Yes, It Would Be Prohibitively Costly For Google To Offer Google Fiber Everywhere, But It Shouldn't Have To
from the think-outside-the-box dept
A bunch of folks have been sending over Business Insider's coverage of a Goldman Sachs Report concerning Google Fiber, and how much it would cost to roll it out nationwide. The estimate from BI, which is what lots of people are quoting, is that it would cost $140 billion. From the quote presented in the article, it's not clear if the Goldman Sachs report actually uses that number of not. The only number actually quoted is that it would cost about $70 billion to cover less than half, so I don't know if the BI reporter is just extrapolating in a manner that seems ridiculous (if covering half the country is $70 billion, that does not mean covering the other half is also $70 billion -- it doesn't work that way):Building out the infrastructure will be expensive. In his September 17 report Still Bullish on Cable, although not blind to the risks, Goldman Sachs Telco analyst Jason Armstrong noted that if Google devoted 25% of its $4.5bn annual capex to this project, it could equip 830K homes per year, or 0.7% of US households. As such, even a 50mn household build out, which would represent less than half of all US homes, could cost as much as $70bn. We note that Jason Armstrong estimates Verizon has spent roughly $15bn to date building out its FiOS fiber network covering an area of approximately 17mn homes.Of course, even if we accept this number to be true -- even though that seems unlikely to be the case -- it seems to miss the point. Google has been pretty clear all along that the goal of the Google Fiber project was not to turn Google into a national broadband competitor, but to drive others to really up their game by showing what's possible: super cheap, super fast broadband with friendly customer service.
And, while Google shied away from its initial promise to have its network open for other services to compete, it still seems like that might be a better way to offer such a broadband. That is, rather than dumping the expense entirely on one company, imagine if it were split up among a bunch of companies (or even individuals), with a promise of openness and competition at the service level, rather than at the infrastructure level. In effect, this is what is happening down in Australia, via government fiat, in which it's building out a national fiber network, with plans to have it open for competition at the service level. That way, the costs of the infrastructure are spread out, but it opens up massive new opportunities for service providers if they provide good service.
The problem -- and the reason such a thing is unlikely to move forward -- is, once again, this insistence by companies that there's more value in owning the pipe entirely, and keeping it locked up and scarce, even if it means less overall efficiency and less overall opportunity. A long term view would recognize that investing in the best network possible, but sharing those costs, and then letting the real competition happen at the service level, would benefit everyone. Instead, we end up with fighting over slow, limited and fragmented networks. It's too bad.
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Filed Under: broadband, costs, fiber, google fiber, infrastructure
Companies: google
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I am awaiting the day we finally rise up against our Corporate Masters and the Corrupt Politicians.
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Lobbying
Govt is the problem, just look at the monopolies they allow in utilities, broadband, health insurance, etc.
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Well, it's all relative. Google has a reputation for bad customer service. But we are comparing them to most of our US ISP's and Telco's. In a room full of black cats, a dark gray cat looks white.
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But we know there is no way this makes any practical sense and can just be done with the whole impractical concept.
What you're asking for is like being able to choose a different long distance carrier for your landline even if they don't own the copper of that land line to your home. If they want to provide you long distance phone service, they should have to run that copper wire all the way to your house just like everyone else does, that's the only way that's fair.
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You mean, like the US has had for the past quarter-century or so?
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Proving how it didn't work, or else we'd still be using dial-up instead of moving toward another system based fiber optics.
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Some translations from Mike-speak are required:
"with a promise of openness and competition at the service level" -- Means gulling the public to pay for infrastructure that Google will utilize (yet pay almost no taxes for: recall its 2.4% rate), and we've also no assurances it'll keep that promise, either.
"In effect, this is what is happening down in Australia, via government fiat, in which it's building out a national fiber network, with plans to have it open for competition at the service level. That way, the costs of the infrastructure are spread out, but it opens up massive new opportunities for service providers if they provide good service. -- Mike here advocates PURE fascism, where COSTS are paid by taxpayers (not least by eternal debt), but the PROFITS go to private corporations (also forever).
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Re: Some translations from Mike-speak are required:
You clearly don't understand how these things go. The alternatives you have are:
a) State builds up infrastructure with taxpayer money and hands it to private/public company. That company gets a monopoly on communications, which means terrible service for everyone (0 competition means 0 incentive to get better).
b) State builds nothing and lets private companies handle the infrastructure building. Only VERY RICH companies can afford the bill for such a thing, which means that you'll end up with a mono/duo/trio/etc-poly in communications, which means terrible service for everyone, because there is very little competitive pressure, and you own the infrastructure anyway.
c) State builds up infrastructure with taxpayer money and basically says "anyone that wants to use the infrastructure is free to do so, so long as they follow 'these rules' and pay X amount which we'll invest in upgrading the infrastructure".
The choice here is obvious, I think. Compare Internet speeds between countries that implement a/b and countries that implement c and maybe you'll get a clue.
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The FCC could even put a surcharge on every phone, internet, and mobile carrier bill, so it is paid for by the end users for the benefit of all. It could pull in as much as... 8 billion dollars a year.
Of course, the telecom operators would NEVER just pocket the money from such a fund and make no effort to lay new fiber.
/Sarcasm.
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Of course, the telecom operators would NEVER just pocket the money from such a fund and make no effort to lay new fiber.
I was having a good day until you reminded me about that...
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Lune Valley fiber. Put in by the people it serves.
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I wouldn't. The cost/benefit ratio is all wrong for me on that one.
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I think you already have.
You've been paying for the fiber sin 1996. Where's your damned fiber? Where's MY damned fiber?
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Fiber Networks Cost $$$
$70B for half the country sounds conservative to me.
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Re: Fiber Networks Cost $$$
Fiber and electronics are actually the cheapest part. The most expensive part by far is sending people to each house once the infrastructure is in place.
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Is not really the companies that are a problem, they are doing what they do best and that is look after only themselves, the real problem is a government that listen to those companies and allow to be infiltrated by agents of those companies.
People could build their own networks, they already pay for it, so it is not like simple people can come together and pay someone to build it for them, but they can't, endless regulations and exclusionary rules make that almost impossible for people to actually build anything by themselves.
In Australia there is a political will to build it for some reason maybe to get easier access to the data who knows but there is a will, that will in the US is non-existent, and so is competition.
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I just want to cheer Google on
The cable and phone company ISPs have forgotten how to compete.
All I want is for Google to move Google Fiber into 10 or so major metropolitan areas and take 90% of the competitors business because they actually give a damn about the customer!!!
I love watching Time Warner cry for mommy government to come and save them because Google is taking their customers. Boo effin hoo.
The ISPs are trying to tell us that we need (even want WTF?) bandwidth caps. Then Google moves into KC with a service 1000% better than what the telcos and cable companies are offering. Its called COMPETITION assholes.
I don't care if Google can get this deployed nationwide. I just want them to HURT the other ISPs.
Isn't it telling that in today's day and age, in many industries, customers are forced to do business with companies that they hate and abhor.
But companies better beware because if a competitor comes in and actually is just plain marginally nice to the customer they will crush the incumbent monopolies.
No if Google will only start to move to becoming a wireless provider. ;-)
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Re: I just want to cheer Google on
Mike Mansick, this isn't an attack so here goes. It's not as if they shouldn't have to, they tried to make it exclusively their project, they need a joint effort to make it nation-wide, and Google wants it done Google's way with third parties. There was one other company who refused third party help in revolutionizing the game console market...Nintendo wanted full control over the proposed SNES CD game content and would not allow Sony to develop games with them in partnership. Nintendo chose the Philips CDi over the partnership project SNES CD with Sony because they figured Philips to be less conpetition. There is a point here.
The point that I see here is that Google, acting like Nintendo, sees other Telco's and third party organizations who could help fund a *nation wide* fiberoptics system, as their Sony. They are snubbing their potential partners to stay competitive the way Nintendo did with Sony...we all know the results of that (Three shitty Zelda titles and Hotel Mario for those who don't know).
So to avoid corporate embarrassment they must get over themselves to be able to compete.
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Re: Re: I just want to cheer Google on
That is of course IF that was the goal. Which is was not. The goal, was instead to show that good bandwidth can be provided at a reasonable cost TO THE CONSUMER. And their point has been well and truly made.
In regards to deployment, as you may or may not know, Google basically said, "Hey, we're going to try out this Google Fiber thing. We haven't decided where yet. So YOU tell us where we should deploy it and why. Remember, creativity isn't necessary but it sure might help your case."
And lo and behold, Kansas City (on both sides) won.
As for the rest of your comment, well it's largely irrelevant. Google Fiber is THEIR project. It's got little to do with the other telcos. As for nationwide deployment, also still irrelevant. You're starting off with the assumption that Google chose not to work with others and then running from that point on. You fail to, for whatever reason, realize that the telcos hate competition and in the majority of the country have monopolies on deployment. Monopolies that they themselves advocated and lobbied for, mostly with local governments. Meaning, even if Google wanted to work with others, they are unable to do so. Except in specific cases like the one in Kansas City, where the local government asked them to step in and provided them some needed infrastructure and resources to do so. In the hopes that Google stepping in would provide the needed incentive for the other telco operators in the area to step up their game and give the customers what they want, better services at cheaper prices.
The rest of your comment is largely a shot a Google and fails for the reason I already listed above. Namely, that you start with an incorrect assumption and run from there.
As for that shot at Google about competing, well... I don't know what to make of it. I suppose I could say something along the lines of, "Rather than litigating away the competition over moronic patents granted to them, perhaps Apple should let their products truly stand on their own merits. You know, if they're really as great as some say they are then they'll sell well." But of course if I did so I'd expect an Apple defending response from you, which I'd largely ignore because I don't care one way or another about any company, but mostly because I don't care about hearing about Apple not being a baby/competing/wre wre wre from you. [shrugs]
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As for it's parallel for acting like Nintebdo towards Sony I've the whole Philips CDi debacle....do your video game history...you might see how Google's actions in not putting effort to make a joint effort mirror that of Nintendo.
In saying that I have hit 2 of your sacred cows it seems.
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That about right?
Because I didn't actually call you a fanboy, I just said I don't want to hear you defend Apple or anything. I don't know if you do or not. But I'll take it based on your answer that you may be one. No one labels themselves as something that someone hasn't stated. And the reason I mentioned Apple was because when I hear Google the only other company as large I can think of is Apple. As far as popular products goes.
And oh yeah, I read the article. And the one on The Verge. Still awaiting the apology for you being wrong. [looks at wrist watch]
Also, I never said Apple could take on this kind of project, no clue where you're getting that from. My only reason for mentioning Apple was you saying if Google wants to compete. And frankly, by and large, quite a few sites have pointed out exactly what I wrote. That if Apple's products are able to compete they should be allowed to do so, without getting courts involved.
But like usual, let's bring up Apple. Yay!
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"As for that shot at Google about competing, well... I don't know what to make of it. I suppose I could say something along the lines of, "Rather than litigating away the competition over moronic patents granted to them, perhaps Apple should let their products truly stand on their own merits. You know, if they're really as great as some say they are then they'll sell well." But of course if I did so I'd expect an Apple defending response from you, which I'd largely ignore because I don't care one way or another about any company, but mostly because I don't care about hearing about Apple not being a baby/competing/wre wre wre from you."
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Re: I just want to cheer Google on
Besides, I do everything I can to avoid doing business with Google. The last thing I need is to be effectively forced to do business with them.
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....I now await to excep apologies :-P Though I don't expect them.
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I guess in that case we should expect an apology from you for being wrong, because they do plan on expanding (per the article). Although I don't expect one.
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Nope, appologies are still mine to accept. I don't expect you to have either read the article (citing the quote above), nor did I expect you to even take the time to mill around through previous comments I've made on the matter in other articles. They are snubbing competition like Nintendo, and almost like Sega did with their customers, the general public suffers. Why? They didn't feed off the base infrastructures in place because their conpetitors use thoseFiOs lines.
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Second, they can offer it in cities first, where they will get much higher return on their investment, and they can just use the money to continue expanding in other cities. It's not like Google needs $140 billion right now to fund this.
By the time they have to move to rural areas, they will get enough money incoming from all the customers in all the cities. So this is very doable.
Also, the Government can help, too. After all they already spent $200 billion to get the ISP's to bring Americans fiber - and they didn't - but still wasted the money.
http://www.pbs.org/cringely/pulpit/2007/pulpit_20070810_002683.html
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Just.... no.
Friendly customer service? What customer service? You mean a webpage? You don't really think they are offering good customer support for the prices they charge?
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But what about mobile?
If the action is mobile, does any company want to sink a lot of money into wiring houses?
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That's the case now. But if you are investing billions into a hardware solution, you might want to be looking pretty far down the road. If you think much of the online world is shifting to mobile, you might want to avoid sinking lots of money into a system which becomes outdated. In developing countries, they aren't wiring homes, so if they start dictating what goes online to accommodate their systems, you may find that the world of content shifts to a wireless world.
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If I were a cable operator, I'd let Google have whatever market it wanted
So if Google wanted to come into a town and my company was already there, I'd probably drop the price on the broadband my company already had in place and let Google rewire for faster speeds.
I don't think there are a lot of companies dying to get into this business or even wanting to hang on to this business if there's a lot of upfront investment that they have to pay for.
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Just use the cellphone business model!
If the telcos can convince us to take a "free" iPhone by agreeing to a THREE year contract, why can't fibre work the same way???
I would gladly pay $100 per month or more for fast, high-bandwidth fibre! And (for the first time in my life) I would happily pay a set-up fee to get that precious light pipe into my home.
The incumbent telcos won't acknowledge this reality until people catch on that they are being gouged, and that speed and bandwidth are basically free once the infrastructure is in place. Remember when you paid $75 per month for a pager that could only beep when you had a message? Remember paying $$ a minute for cell phone service?
Telcos will price the ones and zeroes as high as they can until someone like Google comes along and shows everyone that bandwidth is a commodity just like electricity, gas and water. Have you ever thought about your monthly water bill when 'downloading' a glass of water? Has your tap ever slowed to a trickle because your neighbor was washing clothes? Has the water co ever 'fined' you by quadrupling your monthly bill because you watered your lawn too much?
Bandwidth is the new water. The infrastructure for both is similar in logistics and cost. Water treatment plants, buried pipes, maintenance, quality control, repairs, billing - how are the ones and zeroes flowing into your home any different?
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Re: Just use the cellphone business model!
And I think they will let Google do it if Google wants to.
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I waited years to go from 28k dialup to 1.5mbps DSL,I can wait a few years to go from 50mbps cable to 1gbps+ fiber...its just nice to to know (fingers crossed) someone is finally getting the ball rolling that's not in bed with Comcast and going to stall their roll-out because of backroom deals (Verizon).
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