Google Fiber gets a fast start in Kansas City
Analysts say that more than 7,000 households have already pre-registered for the new broadband service, while 23 percent of designated 'fiberhoods' have cleared the hurdle for .
After just one week on the market, Google Fiber is taking off in Kansas City (in both Kansas and Missouri), where 46 of the designated neighborhoods -- or "fiberhoods" -- have qualified for the service, the company reports on its Google Fiber site.
Google announced its fiber-to-the-home network last week, which offers speeds of up to one gigabit per second and a new TV service. Google said it would prioritize construction of the network in neighborhoods -- so-called "fiberhoods" -- in which residents show the most interest. It set up a website where residents interested in the service can pre-register for the service for a $10 fee. When that particular "fiberhood" reaches a predetermined threshold, Google will commit to offering service in that area.
The response to the service in the first week has been huge -- Google has already managed to sign up 23 percent of the eligible neighborhoods in the two cities. Missouri residents seem to be more enthusiastic about the service; 31 percent, or 40 out of 128 eligible "fiberhoods" qualifying for service. Kansans are lagging, by contrast; only eight percent, or six out of 74 "fiberhoods," have so far qualified for the service. (I pulled this data from the Google Fiber page, which breaks down the Missouri and Kansas data separately.)
In a research note to investors (not online), analysts at Macquarie Capital estimate Google has signed up 7,000, out of a possible 165,000 households. That translates into about 4 percent market penetration in the first week alone.
Google says it's happy with the uptake in the service.
"We didn't really know what to expect," said a spokeswoman for Google Fiber. "But we're thrilled with the progress so far. And we're working hard on the ground to educate people about the benefits of the fiber network."
Google has "fiber trucks" going through various neighborhoods eligible for the fiber network to help educate residents. And Google has also established a "fiber space" demonstration center where local residents can make appointments to learn more about the personal and community benefits of having a fiber network.
It shouldn't come as a surprise that people are enthusiastic about the service. Google's service offers subscribers much faster speeds for a lot less than what they'd pay competing broadband providers. Google's main package costs $120 and gives customers the 1Gbps broadband and Fiber TV service plus 1 terabyte of Google Drive cloud storage.
The 1Gbps broadband-only service is only $70 and also includes 1 Terabyte of data storage. Time Warner Cable, Google's biggest competitor in this market, offers a 50 Mbps Internet service for an introductory price of $80 a month. And its total package with TV service and home phone service included is $200 a month.
But installing a fiber network and running it is not cheap. Macquarie analysts estimate that even if Google manages to sign up 25 percent of Kansas City households, Google Fiber will still operate at a loss.
"We expect this initial rollout to be net negative for GOOG. It reminds us that this initiative is less about a long-term revenue opportunity for Google and more about pushing current Internet providers to increase speeds and innovate (which could benefit Google in the long run)," the analysts said in the research note.