Cristina Stancu
04/26/2013
“Is Google your next cable company?”
Summary
This article covers Google’s initiative to enter the ISP and TV provider market which is currently “ripe for disruption,” because of inflated prices, slow technological advances, and minimal real competition. Google already started the process last year by building its first fiber network in Kansas City, now moving to Austin Texas and Provo, Utah. The fiber service offered in these cities is more advanced and comes at $4.25 per month per megabit/second, compared to 7 cents per megabit/second of speed that Google offers. Essentially, Google is rethinking the way ISP is provided by making it better and cheaper, even free in some cases. Google seems to be many years away from providing nationwide ISP, due to the large infrastructure investment required. It has many hurdles ahead, with such project being extremely expensive. Google would also be playing a first mover role with the new technology, which could pose its challenges; tackling an old infrastructure that is built for copper-based broadband service, while hoping developers start designing web apps that conform to the new fiber technology, is not an easy task. Big competitors such as Comcast or AT&T would not wait on the sidelines and watch Google tap into their market share. They would try to impede this initiative in any way possible, and that could drive Google’s cost even further up. Even with all these obstacles, Google has good reasons to continue its expansion efforts. Comcast and AT&T potentially have the power to limit bandwidth for certain Google services, or to make it more expensive, and thus discourage increased traffic to Google. This leaves Google vulnerable to many external threats. The ability to take control over their own fate and stop depending on other ISP’s to deliver its services serves as a great motivator. Another good reason to continue this initiative is the increased speed that could lead to more usage, more traffic on Google services, and more advertising dollars.
Analysis
The fiber optic technology is relatively new, has not been widely adopted yet, and it could potentially revolutionize cable industry and more. The ISP market is highly monopolized by the current big players (Comcast , AT&T and Time Warner), and market entry barriers are high, because of intense politics and excessive initial fixed costs. It takes a company of Google’s magnitude to tackle these barriers and make internet service faster, better and cheaper, thus conforming to Moore’s Law. If the project is successful many innovations should follow. Increased competition would drive the other players into slashing their prices, or coming up with additional perks, and new services to keep their market share. Needless to say, it could result in a “survival of the fittest” battle where the smartest will prevail but companies from every industry and individuals would benefit from better internet service. Google is currently an advertising expert and would be able to use its Google TV service to offer a more efficient, traceable, and personalized advertising package to companies. More households would get access to the internet and be able to do activities like streaming multiple HD videos in the same time without hiccups or lengthy loading times. Download speeds would be faster than ever; more people would be inclined to use online storage services for documents or photos. Google Drive is another initiative by Google to move physical hard drive storage toward online storage, and the increased speed would facilitate this transition even further. A super fast internet service would open doors that had never been opened before and free up imagination in a revolutionary way.
Source: http://www.techhive.com/article/2036408/is-google-your-next-cable-company-.html