Google Fiber Is Losing the Gigabit Race—All According to Plan

AT&T and other traditional ISPs are racing to compete with Google around the country, which is exactly what we need.
April 28, 2016, 7:17pm

Google Fiber is losing the race to install gigabit fiber in cities around the country, and in cities where Fiber does exist, it's facing stiff competition from incumbent telecom providers.

Good. This means Google Fiber is working perfectly.

Olga Kharif's entire article in Bloomberg is worth a read, but here's the main crux of her story:

"It's been six years since Google announced it would lay a fiber network to compete with cable providers and telephone companies. Although it's now in only four markets, competitors are lowering rates and building faster lines to keep customers from defecting to the technology giant. Because Google needs consumers to have robust Internet speed in order to sell more expensive ads on its search engine, that may be what it had in mind all along."

Kharif draws mostly the correct conclusion here, but the economic analysts she spoke to seem dismissive of Fiber, as it's getting beaten around the country by companies such as AT&T.

"Any time Google is doing three, AT&T is doing 30 cities," Roger Entner, an analyst at Recon Analytics LLC, told her. "There's a lot more bark than bite" to Google's strategy.

Fiber may one day become a dominant internet service provider, and a reasonable option for people in a lot of cities. That hasn't been the case thus far—Entner estimates that fewer than 100,000 people nationwide have Google Fiber. But what Fiber has done is spurred competition not just in the cities where it's offered but in the cities where it's threatened to enter. Entner estimates that people in companies with Fiber see their internet bill decrease by $20 per month.

Take Louisville, for example. As soon as Google announced plans to build Fiber there, AT&T sued the city to slow Google down—then finally started building out its own GigaPower fiber network, which was long promised but had remained unbuilt. Meanwhile, three other companies are trying to bring fiber to the city, as well.

Google has alluded to this plan in a few different blog posts, and it's widely believed that improving speeds across the board by spurring competition is the service's master plan.

"Google Fiber isn't just about deploying faster, cheaper broadband connections (though Google has made it clear it wants a sustainable business)," Karl Bode wrote in a nice Techdirt column last year. "Google Fiber's been largely about highlighting a lack of competition and lighting a fire under all-too-comfortable duopolists. As the project has expanded, Google has made a point of offering cities a checklist helping to make deployment easier, whether it's Google or somebody else doing the building."

Google Fiber is a long way from being a dominant ISP. But Google has done something few other companies bothered with: It's trying to compete, which is forcing incumbent ISPs to actually upgrade their networks and lower their prices.