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Re: Wonder how much all of this costs said by Linklist:said by sonicmerlin: Hopefully if this experiment proves successful they'll expand to other non-FIOS markets.
Never happen. Google won't make money on this. It is pure PR BS to get their name out there as the good guy. It is an advertising campaign and nothing more. So? If anything this should prove that the incumbents are simply resting on their laurels and that the model can be done better. And, if early reaction and interest is any indication, do so quite embarassingly. |
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said by atuarre:Google will milk this for the free PR, and then the real costs will end up hitting the end users, just you watch.
so what. Let's say they charge $20 a month for their currently free tier after 7 years. Should users really end up being pissed?
The reality is that these users can go to the other two incumbent providers if they're ever unhappy with the service. The risk is all on Google and with Google shareholders for the buildout. KC broadband users win no matter how this plays out. |
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 KrKHeavy Artillery For The Little GuyPremium
join:2000-01-17
Tulsa, OK | The result will be the competition will have to price with Google in mind.
In fact judging by past experience they will upgrade and sell dirt cheap in an attempt to keep Google's profits razor thin or even lose money, so that they can "convince" Google it's not profitable long term and to give it up.... should this happen however, then prices will skyrocket quickly.
A Duopoly does not competition make.
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"Fascism should more properly be called corporatism because it is the merger of state and corporate power." -- Benito Mussolini
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 coldmoonPremium
join:2002-02-04
Broadway, NC
 ·Windstream
| said by KrK:The result will be the competition will have to price with Google in mind.
In fact judging by past experience they will upgrade and sell dirt cheap in an attempt to keep Google's profits razor thin or even lose money, so that they can "convince" Google it's not profitable long term and to give it up.... should this happen however, then prices will skyrocket quickly.
A Duopoly does not competition make.
I think Google has the edge in a price war and has deep enough pockets to outlast the incumbents which is probably at the core of their hysterical fear and hatred of Google...
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Returnil - 21st Century body armor for your PC |
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KrKHeavy Artillery For The Little GuyPremium
join:2000-01-17
Tulsa, OK | The problem, as usual these days, is Wall Street. Google has been a darling of WallStreet and has gone up and up.
However the day could come where they fail to meet unrealistic expectations... "What, profits are only up 6% when we expected 18%"!!! and then the stock could tank, wiping out billions in Google's net value.
In such a scenario, the Google CEO and Board would be under intense pressure to "Return to Glory Gains" and any "Projects" that aren't making ridiculous returns at the time could be on the chopping block.
That's my concern for this project and the reason the other incumbents will want dump in this market and keep profits low for all of them in the KC market for who knows how long. They are hoping Google will dump the project at the behest of WallStreet. It's a real threat.
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"Fascism should more properly be called corporatism because it is the merger of state and corporate power." -- Benito Mussolini
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 GuspazGuspazPremium,MVM
join:2001-11-05
Montreal, QC
kudos:20 | reply to KrK
said by KrK:The result will be the competition will have to price with Google in mind.
In fact judging by past experience they will upgrade and sell dirt cheap in an attempt to keep Google's profits razor thin or even lose money, so that they can "convince" Google it's not profitable long term and to give it up.... should this happen however, then prices will skyrocket quickly.
A Duopoly does not competition make.
I suspect that one of the multiple reasons for Google's free option is that it's difficult to undercut free. What might hurt Google is that they have no tier between $0 for 5 meg and $70 for 1000 meg. There's room for something like $30 for 50 meg, for example...
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Developer: Tomato/MLPPP, Linux/MLPPP, etc »fixppp.org |
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KrKHeavy Artillery For The Little GuyPremium
join:2000-01-17
Tulsa, OK | Yeah, I suspect they are trying to actually make a point. What it is I'm not exactly sure. |
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| reply to ISurfTooMuch
said by ISurfTooMuch:Now consider the moneymaking part of this. Why do you assume Google can't make money here? The incumbents are doing quite nicely, and many of them are hampered by the limitations of old technology infrastructure. But Google is changing the economics of the market by overbuilding. The incumbent may have been doing well in a duopoly -- but when you split customers 3 ways, then there's less cash to any one entity.
There's also the likely competitive response. Because infrastructure is a fixed cost, the incumbent will be willing to respond with lower prices and eating into margins. This is good for the consumer because it reduces prices. However, it presents the new entrant with a tough competitive situation. As soon as Verizon installed fiber in a neighborhood, the cable companies would offer targeted discounts that reduced the FiOS take rate.
This is why cable overbuilders have historically had such a hard time of it. RCN, for example, went bankrupt. Even Verizon, which is a much richer company, stopped the FiOS buildout due to disappointing returns-on-investment.
Of course, Google is in a different situation, because telecoms is not their primary business. Their primary motivation is likely the ancillary benefits, rather than the profit on the network itself. |
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tdar
join:2004-04-05
Satellite Beach, FL | reply to KrK
said by KrK:Yeah, I suspect they are trying to actually make a point. What it is I'm not exactly sure.
Watch the first 15 mins of the video they tell you what the point is.
Google makes money off people using the internet. They make money off new innovations on the net as they lead to more use. Innovation as they see it is being blocked because the access part of the net has not kept up with the storage and compute part.
Google wants to change this. They will make money at it and then be in the position to call all the incumbents liars when they say they cant do it. Notice they stated over and over there are no caps on Google Fiber. Think Google wants there to be caps anywhere?
Here's a thought to ponder. What if You Tube could replace your cable or sat provider? |
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said by Crookshanks:Sorry, that's not how business works. Your example is only valid if there was no other product Google could have invested their time and money into. Google has a fiduciary duty to its shareholders to invest its time and money into projects that net the highest possible profit margin.
This is indeed how business works -- in economics textbooks. In practice, though, companies practical vertical integration even when it doesn't make sense. I suspect they do it for the same reason that they pursue value-destroying mergers -- it allows executives to build empires and bolster their clout at the company.
The classic example is the integrated oil company. Almost all the profit is in the crude oil extraction. Yet most of the majors still operate refiners and gas stations, which are essentially breakeven businesses. Only a few have been willing to divest, even though it would improve their capital efficiency.
Right now, Kansas City is a hobby for Google. But if Google were to decide to vertically integrate, though, it would not be the first time that a company made a decision based on non-economic considerations.
Also, tech investors seem to be a lot more tolerant of hobbies than utility investors. Microsoft lost money on Xbox for ten years before finally breaking into the black. If an electric utility were to go out and frack some natural gas, their shareholders would revolt. |
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Kamus
join:2011-01-27
El Paso, TX | reply to Linklist
throwthemdemsout, i missed you so much. |
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 LinklistPremium
join:2002-03-03
Longport, NJ
kudos:5 | reply to fifty nine
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KrKHeavy Artillery For The Little GuyPremium
join:2000-01-17
Tulsa, OK | Yes, because 18 months to install a city is just unacceptable.
This I feel is half the problem. Many business want huge returns right now, immediately--- or by the end of next quarter. This is often fueled by the Street. 2 years out? Unacceptable!
Honestly, if I had to wait the full 18 months to get that fiber, I'd STILL be delighted.
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"Fascism should more properly be called corporatism because it is the merger of state and corporate power." -- Benito Mussolini
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elray
join:2000-12-16
Santa Monica, CA | reply to jjeffeory
said by jjeffeory:The service is free. It's just that the install is NOT free. Come on, we both are fluent in market speak...
Ergo, it is not free.
Cheap, but not free.
With Google's backing, the $300 NRC is a good risk, but its still $300.
its a FAR better deal than the $70/Gbit service, but its $300.
I detest market-speak, and the lemmings who echo it with no shame.
While it may move product and close sales, it contributes to the free-lunch mentality that is ruining our country's remaining work ethic.
Google should be proud of their $300/7-year offer, and proclaim it so, not hide behind fine print. |
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| That $300 is just for the initial fiber to home install - it's really a home improvement fee, not a service fee. If you move to a home that already has Google fiber installed, you can get the service for 'free' for up to 7 years.
$300 is still cheap, or $25/month for first year. That's $3.57/month for 7 years for unlimited 5/5. |
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| reply to fifty nine
Google gets my vote. Lol I just have to laugh with how ignorant most people are. it is claimed that this project cost between 350-500 million and for sure Google is going to make back their money for this project in as little as 3 years. Information is what Google makes money from. Being able to collect data from usage, to search queries, to search trends and everything is worth hundreds of millions a year by itself. It cost almost nothing to provide internet services when you consider the profits made. This project is going to succeed and it is going to spread to other cities, because it will be the project that most people compare their shitty services to.
Remember when everyone wanted Fios to come to their town, now everyone is going to want Google to come to their town. The cost of fiber optic cable is as cheap as chips. You can buy fiber for as low as $120 a kilometer, so that $300 that Google charge for installation can wire more than 1 and a half kilometer and still have room to pay for modem and installation.
North Americans have been fool for so long about the real cost of providing internet that it boggles the mind that it could be so cheap and still make money. DON'T YOU ALL GET IT YET, THE ISPS HAVE LIED TO US. |
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 batterupI Can Not Tell A Lie.Premium
join:2003-02-06
Netcong, NJ | reply to saneblane
said by saneblane :$120 a kilometer
That is funny. What is a kilometer? It must be about ten feet. |
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