
Economics of Google Fiber and what it means for U.S. broadband - iProject
http://gigaom.com/2012/07/26/the-economics-of-google-fiber-and-what-it-means-for-u-s-broadband/
======
jmillikin
One aspect I've not seen discussed is the impact of a commercial fiber service
on city- and county-owned networks.

In the past, when local governments have tried to roll out high-speed
municipal internet access, they've faced bitter opposition from entrenched
network providers (Comcast, Time Warner, AT&T, etc). These companies refuse to
roll out fiber, but also lobby for state laws against government-funded
fiber[1]. The end result is that residents are left on decrepit old copper
lines.

Now there's a large[2] company rolling out fiber, and they have shown explicit
desire to work with local governments. Depending on how the laws are written,
it might be possible to achieve something close to a municipal network by
contracting out to Google. And the Google fiber seems to be cheaper -- I can't
find any municipal fiber services offering gigabit for less than $120.

(bias disclaimer: I work for Google, but am not involved at all in fiber
stuff)

[1] [http://arstechnica.com/tech-policy/2011/03/cable-backed-
anti...](http://arstechnica.com/tech-policy/2011/03/cable-backed-anti-muni-
broadband-bill-advances-in-north-carolina/)

[2] Sonic.net deploys fiber, also priced at $70 a month, but they are a very
small regional ISP. [http://arstechnica.com/tech-policy/2011/06/1gbps-fiber-
for-7...](http://arstechnica.com/tech-policy/2011/06/1gbps-fiber-for-70in-
america-yup/)

~~~
pasbesoin
As I commented elsewhere, perhaps Google is the party with the deep pockets
and legal expertise -- and lobbyists -- to take on and beat these entrenched
monopolies/oligopolies.

When a community of some thousands goes up against a corporation of 10's of
thousands and a largely captive customer base of millions, in e.g. lobbying
the state legislature, well, the deck seems kind of stacked.

In Illinois, I recall specifically, SBC -- now AT&T -- received hundreds of
millions of dollars in tax breaks and incentives, specifically with the
agreement to promote and complete universal high speed access.

They then promptly set their lawyers and lobbyists to finding ways to break
their side of that agreement -- while keeping the incentives, of course.

If Google wants unfettered access to unfettered customers (or eyeballs, if
we're going to call the advertisers the customers... not to go there, at the
moment), such partnerships might be a good way to identify and speed
deployment.

And... plenty of publicity about what people in many other countries are
paying. Little seems to motivate the American consumer -- and voter -- more
than a bargain, or feeling they're getting ripped off.

And, since I'm typing away here, I hope Google will do it while treating their
linepersons (technicians, etc.) decently. As a recent story here, with its
high rating, pointed out, people are tired of seeing the line workers being
abused.

I'm not familiar with sonic.net in detail, but its CEO, Dane, seems a decent
sort, and I bet they're not the worst employer -- whether direct or contract.
(And since Google's already talking to him, maybe you all can pick his brains
in this specific area.)

Google still does some things that piss me off. [1] But I support this
initiative -- I'll sign up as soon as I can, if and when -- unless Dane beats
you to it.

[1] Mentioning just one item: Give it up, already, with the "true names"
initiative. Anonymity has its value and place within the online domain. Not
just one of convenience, but one of necessity, for many people and contexts.

P.S. I'm pretty tired, and I'm probably being to optimistic/idealistic, here.
OTOH, having directly observed the crap dished out by AT&T, Comcast, and the
like, I can readily believe there is plenty of room for improvement.

~~~
vwoolf
Some of what you're describing sounds similar to "The Great FiOS rip-off":
[http://www.huffingtonpost.com/bruce-kushnick/the-great-
veriz...](http://www.huffingtonpost.com/bruce-kushnick/the-great-verizon-fios-
ripoff_b_1529287.html) .

------
fsckin
Imagine for a moment, if they fudged the numbers a bit on the storage capacity
of every box going into your home. They advertise the usable capacity of 1 or
2TB. In reality, it has 30-200% more storage that is not usable by the
customer.

They just made a very fast, low latency, distributed mesh CDN that the
customer pays Google for the connectivity AND electrical bill.

~~~
nostrademons
Isn't the point of a CDN to push content out close to consumers because the
last mile "pipe" is significantly slower than a content-provider's network? If
the consumer is already on the content-provider's network, and operating at
the same speed as the backbone, you don't need a CDN.

~~~
dedward
The point of a CDN, at least a significant one, is to reduce latency. To put
your content closer to your customers. It also lets you handle larger load, is
more resilient to DDOS, etc, but, at least in my view, those are often
secondary... the main issue is latency, and perhaps capacity.

Gigabit to your house won't remove latency, other than perhaps to apps hosted
by google (including google, obviously)

------
gamble
Isn't the more obvious conclusion that Google Fiber is just a bargaining chip
for Google to use against traditional ISPs and cell phone networks? It won't
even serve all of Kansas City for the foreseeable future, much less the rest
of the country. What it does do is demonstrate that Google has the will to
play the carriers' game, without actually committing the capital necessary to
build out a competitive network.

Remember how gung-ho Google was about network neutrality, before it became
necessary to choose between net neutrality and Verizon's support with Android.
I find it hard to believe that Google's shareholders would appreciate the
company devoting the massive amounts of capital necessary to build out a fiber
network across the US, unless it was an existential question. And even then it
will only be built out to the degree necessary to punish the carriers.

~~~
throwaway64
Google already has a massive nationwide network to serve as a CDN for stuff
like youtube. They are peered with every ISP of any significant size, and have
data centers and points of presence in every major city. Not to mention they
have bought up almost all the "dark fiber" they could get their hands on for
the last 10 years. Their network already exists, and its everywhere, the only
thing remaining is rolling it out to residential areas.

There is a large upfront free that customers have to pay for the installation.
If the economics have been worked out correctly by Google, the customers
themselves will pay almost all of the roll out costs.

Edit: I should clarify, a large upfront fee, or a reasonably large monthly
fee.

~~~
gamble
What fee? The only requirements are a 2-year contract, or a $300 upfront fee
for the free option. And they give you a free Nexus 7 tablet with the
contract. At $70-120/month, the money they're collecting on a 2-year contract
isn't remotely enough to cover construction of the network and the end-user
electronics.

~~~
throwaway64
$120 a month for 2 years is $2880 guaranteed, not to mention it is unlikely
customers will leave considering the competition comes nowhere even close to
that kind of offer.

Some of that will be eaten up by fixed costs of providing the service (for
stuff like bandwidth, Google can probably get better prices than almost anyone
else in the world, due to extensive peering), and for the provided electronics
(which Google can order in huge quantities and pay comparatively little for,
or even build themselves, like they do with their own internal servers and
networking equipment). Whats left over is still a very large chunk of change,
especially when you consider the fact that Google wont roll out fiber till a
decent percentage of a neighborhood is willing to sign on (their calculated
numbers are almost certainly designed to cover roll out costs)

I think this will easily pay for their roll out costs. Remember, they don't
need to build out a national network to serve tons of places, they already
have one. YouTube itself already uses something like 40% of the internet
traffic to residential connections.

The important thing to consider here, is as far as Google is concerned, they
only need to break even, they arn't in the same game the other ISPs are where
it is their only profit center.

------
obituary_latte
As a layman, newb, wannabe hacker etc. this does nothing but excite me.

I long ago conceded the privacy vs convenience point regarding google. I've
been a long time customer. I felt (read: convinced myself) then as I do now
that the engineering backbone would stifle less than acceptable behavior by
the company.

I live in the largest city of a northeastern us state. My options for
acceptable Internet are nil. +$120/month for (possibly) 70 Mbps. Which, from
experience, is heavily weighted on concurrent usage.

Everything else aside, I want so bad the option to have [insert company
(google is winning the race)] to come in an offer me something better.

If nothing else, as has been stated in other threads, this will be an enormous
boon for technological state of ISP's in the so far backward US.

~~~
mhurron
> My options for acceptable Internet are nil

And it will remain that way for a long time. Google doesn't serve the whole
metropolitan areas they are in and there is no known plan to expand beyond the
two areas they are in. Google has stated they do not want to be an ISP so no
plans to expand may not just be them being quiet.

So what does this mean for existing large ISP's? Nothing. The same nothing
that every little regional ISP means to them.

------
zmmmmm
So a key part of the "cost saving" is that AT&T gave them cheap access to
poles. Doesn't that mean they are relying on one of the very competitors they
will displace to collaborate with them in this? Seems to me that either AT&T
was forced to do this by competition laws OR they indulged this little
experiment as a one-off but the chance of them or any other telco letting
Google scale this up to the point where it matters is zero.

Does anybody know which one it is?

~~~
jws
I believe most of the poles are not AT&T's, but rather owned by the county and
it's Board of public utilities. The combined power and communication poles
have a standard fee for attachment. Google got a special deal to use the power
area of the pole for free as part of their enticement. Labor cost is higher
for the power area of the pole.

The AT&T deal is probably for just the odd pole where the communications
approaches a building from a different path.

------
shawnee_
Kansas City is pretty close to the geographic center of the US.

 _... to reduce the cost of the actual last mile to users’ homes it’s telling
people in Kansas City that if they want to be the first to get fiber, they’ll
have to convince their neighbors to sign up. The goal is to get a critical
mass of between 5 percent and 25 percent of the homes in a given neighborhood
(Google calls it a fiberhood) committed to signing up for Google Fiber before
ever sending out technicians._

Speaking of cost-per-mile as it relates to "the last mile", population-density
surely has to factor into how cost-effectively this service can be unrolled.
In a densely-populated area, less fiber can serve more people, and can
probably greatly reduce the cost-per-household to install.

Seems like the Midwest would require more cost for fewer households able to
benefit, at least in the beginning of this endeavor. Wouldn't it make more
sense to start on both / either coast, and literally reduce the "cost" of
unrolling it marginally to the less-dense areas of the country, proportional
to physical distance?

~~~
wmeredith
Kansas City's metro area is as population dense as any other developed urban
core. It's not like they're starting out in a wheat field in Kansas.

~~~
humbledrone
This table seems to disagree: <http://www.demographia.com/db-uscity98.htm> .
From the totals at the bottom, I found that the average population density for
the 600 largest cities in the U.S. in 2000 was (total population)/(total land
area) = 99,000,000 / 34,000 = 2911 people per square mile. Kansas City's
density is 1100-1400 people per square mile, meaning that not only is it false
that it's as "dense as any other developed urban core", but in fact it is not
even half as dense as the _average_ city (with population 50,000 or higher).

~~~
tmrggns
I think part of that is the way the city is laid out. I think Kansas City is
more consistent than most cities in having major roads travelling about every
five or six blocks. This probably helps when physically putting the fiber
down.

------
Jun8
"From the infrastructure on the back end to the TV and Wi-Fi routers in the
home, Google has built its own stuff. Most carriers rely on outside vendors to
sell them networking gear and even set-top boxes."

If I were Comcast I would _really_ be afraid at this point, because Google now
has access to top-notch set-top-box, as well as other CATV equipment know-how
through Motorola Mobility's Home division. If then can incorporate that
knowledge into their system they would have an end-to-end entertainment
delivery system.

~~~
vyrotek
I really hope they are. Comcast did some lobbying some time ago in Utah which
prevented local fiber ISPs from being able to install new lines in many
cities. It's very frustrating!

------
whatusername
Does anyone in Australia want to take a stab at what this is likely to mean
for the politics of the NBN?

~~~
mattmiller
I thought NBN already planned to do fiber to the door for most of the country.

~~~
whatusername
So one side of politics will claim this proves that FTTP is the correct
solution. The other side will claim that Private Investment is the way to
build Fiber rollouts.

------
jlarocco
I'm not a big fan of my current provider, but I think I prefer them to the
privacy concerns I'd have using Google.

Almost every existing Google service is based on snooping people's browsing
and serving up ads. They've made billions and billions of dollars doing it,
and as the ISP they'd be able to snoop on _everything_. I'm sure they promise
not to, but I just don't trust them, and I think there's too much money to be
made for them not to do it.

~~~
avree
You trust your current ISP?

I've never understood these arguments. Google doesn't 'snoop' on your
browsing—they anonymously track your habits to give you better ads as their
business model.

You used to get terrible ads on the internet—flashy popups, tricky spam ads,
etc. Google has changed this, since they realized that they could avoid
needing to trick people into click on ads by delivering ads that are actually
relevant.

Your current ISP can 'snoop' on everything you do too. Why don't you have this
odd mistrust of them?

~~~
thaumaturgy
Your own comment explains why: Google has built an empire upon the ability to
efficiently compile information about people.

I've worked for a small ISP. They are not nearly as competent in that regard.
Most of the time, they're just hoping they can finish the day with fewer tech
support tickets than they started the day with.

I trust Comcast / SBC / others less -- especially since they voluntarily opted
to cooperate with the RIAA/MPAA against their users' interests
([http://www.dslreports.com/shownews/ISP-Six-Strikes-Plan-
Arri...](http://www.dslreports.com/shownews/ISP-Six-Strikes-Plan-Arrives-in-
July-118834)) ... but I trust Google least of all, speaking just from a
privacy standpoint.

I realize that it's a little irrational, especially since, as you pointed out,
the information is anonymous. (We think.) However, it's not so much that I'm
concerned with what Google is doing with that information _now_ ; I'm
concerned with what they _might do with it later_. Once the data has been
collected, it's impossible to ever know for certain that it's been removed.
Data collected about customers will survive middle management and CEOs and
entire company boards. It may be sold at any time to anyone for any reason --
or given away freely. It may be used for purposes which I am not imaginative
enough to conjure up.

That probably sounds a little paranoid, but then again, when I was dialing in
to eWorld in 1995, I could not have imagined that 17 years later the cable
company would be my ISP and they'd be snitching on me if I downloaded
unauthorized content. 17 years is not beyond the life time of current storage
methods; who knows what will come next?

Finally, Google can't survive forever on advertising. I frankly expected the
online advertising market to be having greater problems by now than it is.
Still, AdBlock Plus is popular and I've seen a few articles recently that are
tentatively suggesting that buying advertising on Facebook probably isn't
worth it. Google's building some actual consumer hardware now, which is super
neat, but their core competency is in data mining. I think it would be foolish
to believe that if the online advertising market started to really struggle,
Google would just drop the thing that they're best at and move on to something
else.

So I don't think it's such a bad idea to treat Google with a little mistrust.

(But their fiber project is really damn cool.)

------
amalag
Curious why they don't have another mid range offering, 5Mb/s free then
1000Mbs at $70 are the only options? I would love something in the $15-$25
range.

~~~
dsr_
By making the low tier free, they avoid many costs. Billing. Tech support.
Compared to their gigabit-chewing neighbors, the free tier isn't even using
bandwidth of any significance.

Supporting a middle tier would cost as much as the high tier in everything
except bandwidth. The one-time payment of the free tier helps pay for the
infrastructure in the neighborhood, but doesn't incur any real costs after
that. (I expect customer support for free will consist of a web form to report
an outage, and a wiki.)

~~~
Avenger42
> _customer support for free will consist of a web form to report an outage_

And how do you get to the web form if there's an outage? :)

~~~
Retric
Cellphone? However, I suspect they could automatically detect outages based
the in home battery backed up router not responding or losing contact with all
other devices on the network.

