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Google Businesses The Internet

The Mere Promise of Google Fiber Sends Rivals Scrambling 258

Posted by samzenpus from the king-of-the-hill dept.
Hugh Pickens DOT Com (2995471) writes "Marguerite Reardon writes at Cnet that within a week of Google's declaration last spring that it planned to build a fiber network in the city of Austin, AT&T announced its own Austin fiber network and in less than a year's time, AT&T and local cable operator Grande Communications have beaten Google to market with their own ultra-high speed services using newly built fiber networks. AT&T maintains it has been planning this fiber upgrade for a long time, and that Google's announcement didn't affect the timing of its network but Rondella Hawkins, the telecommunications and regulatory affairs officer for the city of Austin, said she had never heard about AT&T's plans before Google's news came out. Hawkins was part of the original committee that put together Austin's application to become the first Google Fiber city. 'Our application for Google would have been a good tip-off to the incumbents that we were eager as a community to get fiber built,' says Hawkins. 'But we never heard from them. Until Google announced that it was going to deploy a fiber network in Austin, I was unaware of AT&T's plans to roll out gigabit fiber to the home.' Grande Communications' CEO Matt Murphy admits that without Google in the market, his company wouldn't have moved so aggressively on offering gigabit speeds. It also wouldn't be offering its service at the modest price of $65 a month, considering that the average broadband download speed sold in the US is between 20Mbps and 25Mbps for about $45 to $50 a month.

It's not surprising, then, that in every city in AT&T's 22-state footprint where Google is considering deploying fiber, AT&T also plans to bring GigaPower. That's a total of 14 markets, including Austin, the Triangle region of North Carolina, and Atlanta, home to AT&T's mobility division. While AT&T refuses to acknowledge that its gigabit fiber plans are answering the competitive challenge posed by Google Fiber, others say that Kansas City may have been a wake-up call. 'I think all the providers have learned some valuable lessons from Google's Kansas City deployment,' says Julie Huls, president and CEO of the Austin Technology Council. 'What Google did instead was say, "We're going to build you a Lamborghini, but price it at the same price as a Camry,"' says Blair Levin. 'And that's what's so disruptive about it.'"
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The Mere Promise of Google Fiber Sends Rivals Scrambling More

The Mere Promise of Google Fiber Sends Rivals Scrambling

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  • Competition (Score:5, Insightful)

    by Anonymous Coward on Friday May 09, 2014 @08:11AM (#46957881)

    Who would have thought that competition is good for progress...

    • Re:Competition (Score:5, Insightful)

      by JWW ( 79176 ) on Friday May 09, 2014 @08:50AM (#46958143)

      I think its fun to watch a company that built its fortune on tiny margins move into a industry that has enormous customer hostile margins.

      Google is going to fucking destroy the big ISPs everywhere they go. Its good to see them fearing for their survival, because the big ISPs are truly evil.

      • I wish, but in fact while there's allegedly fiber in austin, just a few miles north in round rock there's not even a promise by either google or AT&T.

        • I think the first three cities are trial projects. Then they're ramping up to more cities. However, it'll take time, since I'm pretty sure they don't have nearly enough manpower to service all of continental USA in one go. I mean, no point promising fiber 20 years from now when they don't even know the schedule two years out.

      • Re: (Score:2)

        by Lumpy ( 12016 )

        I hope so. current big ISP's need to be cornholed violently.

      • Re: (Score:2, Interesting)

        by Charliemopps ( 1157495 )

        Since "Everywhere they go" is only the most high density neighborhoods in the biggest cities in the country where there are already dozens of ISPs, I doubt it's going to have anywhere near the effect you think it will. Googles serving a few thousand homes out of over a 1/4 of a billion people.

        The one thing Google might do that they've done in other industries is push innovation. ISPs have been pretty strangled by companies like Cisco. If Google can open up the networking hardware market with open source des

        • My city (San Antonio) is pretty big but we do not have dozens of competition. For cable providers, we have Time Warner and Grande Communications (but Grande only services a few places in the city.)

        • Uh, that's a misleading statement. Sure, every city is served by a dozen ISPs...but any given home in that city is most likely only served by two crappy ISP that don't compete with each other. At least, I'm paying more for way less speed than Google fiber.

      • I think its fun to watch a company that built its fortune on tiny margins move into a industry that has enormous customer hostile margins.

        You have that backwards. Google's net margins are 50% higher than AT&Ts and double Comcast's.

        Google has a net profit margin of 21.5% [google.com]. AT&T has a net profit margin of 14.1% [google.com]. Comcast has net profit margins around 10.5% [google.com].

        Google is going to fucking destroy the big ISPs everywhere they go.

        And your evidence for this is what exactly? While it would make me very happy to see more competition, I seriously doubt Google is going to push AT&T, Verizon and Comcast out of their current monopolies on any sort of widespread basis.

    • Re: (Score:3)

      by Lumpy ( 12016 )

      Only 800 pound gorilla competition.

      If YOU tried this, they would have sued you out of existence. Sadly the law allows Corporations to use organized crime tactics to stifle competition. Only when they are up against someone the same size as they are do they play fair.

    • Who would have thought that competition is good for progress...

      This "ISPs have a monopoly they're evil!" myth is getting a bit old.
      http://www.yelp.com/search?cfl... [yelp.com]

      TELECOMS have a monopoly on COPPER PHONE LINES. It has nothing to do with internet. And you could always get a phone via VOIP or Cellular. Whatever advantage the telecoms had was gone at the turn of the century.

      • Where I am, you have 2 choices for internet. Comcast and AT&T. Until a few months ago, AT&T was DSL only. And 6 mbps just wouldn't cut it for my needs, since I work from home, so Comcast was a functional monopoly, and they acted like it. Until AT&T stepped in with the UVerse service and gave me more than I was getting from Comcast for about $50/mo less. Now, I'm with AT&T and Comcast has dropped price and increased service to compete. Funny enough, if they'd decided to price competitiv
        • I was going to chastise you for rewarding AT&T, as they are a horrible company and deserve to go out of business. But I see your other choice was another horrible company that deserves to go out of business. So yeah.

        • Funny enough, if they'd decided to price competitively when they had the monopoly,

          What the hell is the point of having a monopoly if you're going to price competitively?

          • I don't know, altruism? For public good? Utilities have monopolies, yet they're priced competitively. I guess it's more precise to ask, "what's 'competitive pricing' in a monopoly?"
            • Bullshit. I'd sooner believe in Spaghetti Monster than government utilities showing ANY altruism. The utilities in California make some crazy profit, giving hundreds of millions back to cities, and still make enough money to satisfy their "shareholders".

      • TELECOMS have a monopoly on COPPER PHONE LINES. It has nothing to do with internet. And you could always get a phone via VOIP or Cellular. Whatever advantage the telecoms had was gone at the turn of the century.

        ...and cable lines, since you seem to be forgetting that the cable providers are also telecoms.

      • TELECOMS have a monopoly on COPPER PHONE LINES. It has nothing to do with internet.

        Really? Because I could have sworn I got access to the internet over those very copper cables. If you have to go through a monopoly to get access to the internet then it is a distinction without a difference.

        And you could always get a phone via VOIP or Cellular.

        Which requires either those same copper phone lines (AT&T, Verizon, Comcast, TimeWarner or Charter) or wireless access through AT&T, Verizon, TMobile or Sprint. Which oligopoly would you like to use today?

        Whatever advantage the telecoms had was gone at the turn of the century.

        If that were actually true then we would see hundreds of telecoms rather than the local

      • They don't have monopolies? How not? Because you can dig or hang your wires on utility poles without applying for permits? Because AT&T/Comcast/whoeverthefuckelse won't reject these proposals and forcibly mothball them at the said permit application level? You know, monopolies don't come just from the law explicitly saying they're monopolies, but also from laws that lead to stifling of competition.
    • Precisely.
      You can say "Google is evil" all you want, but are they anywhere near as evil as, say, Comcast? I don't think so. Elric of Melnibone wasn't a Good Guy by any stretch of the imagination, he was a warrior of Chaos, weilding an evil black sword that literally eats the souls of it's victims, but as it turned out he and it were the best weapon against the forces of Chaos; whether Google is evil or not is irrelevant, if they've got the juice (and the money) to give Comcast a run for their money, then mo

    • Re: (Score:2)

      by Andrio ( 2580551 )

      Competition is a beautiful thing. Of course, there was no competition in internet providers, which is the whole reason Google started their fiber service.

    • You imply this is obvious? The general theory of "competition is better" is sound, but the specifics of ISPs have usually defeated the general principle. ISPs managed to establish near monopolies first off. Even where there IS already competition, there's usually shitty service due to collusion. When communities have tried to come together to make an alternative, the ISPs have immediately set about undermining them. The towns I've heard of that have tried to setup their own ISP have been sued into subm

  • Competition (Score:5, Insightful)

    by Anonymous Coward on Friday May 09, 2014 @08:12AM (#46957885)

    Oh, so competition causes companies to be competitive, who knew.

    It is almost as if capitalism only works if you punish cartels and break up monopolies.

    • Monopolies? (Score:3, Insightful)

      by cirby ( 2599 )

      ...and it's almost as if you only find actual monopolies in places where the government intentionally creates them in the first place.

      You know, like all of the cable and data monopolies in the US.

      • Re:Monopolies? (Score:5, Insightful)

        by evilviper ( 135110 ) on Friday May 09, 2014 @09:09AM (#46958329) Journal

        Governments don't create cable monopolies. Once there's one network there, there's too little profit, and requires too big of capital investments, to be profitable. It's called a "natural monopoly" and being ignorant of the economic realities that cause it, will make your alternate universe political theory fail miserably in the real world.

        Now then, governments have options to shift the power torwards competition.

        They can offer incentives for competitors to build a parallel network... which is what Google Fiber depends on.

        They can nationalize and/or regulate the natural monopolies, so that they can be forced to keep prices low and improvements coming, in exchange for their rights to run their lines through private and public property.

        They can seperate the last-mile provider from the service provider, perhaps requring the former to be a non-profit.

        But notice that the unregulated free market doing it's own thing isn't one of those scenarios. Not only does deregulation make for less competition and worse service, but without the government doing the eminent domain thing, and leasing space on power poles, no cable company would ever be able to cover a city profitably. There will ALWAYS be holdouts, and everybody will be looking to get an unfairly large chunk of fees from the big company that wants to bury cables on their land.

        • Much of what drives up the cost is not laying conduit under the streets and giving fair access to the conduit. This means that companies have to get a permit (months or years, if it's not rejected) and then actually go dig up everything and lay cable. While that's expensive, it's still quite doable, but not if you have to line the pockets of the local council more than the cable company can to get your permit approved.

        • Governments don't create cable monopolies.

          What? You're completely discounting Municipal Franchise Agreements.
          http://en.wikipedia.org/wiki/C... [wikipedia.org]

          Cable service for most municipalities was put out to bid, and then the highest bidder was granted exclusive rights to run cable. Usually there is a Telephone franchise as well, so that's why most areas have 2 companies: A "Cable" company and a "Telephone" company offering 90% the same services now- they both have local monopoly agreements with the Cities for the areas the service. They used to not overlap s

        • Governments don't create cable monopolies.

          They absolutely do just that when they subsidize the creation of the network infrastructure with our tax dollars [alternet.org], then allow a handful of huge conglomerates to profit off of that forced community investment while gouging the shit out of us and fight back any competition via litigation [deadline.com]. Yeah, in the US, not only does the gov't create cable monopolies, it protects them.

          • they subsidize the creation of the network infrastructure with our tax dollars

            Allowing cable companies to charge their subscribers a few dollars more is NOT a "tax" by any stretch of the imagination. What's more, it was for UPGRADES of their infrastructure, which already had to exist or they wouldn't have had subscribers to pay it in the first place. And finally, it's the government regulation that REQUIRED them get the government's PERMISSION to do it in the first place, so it's massively hypocritical to

            • Nope. That Aereo lawsuit was filed by BROADCASTERS. Specifically: "CBS, Disney, Fox, and NBCUniversal" NOT by the cable operators.

              Uh, you do know who owns NBC these days, don't you?

              • That's one single edge case, which does not detract from the point in the slightest. No other cable companies were represented, and all other parties were broadcasters, so the situation is extremely clear.

                • That's one single edge case, which does not detract from the point in the slightest. No other cable companies were represented, and all other parties were broadcasters, so the situation is extremely clear.

                  One out of 4 is not an "edge case". Also, Comcast is the biggest cable cable TV company. A more correct statement would be "that Aereo lawsuit was filed by BROADCASTERS and cable companies".

        • Re: (Score:2)

          by Richy_T ( 111409 )

          Parallel networks in many places are prevented by legislation, not by cost.

          • Parallel networks in many places are prevented by legislation, not by cost.

            They are sometimes prevented by legislation.

            They are ALWAYS prevent by cost.

            You can name some areas where there are legal restrictions in-place, but I can name some places where there are no such restrictions, and yet no competitors jump-in to the market. The economics just make it impractical.

      • That's only really valid if you consider property laws and intellectual property laws to be part of "the government intentionally creating monopolies". In which case, sure, let's do away with private property and see how far that gets us.

      • It's almost like those cable and data monopolies stocked the government with their people so that the government would work for them and not the citizenry.

        You know, like they talk about with that fancy "regulatory capture" thing.

    • It is almost as if capitalism only works if you punish cartels and break up monopolies.

      Punishing cartels and breaking-up monopolies is hardly a bad thing but surely there are other factors that can discourage competition in addition to the two you mentioned...

    • Re: (Score:2)

      by fermion ( 181285 )
      Certain markets are competitive . In my greater metro area I have like a couple Sony stores, a MS store, and several(maybe 6) Apple stores. Of course the MS and Sony store is in same mall as the first Apple Store in the area. So that is competition I guess. Looking at the demographics and fighting over the same small group of people. MS came in last. Google is basically doing the same thing. If ATT and Verizon have creating a market for high speed internet, then Google is saying that they will provide
    • Unfortunately, it takes a company as large as Google to be competitive. ATT, Comcast, et al have the infrastructure for this, but not the incentive. The minute a small org comes in and tries to provide higher speed service, then ATT can roll out the higher speed service for less money and destroy that small org with price competition. This isn't direct competition. This is Google being willing to throw away money to shake up some markets, and it shouldn't have to work that way. The governments have granted

  • Comment removed (Score:3)

    by account_deleted ( 4530225 ) on Friday May 09, 2014 @08:13AM (#46957901)
    Comment removed based on user account deletion
    • A quick Google search (yeah, not exactly unbiased) doesn't seem to show anything in the top results. I found a reddit thread if you want to look through it, though. [reddit.com]

    • Re:How much does Google Fiber live up to the promi (Score:5, Insightful)

      by geekmux ( 1040042 ) on Friday May 09, 2014 @08:23AM (#46957963)

      When Google Fiber comes to a city and gigabit internet is finally advertised, is it truly gigabit internet or is there massive throttling involved? I've had fiber to my door in Romania (for a little over 10€/month) for many years now, and while upload speeds are somewhat slower than download speeds, you can torrent hundreds of gigabytes a month and no one at the ISP bats an eye. Do Americans get the same goodness, or do the advertised specs come with a boatload of catches?

      When you have gigabit speed being delivered to the consumer, bottlenecks tend to point at the other end.

      It is literally going to start depending on the rest of the infrastructure, and likely how well your hosting provider is peered. Yet another reason net neutrality is such a critical issue. Gonna be a bitch if we finally get killer speed in our homes at a reasonable price only to find we haven't paid the internet gateway thugs enough to get to our damn content.

    • Re: (Score:2)

      by alen ( 225700 )

      it's real gigabit, but only inside google's network
      anything outside google's network they have to buy peering points with Level 3 and other Tier 1 backbones and you can bet they don't buy enough to support 1gbps for every customer at any time
      but then google has been pretty good about selling space to CDN's in their data centers so you don't really need gigabit since the data is inside google's network already

      • Re: (Score:2)

        by Bengie ( 1121981 )
        Google has the second most connected network in the world, right behind Level 3 with about 1/4 their size. Google is better connected than most Tier 1s, plus they have a lot of peering with Level 3. I'm sure they have good relations as both Google and Level 3 are on a crusade for net neutrality against most of the other Tier 1s.

        • Re: (Score:2)

          by alen ( 225700 )

          yeah, and they also have A LOT of internal and application traffic that takes priority over their baby ISP business on that fiber

          • yeah, and they also have A LOT of internal and application traffic that takes priority over their baby ISP business on that fiber

            But Google also has a LOT of fiber :-)

            And, although I don't know and couldn't say if I did, I strongly suspect that ISP traffic is categorized at the highest priority for QoC purposes, alongside all other customer-facing traffic.

            (Google engineer here.)

    • Google doesn't throttle or have bandwidth caps on their fiber.

      From their network management [google.com] page:

      In times of acute congestion, Google Fiber Internet service bandwidth will be fairly allocated among subscribers without regard to the subscribersâ(TM) online activities or the protocols or applications that the subscribers are using.

      Google Fiberâ(TM)s Internet services are priced on a flat-fee basis (plus taxes and government fees). Google Fiber does not charge subscribers a usage-based fee for Intern

  • I think it's backward. (Score:5, Insightful)

    by Anonymous Coward on Friday May 09, 2014 @08:13AM (#46957907)

    AT&T : we're gona build you a Camry but sell it for the price of a Lamborghini, just because we know that we're the only dealership you can buy cars from, and only when another dealership moves in, we're going to get you that Lamborghini.

    • Re: (Score:2)

      by Scutter ( 18425 )

      Well, no....it won't be a Lamborghini really, but it will look just like one, we promise! Ok, the engine will only be a four-cylinder but it will only cost twice as much as Google's Lamborghini! No, we won't charge you for gas or oil for the first six months, but after that we may have to charge a slight service fee. The speedometer goes up to 200MPH, but most of the time, you won't be able to go over 35. Also, you can only drive to three cities per month before you hit your mileage cap because we don't w

      • Re: (Score:2)

        by dkf ( 304284 )

        Well, no....it won't be a Lamborghini really, but it will look just like one, we promise!

        You are aware that Lamborghini make tractors too? You know, the things used on farms?

    • Re: (Score:2)

      by Qzukk ( 229616 )

      Except that with AT&T's 300mbps "giga"power, we'll tell you we're shipping your Lamborghini right away, but it's actually a Honda with a giant spoiler bolted on and a racing stripe sticker.

  • Lamborghini? Ha! (Score:5, Insightful)

    by grunter ( 35840 ) on Friday May 09, 2014 @08:16AM (#46957927) Homepage
    Or perhaps Google are selling a Camry at the price of a Camry, and the other guys who've been peddling Model Ts are now having to get competitive!

  • Competition (Score:2, Informative)

    by Anonymous Coward

    Oh, you mean competition is a good thing and monopolies are bad?

    ISPs in the US don't seem to have *real* competition in the majority of locations. It's amazing what happens when *real* competition comes to the market.

  • The important take-away is.... (Score:5, Insightful)

    by Bill Dimm ( 463823 ) on Friday May 09, 2014 @08:38AM (#46958037) Homepage

    So, what we learn is that ISPs believe they can build a gigabit infrastructure and make a profit charging only $65/month for service without having to subsidize it with an ad business (like Google can). That's a very nice measure of just how much the rest of us are getting screwed by our ISPs.

    • Re: (Score:2)

      by tomhath ( 637240 )
      No, they're subsidizing it with revenue from their other broadband markets.

      • Why would they offer the service at all if they would be losing money on it? Just leave that market completely and have more money at the end of the day.

        • Re: (Score:2)

          by Yebyen ( 59663 )

          That sounds like a winning plan. When the competition comes, just give the whole market to them, at whatever prices they planned to charge. Don't even try to compete, just leave!

          Put that in your 10 year plan. I'm sure it'll go over great with the board at the next annual shareholders meeting.

          (I know you're trying to say, they would still make a profit on this new better service at reduced prices, but I'm not so sure. I shop at Amazon and WalMart, and I think there are really such things as Loss Leaders.

      • Re: (Score:2)

        by Bengie ( 1121981 )
        1gb Internet on average cost ISPs about 10% more than 10mb. I'm not sure it's that much of an assumption that they can turn a profit on $65 for 1gb. A study was done looking at customer data usage and going from 10mb to 1gb only increase their peak usage by 10% on average. I'm sure as new services start cropping up to take advantage of 1gb speeds that customers are starting to get, usage will climb faster, but right now, most everything on the Internet is geared around 10mb or less.

    • Re: (Score:2)

      by alen ( 225700 )

      AT&T just built out an LTE network for their mobile business. fiber to all their towers in every county in the US. they might not own all the towers, but it's still a big footprint. AT&T will put a few speedtest servers on their network and make you think you have gigabit when you will be competing with their mobile data traffic past your neighborhood. and knowing AT&T they will route you data to kansas before routing it to the internet

      don't think anyone else can do the same.

      • The $65/month number is from Grande Communications', not AT&T. I don't know anything about their service, so I don't know if it is any more legit than AT&T.

    • So, what we learn is that ISPs believe they can build a gigabit infrastructure and make a profit charging only $65/month for service without having to subsidize it with an ad business (like Google can).

      I don't believe Google really subsidizes Fiber. Sure there are capital investments, so having deep pockets (filled with ad money) definitely helps, but the Fiber business is being run as a standalone profit-generating enterprise. Actually, this is necessary in order for it to fulfill its primary mission, which is to convince other ISPs that they can make money in the gigabit business.

  • One small detail to add to AT&T side of the story - their GigaPower package is only a name - THAT offering tops out at 300Mbps, and this is true for every city it's available in. Not only that, no one has a clue if they'll every make 1,000Gbps service available in any market.

    Sorry AT&T, calling it a trout a whale does not make it a whale no matter how big you blow up the picture you took of the trout.

  • Making sure Google Fiber isn't profitable (Score:5, Insightful)

    by sasparillascott ( 1267058 ) on Friday May 09, 2014 @08:56AM (#46958209)
    The cynical side of this, is that this is AT&T and Co. are making sure that Google doesn't make any money with Fiber by making sure the market size for Fiber is drastically reduced wherever its rolled out...and discouraging Google from pursuing this as a business. JMHO...
    • Monopoly playbook 101: protect your monopoly. Cut prices anywhere there is competition, simply to discourage/bankrupt the competition.
  • They aren't building a Lamborghini and pricing it at a camry, att was building a camry and pricing it at a Lamborghini.

  • If this is what happens in the USA when Google Fiber is planned, I'd like to see what would happen in Canada. Bell and Vidéotron are so greedy, their reaction would probably be to increase the prices, lower the speeds and the monthly caps even more, with ads everywhere telling us "Stop Google Fiber or else we'll charge you even more".

  • In Austin nothing has really changed... (Score:5, Interesting)

    by AmazinglySmooth ( 1668735 ) on Friday May 09, 2014 @09:39AM (#46958621)
    So they all announced upgrades here in Austin: Google first, then AT&T Uverse, and now TWC. But. Nothing has really changed. Everyone has announcements, but the coverage areas are so small and nothing has changed. TWC has made the best annoucment that their 300Mbps service will be available all over Austin, but not yet. They have offered some date in the future that I'm sure will be delayed. So competition works, but no one is really being that aggressive.
  • Please just mention you're coming to Denver, would love to see how Comcass and CenturyLunk react.

  • Lock in the total price to the customer. Watch for extra fees, services, and gotchas. And make that lock-in 15 years.

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