber solution for $70/month. To help expand the service to lower income groups, the company also offers a free basic service (5Mb/sec) for a one-time $300 set-up fee that cost as little as $25/mo with a payment plan. Google’s motivation is not hard to discern. The company will most certainly drive its core business (selling ads) forward with faster over the top programming and put pressure on rivals to match new pricing models. All good news for HW companies like connected TVs looking for content delivery to help drive new sales forward.

Also on the list for 2014 Google fiber to the home deployment includes Austin, TX and Provo, UT, with another 14 cities on the short-list, and “under consideration”. In a move perhaps to match Google, AT&T announced it will upgrade current 300 Megabit speeds to 1Gb per second in up to 21 metro areas, some that compete with Google head to head. No word on pricing yet from that company.

Google fiber to the home coming to Austin TX Google fiber to the home coming to Austin TX, Source: Google

Meanwhile on the infrastructure /investment side, the Google build-out will establish and realize new benchmarks in the fiber to the home delivery service that put current sub-GBps speeds to shame. The company offers nothing less than a “game changing” approach to the heretofore, relatively static economics of broadband delivery. Google’s new pricing and delivery speed model will likely force other competing BB providers to either match or disengage from those specific markets. Comcast, AT&T and others will have to put up or shut up as Google continues its fiber to the home march, (hopefully) coming soon to a community near you. – Steve Sechrist