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Google Fiber Costing Google a Pretty Penny – Estimated To Cost $11 Billion for a Nationwide Rollout

April 9, 2013 - Written By Alexander Maxham

Today, Google announced that Austin, TX is the second US city to get Google Fiber. How many of you are jealous? I know I am, especially since the ISP’s in my area offer such slow internet, I often have to hotspot. Anyways, for those that don’t know, Google Fiber is Google’s venture into the Internet Service Provider business. Google Fiber promises speeds of 1GBPS for both upload and download. Some speed tests from Kansas City has shown around 950mbps down and 900mbps up, which isn’t bad and still pretty close to the 1gbps. Could you imagine being able to download a movie in under a minute?

Analysts over at Bernstein Research have published some estimates, this week, of how the cost of Google Fiber is shaping up for Google. Seeing as they have only gotten Google Fiber in one city so far. The firm notes caution about whether Google will bring Fiber nationwide of not, which of course we all would love to see. To bring Google Fiber nationwide it would cost Google around $11 billion to build. This includes internet and TV service to another 20 million homes which would achieve a medium-to-large rollout to compete with the other ISP’s out there like AT&T, Comcast, and Time Warner.

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Last year, Ryan pointed out that when Google first unveiled the details of Fiber for Kansas City, there were a couple of big hurdles they had to jump to get their service off the ground. The first major hurdle would be the infrastructure and then getting it connected. Bernstein’s Carlos Kirjner and Ram Parameswaran have now put a price on that hurdle. According to those two analysts it would cost the search giant about $84 million to pass 149 thousand homes, and that doesn’t include getting them all connected, the first phase for Google Fiber in Kansas City. Kansas City, KS., would cost Google about $38 million and $46 million for Kansas City, Missouri. The cost per home would be about $674 and $500 respectively.

Google has already detailed three different service plans for Google Fiber as shown below:

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Bernstein is estimating that to connect just Broadband service it would cost Google $464, those getting Broadband and TV would be $794 to connect. Once the service gains some momentum, there’s no doubt that Google will see some revenue incoming that will help offset the price of getting Fiber rolled out in more cities faster. Kansas City was like Google’s guinea pig for Fiber. Bernstein is expecting that in the first year, incremental cash investment will grow to 18% penetration to about $2 million with $15 million in incremental cash costs offset by $13 million contribution from users.

So we desperately need Google Fiber to gain some momentum that way we can see it landing in more cities, and competing with the big ISP’s more and more and hopefully get them to drop their prices to compete with Fiber.