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I won't be surprised if this news is met with the usual sentiment that Google abandons everything that isn't immediately hugely successful, and while I often sh
by Inconel 10y ago
I won't be surprised if this news is met with the usual sentiment that Google abandons everything that isn't immediately hugely successful, and while I often share that criticism of Google, I can't really fault them too much in this case. Getting a nationwide ISP up and running from scratch just seems like an almost impossible task. This is disappointing to me nonetheless.
Can someone with knowledge of the industry explain to me what the biggest hurdles were for Fiber and what if any mistakes Google made in it's rollout? Am I correct in assuming telco interference or hostility played a part? What could Google have done differently for Fiber to be profitable, or is this simply not an industry that you can hope to be profitable in unless you look 20-30 years out?
Basically I'm curious to learn whether this is a result of mistakes on Google's part, Google just not having the long term wherewithal for the rollout, or market/regulatory forces making such a project impossible at this time?
- scarmig 10y agoMy totally non-professional opinion is this: the problems of there not being good ISPs in the USA isn't a technical or infrastructure problem, where Google excels. They are instead political and organizational problems. Existing ISPs give as little as they can legally get away with while extracting as much money as possible from customers, by hook or by crook. If Google enters a market to provide a better service, Comcast et al. can easily pretty much flip a switch in that market to start providing a better service to hold onto their disgruntled customers, depriving Google of much of the market it needed to make Fiber profitable. So Google ends up spending a bunch of money while not being able to capitalize on it.
- Guest98123 10y agoGoogle Fiber was never in my city, but can those with Google Fiber in their area weigh in on the above? When Fiber came to town, what happened with the existing ISPs in the area? If you called to cancel and explained moving to Fiber, did they give you an offer you couldn't refuse to stay with their services, and if so, did you take it?
- scarmig 10y agohttp://thenextweb.com/insider/2016/08/22/comcast-hopes-you-dont-notice-its-twice-as-expensive-in-non-google-fiber-markets/ http://thenextweb.com/insider/2016/08/22/comcast-hopes-you-d... That doesn't prove anything, but their prices certainly are eerily competitive with Google's in any market that Google entered, while they're... terrible everywhere else.
- matwood 10y agoThis is standard competition. When VZW was laying fiber in various places, as soon as they turned it on where a friend of mine was living Comcast proactively lowered his bill.
- red_phone 10y agoHere in Provo, Comcast was astonishingly effective at preserving market share. As soon as Google Fiber was announced (and long before the first hookups took place), Comcast started dropping all kinds of deals in our laps -- things like 250 Mbps download speeds for the price you were currently paying for 20 Mbps. But they were all contingent upon your signing a new 3-year service agreement. Most people don't appreciate how long a Google Fiber roll-out takes. I waited nine months to be connected and I was lucky. My parents had to wait two years. Google offered very little visibility into when the install would take place. (We've been waiting two years now for a hookup at my small business, with no end in sight and no way to get an estimate from Google.) These realities gave Comcast a giant head start to perform customer retention jujitsu. It basically took a steely determination (or an implacable hatred of Comcast) to resist the deals being offered in all the calls, letters, and emails. You could accept their deal -- and be enjoying 12x faster internet within a week -- or hold out for Google Fiber at some undetermined future point. So many folks were taking the bait that Comcast brought a great many contractors in from out of state to handle the volume of upgrade service calls. For months, nearly every room at a Residence Inn near my home was occupied by out-of-town Comcast crews. Every space in the parking lot was filled with a Comcast van at night (hilariously, each van had its orange cone deployed in front as per company requirements). When I finally was able to contact Comcast to cancel after our Google installation, the rep had a special script for Provo customers. It centered around questions of whether we were actually achieving gigabit speeds in real-world situations. Though I still proceeded to cancel their service, it was a pretty devastating critique as no one connecting over wifi (which was almost everyone) could even achieve the 250 Mbps speeds Comcast was offering, to say nothing of the gigabit speeds Google had sold you. I'm happy with Google Fiber overall and I certainly don't miss Comcast, but they wound up being a more capable competitor than I'd ever have suspected possible.
- Lost_BiomedE 10y ago"Existing ISPs give as little as they can legally" I would add legally and illegally. Also, 'get away with' means everything from strong arming, being sneaky, flat out lies, bribing, etc.
- xenadu02 10y ago> If Google enters a market to provide a better service, Comcast et al. can easily pretty much flip a switch in that market to start providing a better service to hold onto their disgruntled customers, depriving Google of much of the market it needed to make Fiber profitable. This is why the pure libertarian ideas about a completely free market just don't work for some services. It is a complete waste of human and material capital to run more than two last-mile networks (the second for redundancy and you could argue that is also a waste). When you've got more than 4-5 you simply can't ever make a return on investment. The physical last mile should be separated from the rest of the business and managed by a public benefit or non-profit. It works just fine for electricity choice in states like Texas. We already know the physical fiber can carry 100GB, probably a lot more. The infrastructure would be suitable for at least the next 100 years. Leave ONT and central office equipment up to individual vendors who want to offer service, which gives them the maximum ability to compete on provisioning, backhaul, customer service, and features. If you want to object that it is government regulation ruining the free market... well I have news for you: a completely free market has never existed. Ever. In the history of the world. People use social connections, money, and power to stifle competitors. They've been finding creative ways to do that for thousands of years. To pretend that a limited and weak government will be able to exert any control over huge multinational corporations is laughable. Even Uber and AirBnB had to use social pressure to force through changes.
- Akkuma 10y ago>This is why the pure libertarian ideas about a completely free market just don't work for some services. It is a complete waste of human and material capital to run more than two last-mile networks (the second for redundancy and you could argue that is also a waste). When you've got more than 4-5 you simply can't ever make a return on investment. If the current environment is preventing any and all business from flourishing, in this specific case Google Fiber, this is arguably even more wasteful. There is nothing getting done instead of something getting done. The political & regulatory maneuvering probably costs nearly as much for Google Fiber would as building out more redundant infrastructure. Plus, their business model may have required a large amount of users to really make the business worthwhile, so they wind up in this situation where they can't expand fast enough.
- nostrademons 10y agoThe point of Google's Access businesses is that they win either way. If they go in and compete successfully, they get all the customers and make a profit. If they go in and Comcast et al raise their speeds to match, they've made the Internet faster and they profit off of increased search revenue and more YouTube playthroughs. The only way they can lose is if they're forbidden from entering the market at all, which unfortunately is what happened with Fiber. They're still betting big on the space with Loon, Fi, and Webpass, though.
- nostrademons 10y agoI worked briefly on the Fiber team when it was very young (basically from 2 weeks before to 2 weeks after launch - I was on loan from Search specifically so that they could hit their launch goals). The bottleneck when I was there were local government regulations, and in fact Kansas City was chosen because it had a unified city/county/utility regulatory authority that was very favorable to Google. To lay fiber to the home, you either need right-of-ways on the utility poles (which are owned by Google's competitors) or you need permission to dig up streets (which requires a mess of permitting from the city government). In either case, the cable & phone companies were in very tight with local regulators, and so you had hostile gatekeepers whose approval you absolutely needed. The technology was awesome (1G Internet and HDTV!), the software all worked great, and the economics of hiring contractors to lay the fiber itself actually worked out. The big problem was regulatory capture. With Uber & AirBnB's success in hindsight, I'd say that the way to crack the ISP business is to provide your customers with the tools to break the law en masse. For example, you could imagine an ISP startup that basically says "Here's a box, a wire, and a map of other customers' locations. Plug into their jack, and if you can convince others to plug into yours, we'll give you a discount on your monthly bill based on how many you sign up." But Google in general is not willing to break laws - they'll go right up to the boundary of what the law allows, but if a regulatory agency says "No, you can't do that", they won't do it rather than fight the agency. Indeed, Fiber is being phased out in favor of Google's acquisition of WebPass, which does basically exactly that but with wireless instead of fiber. WebPass only requires the building owner's consent, and leaves the city out of it.
- Inconel 10y agoIt's very interesting that you say the biggest hurdle was regulatory capture, that is certainly depressing. This leads me to another question that maybe you or someone else can answer, although I understand if you can't for various reasons. There seems to be a ton of very smart people working at Google and I can't imagine that they would go about trying to set up their own ISP without taking into account the huge pushback they would get from existing telcos, so I would imagine they had plans to deal with all of this. Did Google underestimate the amount of pushback they would receive, did they feel they could effectively lobby for changes which turned out to be unsuccessful? Or has something else changed in the proceeding years since Fiber originally rolled out that makes Google think it is no longer worth the fight?
- nkw 10y agoOnly speaking with knowledge of their first market (Kansas City), I would guess it is a combination of three things: * Buildout costs Google was using the same contracts as everyone else for the fiber infrastructure install. The guys running the trenchers and directional drills where the same guys that do it for AT&T, Time Warner, Comcast, whomever. Google built at such a pace they certainly were not getting any deals, and very likely significantly increased the costs due to the massive amount of work that was being generated vs. available contractors. Capex cost is everything and they were just blindly writing checks to other people to get it done. Google was innovative in their "fiberhood" signup process where they heavily marketed to their targeted expansion areas to encourage a certain take rate before build out. I suspect this saved them some money (or rather allowed their CapEx to be spread over more subs), but after that initial signup, I'm not sure there were any efforts to promote further subs. (Actually I'm not even sure people could subscribe after the initial buildout). There was no Google magic about the fiber installs. It is stringing fiber along poles or burying conduit and running fiber through it. If there was some breakthrough that was able to be made here or technology which gave them an advantage on the CapEx required, it would have been huge boon. There wasn't. * Access or cost of access to AT&T/KCPL utility poles Unsurprisingly those that owned some of the utility poles here (AT&T and KCPL) were more than happy to smile while screwing Google's fiber effort. The rates and access rules for these things are set at the Federal level and lobbying by telcos/utilities is fierce. Google's blank regulatory check from the cities was worthless on this front (except for parts of KCK where the local government owned some poles). The cost and regulatory burden for utility pole access is drafted to simply make use impossible or uneconomic. * A gradual mindset transition to a "Wireless is easier than all this ditch-digging" mindset. Google has been doing a lot of work with licensed spectrum. Maybe they ran the numbers and figure it is cheaper to buy some spectrum and see if they can work some wireless magic (either technology or special FCC regulation perks) and make it their special sauce. I don't think I'm betting on that particular horse.
- Inconel 10y agoVery interesting regarding CapEx and Google blindly writing checks. So it would appear that in addition to the regulatory hurdles Google also made some poor decisions in the rollout and signup process. Would Google have been better served targeting smaller cities that might have been more receptive to Fiber than the ones they ended up building in? Or is there not enough money to recoup costs in smaller cities? Regarding utility pole access being handled at the Federal level, is there any lobbying campaign at the national level to rewrite the rules governing access to make the situation less skewed towards incumbent telcos? In my area here in LA county, it seems most utility poles are on public right-of-ways, I would think it would make a lot of sense to have those poles available for any company that wants to compete to offer services. Is there any meaningful reason this isn't done aside from cronyism on the part of the telcos?
- rayiner 10y agoThe biggest hurdle is simply the "physics" of building a fiber network. It's not just expensive to run fiber by every household. That expense is effectively multiplied by a factor of three because you can really only ever hope to get about 1/3 of the market. That's about what Fiber plateaued at, and what Verizon FiOS has plateaued at. So if it costs $1000 to run fiber past a house and $500 to connect a house, and you manage to get 1/3 of houses you pass to sign up, your net cost per house is 3 x $1,000 + $500 = $3,500. The existing telecom companies definitely used legal tactics to discourage fiber rollout. But nobody manages to deploy telecom infrastructure without dealing with lots of lawsuits. AT&T might have complained about Google moving its fibers on AT&T polls, but at any given time it's facing lawsuits over stuff like fiber cabinet siting. Even with those lawsuits, Google got a much better deal on the regulatory front than incumbent companies. Every Fiber city granted fast-track permitting, and declined to impose build-out requirements. That's huge. Ordinarily, cities force ISPs to build out to all neighborhoods without regard for probable subscribership. Google totally bypassed that with its "Fiberhood" model, where it built out to neighborhoods with demonstrated interest. Nobody else in the industry gets that kind of preferential treatment. Google got it because of the huge amount of goodwill Google has as a brand.
- Inconel 10y agoReading your response as well as others' really illustrates to me how depressingly difficult this task is. I honestly have to give Google a lot of credit for Fiber, even if it ends up being a failure, in fact I now have a bit more respect even for the big telcos, its pretty amazing that such a convoluted system functions at all. I tend to be somewhat skeptical of large government programs, although not fanatically so, and even to me this situation seems like it could be much better handled if all, or much of the infrastructure, at least in terms of things like utility poles, would be municipal owned and then leased out to service providers. I wouldn't necessarily want the government running the actual service but if they owned the physical infrastructure and leased it out I feel like we might actually have much more private competition. Does anyone know how utility pole ownership by telcos or power companies came about in the US? It seems like some are municipal owned while others are entirely privately owned. Also, when people talk about municipal fiber in the US are they mostly talking about municipalities owning both the infrastructure as well as being the ISP? Are there examples of private/public partnerships were the gov owns the infrastructure but the service is provided by private industry? Regarding your last point about Google getting preferential treatment, I am not at all disputing this, but I believe even Google had to provide fiber to certain municipal or civic organizations. I could be misremembering that though. Edit: Apologies if some of my questions are unduly broad in scope.