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Google Fiber


When Google first announced it planned to offer 1 Gig/second fiber-based Internet service to – well, the world – the notion seemed daunting but doable. At least to Google.

Recently, however, parent company  Alphabet Inc. (NASDAQ:GOOGC), has been learning just how much the daunting part is slowing down the doable part.

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Cost

The Wall Street Journal and others have reported that Google’s high-speed-Internet business is slowing down with the company rethinking how it will deliver Internet connections moving forward.

The project launched in 2012 in Kansas City. Fiber runs $70 per month. Television adds an additional $60. Analysts peg the one-time cost for each residence the installation passes at $500. Not everyone on the route subscribes.

Legal Issues

The cost to install fiber optic cable is only one part of the problem. There have been issues with municipalities and citizens having their lawns torn up, gas lines ruptured, water lines broken – the list goes on. Many have threatened or taken legal action.

Nashville’s Metro Council raised legal issues regarding Google’s support for an ordinance that would make it easier for Google to use existing utility poles, currently used by competitors such as AT&T Inc. (NYSE:TC) and Verizon Communications Inc. (NYSE:VZD).

The Wireless Solution

One solution proposed by Google is to go wireless – at least for the so-called “last mile” to customer homes. The company recently began construction in 5 new metro areas to test the use of wireless technology. The ultimate – at least medium-range – goal is to go wireless in about 24 metropolitan areas based on a filing with the Federal Communications Commission August 5.

To further bolster the wireless strategy, Google Fiber recently purchased Webpass, Inc., a company that beams Internet service from a fiber-connected antenna to another antenna mounted on a building. This practice avoids the need to dig trenches between the street and the home or apartment building.

AT&T and Verizon have also talked about using wireless technology as a “last-mile” solution but like Google, neither has built a substantial network to date. AT&T, however, does have its GigaPower Network in 25 major metro areas.

The Leasing Solution

Other options include Google trying to get municipalities or utilities to build a fiber network and then lease it back to Google. Leasing underused existing fiber-optic lines is another option in some areas.

Both Google and AT&T have favored the leased use of existing fiber-optic cables in communities where foresight by city planners created opportunity for savings on the part of the companies and a chance to be first in line for fast Internet service.

Alternate Motive

From the very beginning, some observers thought Alphabet’s real goal was to goad other companies, like AT&T and Verizon into boosting their speeds, via fiber-optic and other means.

If that was the plan, it has worked to some extent. In addition to AT&T and Verizon, Comcast Corp. (NASDAQ:CMCSAC) and Charter Communications (NASDAQ:CHTRC) have also built up high speed networks in areas where competition is stiff.

All along, however, Alphabet has said Google Fiber was a real business.

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A Real Business

Although Google Fiber is currently available in only a handful of cities, more are being built out – 6 more at this writing – with more to come.

If demand expressed on social media is any indication, Alphabet will have no shortage of customers when it does come to a town near you. The slow pace of the Google Fiber build-out is frustrating many and opening the door for competitors, such as AT&T and Comcast, assuming they could move faster than Google.



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