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The Lou

2 recommendations

Google fired a shot across the bow

Yesterday's post regarding Google Fiber had the most telling quote in it:

»Ars Realizes Internet Can't Keep Up With Google Fiber

"You've in essence removed a bottleneck that the Internet isn't yet structured to deal with being removed. Having that much pipe means you're basically plugging your computer directly into the thing you're downloading from. Your own bandwidth is so great that it becomes immaterial. It becomes a question of how much bandwidth the other side has available."
In reality, Google has said very little regarding the service other than "we're going to deliver fiber-based services to a selected area". Anything else that's been mentioned regarding it has been speculation based upon analysis of how the project priced, delivered and performed.

That said, Google's pricing a service at a nearly negligible cost is doing two major things:

1) Putting billions of dollars behind the belief that the consumer's attention is worth more then the investment. Essentially, they're force feeding a HUGE spoon to the base they reach and showing advertisers, "look, if you want their attention...send it down my pipes and you'll make money."

2) They're upsetting the model that people buy "services" for the sake of having "services." Residential customers don't buy electricity for the purpose of saying, "look, I have electricity!" They purchase it to consume products that benefit from having electric access. By almost giving away the access needed consume tv and online products, Google is removing any reason customers may have for conducting even more of their lives outside of their infrastructure....or those companies also benefit from Google's business interests.

They're a complete mind-shift that entrenched providers are not ready to compete against.

Trogglus normalus

Chicago, IL
I dont really agree with those points.
1) They built a fiber network. They are simply letting users use most of the capacity of the network. Sure they can artificially limit users like most ISPs do, but what would be the point in that when customers are paying you more than enough to cover all the costs to operate the network and have a great profit.
Using 5 mbps or using 100 mbps on their fiber network costs exactly the same per user as 99% of the costs are in the physical connection and hardware.

Now they do have their limited 5 mbps plan for $300 which only covers paying in installer to run fiber from the street to the persons house and hardware.
But if you built out the network to that street then any money is better than nothing and at least getting the 5 mbps hooked up is free advertisement to get more services to that house.

I dont see this as a mind-shift. It is simply building a fiber network that can be constantly upgraded for more speed with new equipment instead of having to change any wiring and offering a cheap teaser plan to get their foot in the door so any extra profitable services can be turned on instantly.

Google is simply trying to be a profitable successful ISP, not a monopoly that tries to rip off customers just because they can.
Remember the incumbents have been around for decades, their entire networks are already fully paid for so they can easily undercut google if they wanted to, the problem is they dont want to.