Weekly News

Google Fiber no longer a moonshot — it's a 'real business'

July 20,2016 03:12

SAN FRANCISCO — In February, Josh Mosqueda moved into a one-bedroom apartment on the other side of Austin from most of his friends, not for the nearby greenbelt or the swimming pool, but for the kind of perk this 27-year-old software engineer could ...and more »

SAN FRANCISCO — In February, Josh Mosqueda moved into a one-bedroom apartment on the other side of Austin from most of his friends, not for the nearby greenbelt or the swimming pool, but for the kind of perk this 27-year-old software engineer could not resist: Google Fiber.With the one-gigabit-a-second service, fast enough to download a movie in less than two minutes, Mosqueda streams Game of Thrones, steps onto the virtual ice with video game Rocket League or tests mobile apps — frequently on multiple devices and without most of the hiccups he experienced on other broadband services.With Fiber, Mosqueda no longer hesitates as he hands out his Wi-Fi password when hosting friends, even during a housewarming party."Every time I say that I have Google Fiber, people freak out," says Mosqueda. "And I say, 'You should freak out. It's amazing.'"Mosqueda is not a spokesman for Google Fiber but he might as well be. Testimonials like his are fueling demand for the super-speedy Internet service across the country.And that's good news for Fiber, which has a green light from executives at parent Alphabet (GOOGL) to spend big in its mission to become a national broadband company that competes with the industry's deeply entrenched heavyweights."Now that we have proven the business model to ourselves, we are expanding,"  says Dennis Kish, vice president of Fiber.GIGABIT WARS Yet demand is spreading far faster than Fiber is.Fiber operates only in a handful of cities, with six more being built out, and it's in discussion with 13 more cities. Consumers on social media are vocal about wanting it in their cities, and mayors — eager to flaunt access to cutting edge Internet – vie to be chosen by Google.The slow pace of expansion is frustrating some consumers and it's allowing competitors to race ahead.Map of Google Fiber's expansion plans (Photo: Google Fiber)Among them: AT&T, whose GigaPower Network is already in 25 major metropolitan areas and is expanding to an additional 31, many of them this year. AT&T is also experimenting with a 5G wireless service in Austin with speeds of up to 14 gigabits per second in early tests.Comcast has rolled out gigabit service in Atlanta and Nashville, and plans to introduce it this year in Chicago, Detroit and Miami with more markets coming. It also offers 2-gigabits-a-second service called Gigabit Pro. And Comcast is testing a new wireless service that delivers speeds approaching one gigabit.Welcome to the gigabit wars. Who will win? You.Americans spend much of their lives connected to the Internet, yet the U.S. ranks 16th in the world in average Internet connection speed, lower than Turkey, Kenya and Paraguay and on par with Thailand, according to Akamai's latest State of the Internet report. In many places around the country, consumers have one or two options for high-speed Internet.Internet giants Google and Facebook, frustrated that telecom companies aren't moving fast enough, are building all kinds of technology to extend the reach, accelerate the speed and lower the cost of the Internet, from high-altitude balloons to drones. The perpetually sorry state of U.S. broadband prompted Google to take an even more ambitious step: It announced Fiber in 2010.Google's lucrative advertising business relies on the use and growth of the Internet. Faster, cheaper connections mean more people spend more time online using Google services such as search, YouTube or Gmail, and viewing Google ads, says Recon Analytics analyst Roger Entner.Consumers have benefited from Fiber's entry into markets, where Internet providers lower prices by an average of $15 to $20 a month, and they begin to offer faster Internet service, Entner says.GOOGLE'S BIG BET"Google wanted these guys to get moving and it worked," Entner says.But Google Fiber is far more than a catalyst to get industry players to step up their game. Fiber is aiming to build a nationwide broadband network, helped by its mountains of cash.It's trying new strategies, such as lowering costs by tapping into existing networks rather than building them from scratch. It's also experimenting with wireless technology that could help Google spread the service farther faster because it won't have to build out or buy fiber networks. Fiber plans to start testing the technology in Kansas City and have a network running by the end of 2017. And, in June, Google Fiber said it would buy Webpass, a wireless point-to-point service focused on apartment buildings and condominiums."It is indeed a real business, and it's serving to increase competition as well, and that's something that we don't mind," Kish says of Fiber. "We think it's healthy for the market and for consumers."Alliance Bernstein analyst Carlos Kirjner estimates Fiber could connect as many as 25 million homes over the next five years.ALPHABET BLESSINGLast year's reorganization of Google under parent company Alphabet, separating Google's lucrative advertising business from its "other bets" is giving Fiber runway to drive toward that goal. Fiber has the blessing of Alphabet management, including CEO Larry Page, executive chairman Eric Schmidt and finance chief Ruth Porat.It's a costly gambit. In the first quarter alone, Alphabet spent nearly $280 million on capital expenditures primarily related to Fiber. Operating losses from Fiber and Google's "other bets" were $802 million with revenues of $166 million in the first quarter."We are investing in a very thoughtful way," Kish says. "And we're doing the right things to build a good, healthy, long-term business that is self-sustaining.""Every time I say that I have Google Fiber, people freak out," says Mosqueda. "And I say, 'You should freak out. It's amazing.'" (Photo: Joel Salcido, USA TODAY)As Fiber digs in, it's also discovering that operating a broadband business comes with some baggage: customer complaints that are usually targeted at telecom companies.In 2013, Google Fiber said it would roll out gigabit Internet service in Austin. Last year the city of Austin received 363 complaints about construction and installation activity, including home, landscaping and lawn damage, trucks blocking driveways and other disruptions. Of those, 254 involved Google Fiber and its contractors, while about 100 involved AT&T and Time Warner, according to the Austin American-Statesman.Austin tech executive Bowman Hall signed up for Fiber in February 2015. He found out in May that Fiber had incorrectly classified his home as an apartment building, skipping over him. Google apologized, but told him it could take months. He fumed, then last week Google finally installed Fiber.Is he enjoying it?"So far, yes," he says.Follow USA TODAY senior technology writer Jessica Guynn @jguynn Read or Share this story: http://usat.ly/2a8sab1

business cards business business casual business insider business letter format business plan business casual for women business plan template business card template business analyst

Share this article

Related videos

Alphabet comes before Apple: Google's parent now most valued company in the world
Alphabet comes before Apple: Google's parent no...
Introducing Project Wing
Introducing Project Wing

DON'T MISS THIS STORIES