Google Fiber


One of the latest questions to arise from the debate over how soon Google fiber will become a force in the internet and TV business is which cities are in the grand scheme for Google to compete in.  Historically, Google has searched for low competition mid-size cities to enter and become immediately competitive with other smaller less entrenched providers. 

 

The idea is that if Google is going to invest in the infrastructure in a particular area or city they don’t want to have to turn around and  decrease their profit margins as other media giants like AT&T and Comcast catch on to the market and begin to compete for the same customer base.

 

Recently, Austin Texas has been announced as a market for Google to begin providing fiber internet and TV services. Since the national average for internet speed in the U.S. is roughly 10 Mb, Google fiber offering 1 Gb (one gigabit or 1 billion bit) internet service, which is about 100 times faster is a remarkable improvement and a game changer to say the least. 

 

Google has been strategic in planning to offer this service to markets such as Kansas City, Austin, and Provo, Utah starting at around $70 per month. 

Television services can be bundled for around $120 per month all while integrating the use of Google’s Nexus 7 tablet as a remote (nice marketing guys).  The service has recently included 2 terabytes of DVR storage and additional storage space in the cloud of 1 terabyte.    

 

Strictly speaking of speed and cost, other providers have the ability to lower their cost and increase their speed almost as easily as Google can offer the services.  The question is will Google enter enough markets to drive down costs in a wide range of areas for many customer bases. 

 

The average profit margin can be higher than 90% on internet services for companies like ATT, Comcast, Time Warner, etc. and increasing speeds would not be extremely difficult for the large providers.  According to experts, minimal infrastructure would need to be added for the broadband giants to be competitive with Google if Google decides to enter their market. 

 

Google for this reason may decide not to enter larger markets like New York, Atlanta and Chicago because of the embedded fiber lines and infrastructure that other companies have invested in already.

 

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