People
today are thrilled
about Google (NASDAQ: GOOG ) Fiber. The search giant's foray into gigabit fiber
optic broadband service
represents a
vital catalyst to
the business,
even
though also embodying a probably
disruptive risk
to incumbent cable companies
which
might be intent on holding America captive as
a result of substantial
charges
and slow speeds.
The corporation has also picked up the speed. After the initial rollout in the Kansas City region, Massive G subsequently announced growth into Austin, Texas, and Provo, Utah. Individuals back-to-back announcements have been encouraging signs that possibly Google had grand ambitions to increase Fiber's attain.
Could Google potentially roll out Fiber nationwide and actually place the heat around the cable organizations? Never hold your breath.Less complicated explained than carried out
Industry researcher IHS isn't going to consider it can be feasible for Google to deploy Fiber nationwide, despite the fact that the Austin and Provo announcements were so rapid. Google will often be a "minor player" during the U.S. broadband market place, based on IHS. Rolling out on such a scale would only be as well costly.
The researcher estimates that the complete population within every one of the at present planned cities is about one.four million, or about 0.4% of all U.S. households, that is reasonably shut to my preliminary estimates prior to Provo was announced (Provo has a comparatively smaller population of an estimated 115,000). Even when Fiber have been to dominate the markets that it truly is readily available in, Google would have only about 0.2% marketplace share of all U.S. properties.
In comparison, Comcast (NASDAQ: CMCSA ) has 18.3 million broadband subscribers, AT&T (NYSE: T ) has 16.4 million, Time Warner Cable (NYSE: TWC ) boasts 10.9 million, and Verizon (NYSE: VZ ) enjoys 8.8 million subscribers.
The corporation has also picked up the speed. After the initial rollout in the Kansas City region, Massive G subsequently announced growth into Austin, Texas, and Provo, Utah. Individuals back-to-back announcements have been encouraging signs that possibly Google had grand ambitions to increase Fiber's attain.
Could Google potentially roll out Fiber nationwide and actually place the heat around the cable organizations? Never hold your breath.Less complicated explained than carried out
Industry researcher IHS isn't going to consider it can be feasible for Google to deploy Fiber nationwide, despite the fact that the Austin and Provo announcements were so rapid. Google will often be a "minor player" during the U.S. broadband market place, based on IHS. Rolling out on such a scale would only be as well costly.
The researcher estimates that the complete population within every one of the at present planned cities is about one.four million, or about 0.4% of all U.S. households, that is reasonably shut to my preliminary estimates prior to Provo was announced (Provo has a comparatively smaller population of an estimated 115,000). Even when Fiber have been to dominate the markets that it truly is readily available in, Google would have only about 0.2% marketplace share of all U.S. properties.
In comparison, Comcast (NASDAQ: CMCSA ) has 18.3 million broadband subscribers, AT&T (NYSE: T ) has 16.4 million, Time Warner Cable (NYSE: TWC ) boasts 10.9 million, and Verizon (NYSE: VZ ) enjoys 8.8 million subscribers.
Source: IHS (May 2013).
The broadband business favors large incumbents, because of high infrastructure costs that inevitably result in an oligopoly industry structure. AT&T and Verizon have shifted their focus away from the wired side, content to let Comcast and Time Warner divvy up the business, in order to focus about the high-growth wireless segment. Google has very little chance of making a meaningful dent in these companies' overall subscriber bases unless it truly is willing to invest billions in infrastructure. IHS analyst Dexter Thillien doesn't feel Google will be willing to match how much AT&T and Verizon have plunged into their own fiber networks over the years.
However, Google has some cost advantages. By slowly rolling out in select locations immediately after receiving incentives from local governments, it can offer lower rates than its rivals. The flip side is that competitors can request similar incentives to build their own networks, much within the way AT&T did when it announced "intent" to upgrade its fiber network in Austin if it could score the same incentives.
Google Fiber is very much what Internet support should be, but making it a reality is much simpler said than carried out.
As one of the most dominant Internet companies ever, Google has made a habit of driving strong returns for its shareholders. However, like many other Web corporations, it can be also struggling to adapt to an increasingly mobile world. Despite gaining an enviable lead with its Android operating system, the industry isn't sold. That's why it is more important than ever to understand each piece of Google's sprawling empire. From the Motley Fool's new premium research report on Google, we break down the risks and potential rewards for Google investors. Simply click here now to unlock your copy of this invaluable resource.
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