
Google’s Little Fiber Experiment Could Cost Over $1 Billion - thafman
http://blogs.barrons.com/techtraderdaily/2010/02/10/googles-little-fiber-experiment-could-cost-over-1-billion/
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samd
The "street" is clueless. Not only does Google have plenty of cash to burn,
but this could snowball into something that pays off for them. Google has a
vested interest in a faster internet, just like shipping companies have a
vested interest in better highways.

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brianobush
Spot on. The street looks quarter to quarter. Looking ahead for the next big
thing is next to impossible for that mindset. This is where google got it
right in setting up two classes of shares to keep wall street from messing up
the big plans.

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csmeder
This is the problem with going public. You are dictated by the street and its
short term goals. The street has no vision. And this sucks because they hold
the power? (Steve Jobs gets a little leeway because hes proven over and over
again.) Investors can vote out board members if they think this is stupid
right? And board members out of fear can fire the visionaries. By going public
google's balls are in the grip of the street and at its whim? I never plan on
going public for this reason, but enlighten me if I'm wrong. To me it seems
like "don't be evil"/visionary and being a public company can't go hand in
hand.

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samd
As far as I know Larry and Sergey own a controlling interest in Google. Not a
majority interest, but they own most of the controlling stock. So I think they
can basically do what they want.

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brianobush
they also own shares that have more voting power. I can't recall the details,
but one of their votes has more weight than the publicly traded shares do.

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ShabbyDoo
Perhaps Google is going to force the hand of America's existing telcoms to
provide more reasonable broadband services. Right now, they're sitting fat,
dumb, and happy as oligopolists with no significant incentive to provide
faster service -- as long as their competitors don't move first.

These "tests" are strategically similar to the Chrome browser. It's not that
Google cares that it provides a fast, standards-compliant browser to the
world. Instead, Google simply cares that nobody else can limit progress by
sandbagging, as Microsoft did with IE6 for years. So, even if Chrome's market
share is relatively low, its existence forces Microsoft to compete. And, when
Microsoft does, Google wins because its net-based services are a good user
experience.

Phone companies don't want the expense of upgrading their infrastructure to
support fast Internet. And, cable companies are surely terrified of gigabit-
to-the home. Why would MTV bother with the cable companies when it could just
stream its shows on demand via Akamai (or whomever) and sell highly-targeted
advertising?

This strategy also reminds me of Google's $4+B bid on the 700mhz spectrum.
They didn't actually want to own it, but they wanted to be sure the US
government sold it with the open access rules attached which would ultimately
benefit themselves.

Five years from now, I think The Street will look back on this move as
brilliant.

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thwarted
Agreed. The only way I want the terms "fat, dumb, and happy" to be used in
reference to telcos is when talking about their pipes.

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jonknee
> The cost of the rollout - which will involve physically laying cable to
> individual homes - he thinks will be somewhere between $3,000 and $8,000 per
> household.

Curious numbers considering Verizon spends ~$700 per home to connect their
fiber network. I don't see Google spending more than 10x than what their
closest competitors spend. Especially when they can cherry pick an easy market
for the test.

Still, the capital expenditure is offset by revenues coming in. At $50/mo
that's $600 in revenue coming in per year for each household. Finance the
construction and pay it off with the monthly revenue.

The toughest part by far will be dealing with the existing players. No telecom
company is friendly to a new entrant.

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djcapelis
There's a difference between fiber to the driveway and fiber to the home
itself. I'm guessing the $700 price is fiber to the driveway. Existing players
can (and almost always do) run the last few hundred feet over copper even if
they call it fiber to the home.

It seems absurd there's such a cost differential, but there you go. If you
look at other types of hookups, you'll find they can be equally expensive.
Sewer hookups are four digits usually too.

Now we don't know if Google will actually take this approach, but the numbers
they quoted aren't completely absurd for some cases. Though I imagine Google
has a few neat tricks planned which may upset some long-held assumptions.

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jonknee
FiOS is fiber all the way, they rip out the copper that was there previously
even. The costs have gotten cheaper as they scaled up, but even their initial
costs were on the lowest end of the OP's estimate.

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lief79
For what it is worth, it's actually fiber to the house. But good luck
connecting a computer directly to that fiber.

Now, practically speaking, fiber to a gigabit network connection should be all
you need, but it's practically not much of a difference from what Comcast
offers in our area. It's just a marketing point.

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jonknee
It's a big difference because Comcast caps your speed. For FiOS there's an
ethernet cable coming out of the box that the fiber cable goes into and it
only goes as fast as you pay for, topping out at 50Mbps (for $145/mo).
Apparently Google will support gigabit ethernet at uncapped speeds. Huge
upgrade.

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coryl
I'm thinking it would be in the best interest of telecom giants to get in on
this experiment. This is inevitably the direction their headed, and they would
learn a lot from it.

If anything, telecoms should be bidding on the contract to lay out Googles
fiber, and subsequently working with Google to own the next big pipeline
infrastructures.

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invisible
Google as an ISP: "We give anonymity to your data but track every website you
visit. We do not sell your information but we do use it for our advertising
and search results." Just a search for more data with proven annual income?

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rogermugs
google's got the cash.

i put forth my neighborhood as a potential test candidate... pretty sure we're
not gonna win tho.

