Google Fiber eyes Triangle for latest expansion

dbracken@newsobserver.comFebruary 20, 2014 

  • Google Fiber pricing

    In Kansas City, Google Fiber has three product offerings. Customers can pay $70 a month for 1 gigabit-per-second uploads and downloads, or $120 a month for a gigabit connection and TV. For customers that don’t want a gigabit connection, Google Fiber offers a basic broadband connection for a one-time $300 construction fee that can be paid upfront or over a year. That service, which is comparable to basic broadband speeds, has no monthly fee for at least 7 years. That works out to less than $4 a month.

The Triangle is one of nine metropolitan areas where Google is considering expanding its high-speed Internet and TV service known as Google Fiber.

Over the next several months, the company expects to do topography and infrastructure studies and hold planning conversations with local officials to determine whether the Triangle is suited for its network. Google’s fiber optic network offers residential customers 1 gigabit-per-second Internet service, which is nearly 100 times faster than most broadband connections in the United States.

“By the end of the year, we hope to provide an update on which cities we will be bringing Google Fiber to,” said Kevin Lo, general manager for Google Fiber.

Wednesday’s announcement potentially represents a major expansion of Google Fiber, and it is the best indication yet of the search giant’s willingness to compete nationally with large Internet and cable providers such as Time Warner Cable and Comcast, which announced plans to merge last week, and AT&T and Verizon.

In 2011, Google chose Kansas City as the initial market for its Google Fiber service. It has since announced plans to build a similar network in Austin, Texas. Google Fiber also acquired a network in Provo, Utah, where it has begun offering ultra-high-speed Internet service.

The other metro areas being considered for this latest expansion are Charlotte, Atlanta, Nashville, San Antonio, San Jose, Salt Lake City, Phoenix and Portland, Ore. Google Fiber is targeting 34 municipalities within those nine metro areas, including seven in the Triangle – Carrboro, Cary, Chapel Hill, Durham, Garner, Morrisville and Raleigh.

“If we can get through the planning process, we’d like to build everywhere – in all 34 of these cities,” Lo said.

Each city is being asked to work through a checklist of items that are designed to expedite the construction of a fiber optic network. Google Fiber says it needs to limit red tape that can slow the costly work of building a network street by street.

“When we get going, I think we want to be able to move on a fast and predictable schedule and so we like to work with a city upfront for handling what might be up to a 100 times more permits than they see today,” Lo said. “Really, we’re doing this so they don’t become annoyed with us later.”

In addition to gauging local officials’ willingness to cooperate, the company will evaluate cities based on their existing infrastructure and housing density. That includes determining how much of a fiber network can be strung along existing utility poles – instead of having to be buried underground.

A big threat

It’s unclear how Google Fiber’s entrance into the Triangle market might alter the competitive landscape for Internet and TV service. Google Fiber is only targeting residential customers, though officials say it may eventually offer a product for small businesses.

After Google announced its intention to enter the Austin market, AT&T and another Internet service provider there said they would sell consumers gigabit connections. Kansas City did not see a similar response from cable or phone companies.

In the Triangle, Time Warner Cable now offers download speeds of up to 50 megabits-per-second and upload speeds of 5-megabits-per-second, while AT&T offers download speeds of 45 megabits-per-second and upload speeds of 6 megabits-per-second.

Brian Bennett, a cable industry analyst and owner of Bennett Strategic Insights, said Google may see an advantage in loudly announcing its intentions.

“By putting this information out there and people getting ahold of it, it makes competitors in the markets they mention worry,” he said. “To say, ‘Oh we might potentially come there,’ that’s a big threat from an Internet perspective because they’re offering speeds that aren’t even comparable.”

Bennett said most cable and phone companies are already working on ways to improve the broadband speeds over their existing coaxial cable and copper wire networks.

“They’re trying to find more ways to get more speed out of the existing technology instead of having to reinvest in an entire market to bring fiber to the home,” he said.

Google Fiber officials say the company’s service is a response to consumer demand for faster Internet connections. They also argue that as such networks become ubiquitous they will spur technological innovations. But as one of the largest providers of Internet services, Google, which owns YouTube, also has a lot to gain from expediting the rollout of ultrafast networks.

“Google itself wants to push these gigabit data speeds because their core business is built on customer data, and the fact that they can get that data a lot quicker and at the same time build up their reputation as being the fastest is great,” Bennett said.

Some analysts viewed Google Fiber’s announcement Wednesday as being more about public relations than anything else.

“Google has a great PR machine about a 1-gigabit fiber to the home system,” said Steve Effros, a cable industry analyst in Virginia. The average home doesn’t need that much bandwith, Effros said. “So the purpose of a 1-gigabit system right now is not exactly clear.”

Cherry picking customers

Effros said Google Fiber’s business model is basically to cherry pick the most attractive communities, something that was illegal for the cable companies to do when they got their franchises.

In Kansas City, Google Fiber has centered on neighborhoods where it can register the greatest demand and making consumers now-or-never offers on hook-ups. That’s intended to avoid costly piecemeal installations across a market. Google Fiber has not disclosed how many customers it has, or when it expects to turn a profit in Kansas City.

“If Comcast got the same deal that Google got, there would be outrage in terms of the local community agreeing to have, in essence, redlining – ‘I’m going to go into the wealthiest areas first, I’m going to go into the areas that commit to buying my service before I offer it, and I’m going to undercut the prices of everyone else because I don’t have the same obligations that my competitors have,’” Effros said.

“This is simply not true,” a Google spokeswoman said in response to Effros’ analysis.

Time Warner responded to Google’s announcement on Wednesday by issuing a statement noting what services it already offers in the Triangle.

“Our most popular tiers of speed offer the best value across not just the city of Raleigh, but the whole market, connecting multiple devices in the home with consistent high-speed Internet – at a lower cost than most wireless plans or Google’s one-size offering,” spokesman Scott Pryzwansky said.

Most of the 34 new cities Google Fiber is targeting were among the more than 1,100 communities that applied for the service back in 2010. Both Durham and Raleigh were among those that applied, with Raleigh City Councilman Bonner Gaylord going so far as to offer to name his unborn children after Google’s two founders if the city was chosen.

Durham Mayor Bill Bell welcomed the possible entrance of a deep-pocketed competitor into the market for Internet and TV service.

“You can have competition, but if you’ve got quality competition that really brings it to a different level,” he said. “I’m hoping that’s what we see with Google’s announcement.”

Bell and Raleigh Mayor Nancy McFarlane both said that Google Fiber’s service is likely to be attractive to the Triangle’s large number of high-tech, pharmaceutical and biotechnology workers.

“We do have a great number of people ... that work in those industries that would really benefit from having this kind of connection to their home,” McFarlane said. “It is very exciting.”

Kansas City Star staff writer Scott Canon contributed.

Bracken: 919-829-4548; Twitter: @brackendavid

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