Google is showing the cable companies and telecommunications providers how a broadband network should be built.
On Thursday, the company took the wraps off its new Google Fiber and Google Fiber TV services, which through a fiber connection directly to the home, delivers broadband speeds of 1Gbps on both the upload and download links. It also announced its new Google Fiber TV service that offers a vast array of high quality HD video content broadcast to TVs and is also available on demand.
The services that Google is delivering to lucky residents of Kansas City, Mo., and Kansas City, Kansas, is leaps and bounds above what they can get currently through providers, such as AT&T's U-verse service or Time Warner Cable. But it's also much more advanced than what the average American is able to access from any cable operator or telco broadband provider in the country. And Google is offering it at prices that beat the local and even national competition.
In fact, Google will be delivering speeds that are more than 100 times faster than most broadband users get today. And on the TV side, the company has included enhancements, such as doubling the number of TV shows that can be recorded by a DVR at one time, plus it offers more than 500 hours of storage for very high quality HD video.
Google hasn't said yet whether it will deploy a fiber network in any other cities. The company is focused on Kansas right now. But it's clear that the deployment is strategic for Google. Even though most users today don't need Internet access at 1Gbps, Google is showing what's possible. And the company hopes that applications and uses for the ultra fast network will evolve to fill the pipe.
But the network itself is also a way to show the rest of the broadband industry how they should be building their own networks to offer much faster speeds, which in the long run benefits Google's advertising and search businesses. And it offers Google data that it can use to nudge cable operators and phone companies to be more aggressive in upgrading networks and offering services at lower prices.
"This is a strategic business for Google," Kevin Lo, general manager for Google Access, said in a phone interview from Kansas City. "And on a national level, this is about innovation and access to an abundance of technology. There is a bottleneck right now in residential access where people are only getting speeds of 5 Mbps."
And even though he didn't directly say it, he made the point that the Google Fiber network can be seen as a challenge to what broadband providers have offered in the past.
"The last time we doubled the speed of broadband a whole new market evolved and spurred tremendous growth in the Internet," he said. "We don't want incremental change. Offering you a 10 Mbps service and edging it to 50 Mbps and then 100 Mbps, that's not what drives real innovation. We need to do something in a big way that will take a material step in performance."
What Google can teach broadband operators
Google's chief financial officer, Patrick Pichette, described during the presentation introducing Google Fiber how computing power thanks to Moore's Law has grown through the years doubling every 18 months. And he showed how the cost of network storage has fallen dramatically, paving the way for cloud-based services such as the ones offered by Google. But network access speeds have remained relatively flat over the past several years. The result has been only incremental changes in the speed of services that are offered to consumers.
"We saw a doubling of speeds for Internet access in the early years as we went from 14 kbps to 28 kbps," said. "But then after the cable modem showed up, we've seen little progress in access."
Pichette also pointed out that even though speeds have only increased incrementally on a per megabit basis, Americans are still paying more for Internet access than consumers in other countries.
And this is where Google is also showing existing operators a thing or two. Google is offering 100 times faster speeds on a service that is less than half the cost of the fastest Internet services available in the country today.
The 1Gbps broadband-only service is only $70 and also includes 1 Terabyte of data storage. This compares to Verizon's Fios service, which charges $205 for a 300 Mbps service with 65 Mbps uploads. Like Google, Verizon also delivers its broadband service over a fiber connection linked directly to the home. But unlike Google it doesn't offer these faster speeds with symmetrical bandwidth speeds.
When packaged with its TV service, Google's services are also priced affordably. And they beat the offerings from local competitors, such as Time Warner Cable. For $120 a month, Kansas City residents can get the 1Gbps broadband service and the Google Fiber TV service plus 1 Terabyte of data in Google's cloud storage service Google Drive.Google is even throwing in the $200 Google Android Nexus 7 tablet at no additional cost, so that users can use the Android App to control the TV service and even watch TV on their tablet.
And Google is giving away basic broadband service with speeds up to 5Mbps downstream and 1Mbps upstream for free for the next seven years, so long as users pay the $300 cost of hooking the fiber up to their home.
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.
Time Warner was unable to put an executive on the phone to discuss the differences between the Time Warner network and the Google Fiber network, but a spokesman said this in a statement:
"Kansas City is a highly competitive market and we take all competitors seriously," he said. "We have a robust and adaptable network, advanced products and services available today, and experienced local employees delivering local service. We are confident in our ability to compete."
For Google, Lo said competition is necessary to drive the market.
"At Google we think competition is always a good thing," Lo said. "In our core business, we are always a click away from being irrelevant, so our engineers wake up knowing that they must stay ahead of the competition."
Google has been tight-lipped about if or where else it might deploy a similar fiber network. But even if the company doesn't expand the service beyond Kansas City, the fact that it has been able to develop a service that offers so much bandwidth could be enough to shake things up among broadband providers.
"At this point you'd be hard-pressed to see any reason to have 1Gbps connections into a home," said William Weeks, technology fellow at TEconnectivity, a company that helps operators deploy fiber networks. "I think what Google is trying to do here is prove the business case for building such a network and offering these speeds. They'll have their own numbers that they can show if the cable operators and telcos tell the FCC tha they can't build more capable networks more rapidly."
Indeed, Google seems to be making the case for why broadband providers need to up their game and offer faster services at lower prices. And even though the network won't be a direct threat to cable operators like Comcast or Verizon, which don't offer service in Kansas City, it could be used as a counter-argument to these companies' complaints and threats about Google and other Internet services eating up too much bandwidth.
Recently, Internet service providers, such as Time Warner Cable and Comcast, have placed limits or caps on their services. And some have suggested that Internet companies, such as Netflix, should pay more for content delivered to their customers over a broadband provider's network.
Google's execs say that with a fiber network, there is no need for these restrictions. And the company has not put a cap on broadband usage.
Google as market instigator
The Google Fiber initiative isn't the first time that Google has tried to push the market forward. In 2007, the company lobbied for open access conditions on wireless services that used the 700 Mhz spectrum block. And after it won that battle, in 2008 it bid on the spectrum, forcing the winner of that auction, Verizon, to adhere to FCC requirements.
Google has also dabbled in community-based Wi-Fi and launched a citywide network in Mountain View, Calif. It's also deployed a broadband network at Stanford University. And in 2010 it unveiled plans to build the Google Fiber network. More than a thousand cities wanted to be considered for the network. But Google chose Kansas City.
In other parts of its business, Google has entered new markets to stir things up and drive innovation. Its Nexus line of mobile products has been developed to use the best components available to make the most technologically advanced mobile devices. The hope is that developers use these devices to create new applications and innovate in mobile.
"I think in general people misinterpret our motivations for building the Nexus products," Patrick Brady, who works for Google and helps develop the Nexus products, said in a recent interview when asked if Google is concerned about making money on its Nexus products. "It's about building and driving the ecosystem."
The same strategy is likely taking shape here, where Google is likely not going to emerge as a nationwide broadband player but instead is trying to shape the broadband business to increase speeds and thus increase the functionality of its own Google products.
While commercial broadband providers may be slow to ramp up speeds and drop prices to make high-speed network connections affordable to the masses, other organizations have sprung up to push more fiber-based networking. Last summer, a consortium of universities called GigU banded together to deploy 1Gbps fiber networks in communities and towns near universities. And earlier this summer, the White House along with the National Science Foundation's GENI (Global Environment for Network Innovation) program launched "US Ignite," an initiative that will bring startups together with local and state governments, federal agencies, universities, and others in the tech community to develop a national 1Gbps network.
"We know we are going to need more network capacity as we do more things online," said Jim Baller, president of the Baller Herbst Law Group, who has advocated for community-based fiber networks for years. "But the question is how will we get there? And that's what these initiatives are doing, which is bringing players together and stimulating interest and dialog."