Google Fiber

Google Fiber is Showing Early Signs of Success

October 8, 2015 - Written By Fernando Bonilla

Google Fiber, the company’s gigabit and cable TV service that offers astoundingly quick internet speeds, seems to always be surrounded by hype and a degree of anxiousness. This reaction is understandable, considering the service’s 1 gigabit per second connection is a whopping 40 times faster than modern standards. Whenever Google announces its plans to develop new infrastructure in cities to support Fiber, the media is happy to hear it. However, even after several launches at different cities around the U.S., Google Fiber has a relatively small subscriber base. Whether this means that other internet service providers (ISPs) have nothing to worry about is another story.

Bernstein Research has published a new study that looks into Google Fiber’s success in cities where it’s available and whether or not the service is having any significant impact on the world of ISPs. In Kansas City, the location where Fiber was originally launched three years ago, the study found that Google’s service has reached a penetration rate of 20%. It then estimates that it is easily possible for Google to penetrate up to or above “40% of homes passed and realize attractive ROIs [return on investments].” Even so, the study suggests that Google may only have 100 to 120 thousand subscribers to its services. Bernstein admits that this seemingly poor number of customers “likely plays into the incumbents’ default belief that deploying and operating wireline networks at scale is much harder than commonly thought.”

That attitude is exactly what Google is fighting with Fiber. The U.S. has surprisingly little to no providers for the gigabit-speed service. The search giant is hoping to use its program to help current ISPs begin to roll out similar services of their own, and lower prices for their slower connections. There are signs that Google has been successful to a point in that regard. For one, IPSs are indeed introducing price cuts for their services, though only in locations where Google Fiber is available. However, it is likely the traditional internet providers are not taking Fiber seriously as a competitor. Bernstein notes that they shouldn’t marginalize Fiber because of its limited availability. Eventually, Google’s service could claim up to 50% of the market in cities it has been able to incorporate its infrastructure. With Google planning to take Fiber to a substantial amount of additional areas, including Charlotte and Nashville, ISPs should worry about the new kid on the block. The gigabit speed provider is in a position to become profitable.

The study sees a realistic 15 to 20 million subscriber base for Google Fiber in 6 to 8 years, even calling such an estimate “far from impossible.” If that figure is anywhere near reality, the United States’ ISP landscape is sure to see significant changes.