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Nationwide Google Fiber would cost $11B over five years
- gruseom 13y agoThat number seems low enough that they should do it for the good will it would generate and as part of their "do whatever spreads the web" strategy.
- cheald 13y ago$11B annually is a "low" number? That's an utterly incredible amount of money. Google doesn't have to bring fiber to everyone; they just have to exert enough pressure on the incumbents to get them to step up their game out of fear that Google might move into <market> next and knock them off their pedestal. Google isn't doing this for good will - they're doing it to advance the state of broadband in the US.
- wmf 13y agoAFAIK, when Google (or any other FTTH provider) comes into a city the incumbent ISPs improve service/lower prices only in that city. I don't know how to scare them into lowering prices without actually competing.
- cheald 13y agoI suspect part of that may be due to lower market penetration. At some point, the FTTH market will reach a point of critical mass where it has to be competed with nationally, not just regionally. That said, the cost estimates are just infrastructure expenditure to reach 20 million homes. If 1/3rd of those subscribed to Fiber @ $70/mo, 1/3rd at $120/mo, and 1/3rd did not subscribe, or subscribed at $0/mo, that's $15.2 billion in revenue annually, ignoring the $300/install offset from $0/mo customers. Those are totally BS, made-up numbers with wild assumptions, but it's a huge market and there's a lot of money to be made in it.
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- kristofferR 13y agoIt has been corrected to be $11B over a five year period, not annually as it was originally stated. Considering that Google almost hit $11B in profit in 2012 alone, spending $11B over 5 years on a revolutionary infrastructure project that might even start making a direct profit directly from the monthly fees after a while for itself, but most importantly could totally revolutionize what type of services and experiences Google could deliver to ~15% of American households - doesn't seem like such a bad investment after all.
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- cheald 13y agoCitation on the 24 Mbps cap, please. I've never heard of anything of the sort; there is a 5Mbps cap on the "one time install fee, then free" plan, but it would be awfully silly to sell gigabit internet and then cap it at 2.5% of capacity.
- Aloisius 13y agoI believe I misread a table when comparing it to AT&T. It was AT&T that was capped at 24 Mbps.
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- gbaygon 13y ago$11B year for 20M homes = $550/year per home = $45 monthly Currently Google charges $70/mo for the service. The numbers doesn't look that bad to me, am i missing something?
- seanalltogether 13y ago"we estimate the annual [capital expenditure] investment required to be in the order of $11 billion to pass the homes, before acquiring or connecting a single customer." The statement is a bit ambiguous, perhaps the problem is that it costs $11B just to reach 20M homes, regardless of whether or not they choose to purchase the service, in which case they would be losing a lot of money.
- loceng 13y agoAnd there is so much more value that comes from them providing this.
- ippisl 13y agoWhat's missing is the return on investment data.If it's good , the $11B number would be an advantage: a good investment at a huge scale, something many companies are looking for.
- chrisro 13y agoHopefully I haven't messed any of the numbers up: $11 billion per year for 20 million homes or roughly $550/home/year or $45/home/month And, for perspective: From 1936 to 1938, the Rural Electrification Administration spent $210 million ($3.37 billion in 2012 dollars) to connect 100,000 rural farms to the electrical grid at a cost $950 each (over $15,000 in 2012 dollars). Edit: Per the title update from "annually" to "over 5 years" the above, non-historical numbers are off by a factor of 5. The costs would be $110/home/year or $9/home/month over 5 years!
- aqme28 13y agoYou messed up the numbers in the sense that it's $11 billion over 5 years, not annually. So you're over by a factor of 5.
- chrisro 13y agoOops! Thanks for the correction. I guess I missed that detail. $9/home/month or $110/home/year for 5 years is even more manageable, though! Edit: I see now where militiaman21 requested that the title be updated to "over 5 years" per new information. When I posted my numbers, the title said annually. I thought maybe I had missed something in the text.
- yessql 13y agoHow about this math 11,000 million dollars per year divided by 115 million households, divided by $70/ month, divided by 12 months per year. That's 11% percent of households to break even? 65% of adults already have broadband at home in the US. So will about 1 in 6 switch to 100x better for marginally more money?
- pvnick 13y ago"Probably will never happen" is a phrase that has been applied to human flight, walking on the moon, the internet, just about everything we take for granted now. I tend to dismiss someone's opinion when they utter such words.
- megaman821 13y agoOnly $11 billion? That's nothing (we probably spend more in month or two on Iraq). Why can't the government roll out high speed Internet to everyone and lease the lines to ISPs? Somehow we have gone backwards, there was more choice and competition in the dial-up networking era than now.
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- ISL 13y ago15.3 days. http://en.wikipedia.org/wiki/Cost_of_War http://en.wikipedia.org/wiki/Cost_of_War
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- dsfasfasf 13y agoAnd yet there are so many idiots that will "denounce" the waste in tax payer's money in funding NASA or projects like this (I know, I'm preaching to the quire) and yet say nothing about the waste in wars. Stupid is as stupid does I guess.
- LandoCalrissian 13y agoIt's honestly not a ton of money for Google either. On top of that I don't know why it would need to be all rolled out at once when you could do a slow roll out over many years.
- wmeredith 13y agoAs many others pointed out, just as with poverty/healthcare/$other_big_problem this is not a monetary issue, it's a cultural one.
- gbhn 13y agoAnother comparison: Yahoo Finance says Time Warner Cable's income in 2011 is ~$20B. I'm not sure I understand why $2B/year for five years is a big obstacle. Reaching 15% of the US cable market (60M households in Q42011 per Nielsen) is 9M subscribers, which at $120/month (current Google Fiber cable replacement rate) is $12B/year. Anyone else understand why this is poor ROI? Obviously network construction is only part of the operational cost of a big network. But if it's a tiny part, then it seems even stranger that it's being presented as an obstacle. Internet-only rates would be ~$6B/yr, but that has substantially less overhead cost of content associated.
- rikacomet 13y agoIndian Billionaires doing the same. http://www.hindustantimes.com/business-news/CorporateNews/Ambani-brothers-bury-hatchet-sign-Rs-1-200-crore-deal/Article1-1036119.aspx http://www.hindustantimes.com/business-news/CorporateNews/Am...
- josh2600 13y agoEveryone that's wondering why this doesn't happen, the answer is simple: private enterprise. The ideal network is publicly owned and privately operated/maintained, but that will never happen because the state would be impinging on the liberty of corporations to profit. In a reasonable state, the gov't would connect every home and operators would compete on service. Instead, we take the tacit monopoly granted to early operators and extend that into the abysmal dystopia we live in today, one where carriers control all. You could have ubiquitous 10Gb links to every home, if only some one would let you, and then folks start to say "well why don't we do this for every industry. Why if everyone paid their fair share we could all have cheap healthcare!". And therein lies the problem. Profit and public interest are diametrically opposed in the case of utilities. Nevermind that most carriers operate over publicly licensed spectrum, or send cables along publicly owned land; a monopoly is the epitome of capitalism and Telecom is printing money. In short, ubiquitous fast internet access has never been a technical problem or a distribution problem, it is a social problem; just like healthcare and, to a lesser extent, power and water. ::EDIT:: I am not saying that profit or capitalism is wrong, only that in the case of utilities, on which we all rely, it is a bit strange.
- thatswrong0 13y ago> a monopoly is the epitome of capitalism and Telecom is printing money. But you said earlier: > Instead, we take the tacit monopoly granted to early operators and extend that into the abysmal dystopia we live in today, one where carriers control all. So you agree that what we have in the telecom industry isn't capitalism (since it is the government that grants these telecoms their monopolies), yet you also think that capitalism inevitably leads to monopolies, even though this is demonstrably not the case?
- just2n 13y agoI think trust was intended, from the context. It's not a monopoly, it's an oligopoly. But it's also a bit wrong to argue that capitalism is at fault here. It appears it's rather the rampant and ubiquitous corruption, greed, and incompetence of government at every level, coupled with the fact that $$ == speech in the USA. This isn't going to change into a publicly-run publicly-funded enterprise anytime soon, so our best bet is a company that has yet to be wholly consumed by evil (Google, in this case, though they're on the fast track to it by trading our privacy for money from advertisers). I'd be OK with a country-wide investment to help Google deploy Fiber as quickly as possible, but I'd want some kind of guarantee that at some point the entire infrastructure would revert to public control, just to prevent Comcast 2.0 from forming. It would be rather funny to see a kickstarter hit $11B, too.
- militiaman21 13y agoUPDATE 3:45pm CT: Kirjner wrote us to say that he had "picked up a typo in our write-up. The $11 billion is not annual but total. I corrected it in our files. Please do so too if you can." In other words, rather than Google spending $11 billion annually, the analysts estimate this is what Google would spend over five years
- davorak 13y agoCould a mod correct the title which is currently misleading.
- bgruber 13y agotheir analysis of why Google is doing this in the first place: "we believe Google Fiber has two related objectives: first, Google is seeking to figure out whether or not, or under what conditions, it can make money as a facilities-based provider of broadband and pay TV services; second, it is an opportunity for Google to test new applications, new ad formats and delivery models (e.g., targeted TV ads) and to get further insight into consumer behavior." This completely misses what I believe to be the primary reason, which is raising the bar for internet access, regardless of who's providing it. Chrome started out similarly, though my impression is that Google does care about dominance for that now. But the point is: if google fiber in 3 cities means comcast gets better in 1000, that's a win for google.
- JshWright 13y ago>But the point is: if google fiber in 3 cities means comcast gets better in 1000, that's a win for google. Unfortunately, what it means in practice is that Comcast will get better in exactly 3 cities.
- CarlosT 13y agoA collective action startup could help solve the problem for neighborhoods wanting FTTH. In a Groupon/Kickstarter model, each house commits ~$3,000 toward a goal. When 250 households in a neighborhood commit and collectively commit ~$750,000 (i.e. $3,000 x ~250 homes) then sub contractors lay the fiber in the neighborhood. As an aside, the Australian government spent ~$4,000 per household to connect each house to FTTH.
- toomuchtodo 13y agoThat's already how Google Fiber works: https://fiber.google.com/how/ https://fiber.google.com/how/ A neighborhood has to reach a critical mass of reservations before Google will commit to a rollout.
- wmf 13y agoWhich raises the question of whether people could have their own fiber rallies without Google as a gatekeeper.
- toomuchtodo 13y agoIf they can organize a non-profit org to build out the network and operate it, and get the capital for the equipment, yes. https://www.google.com/search?q=community+broadband https://www.google.com/search?q=community+broadband
- WesternStar 13y agoIronically their analysis actually convinces me of the opposite proposition. Frankly, the most neglected part of their analysis is the a can Google actually make money from customers who only pay the initial fee and never pay again for 7 years. Could they conceivably make money on a per customer bases on a customer who paid nothing? I believe they can. Does Google Fiber have the reputation of being the best ISP in the United States. I believe it does. Does that branding offer a regulatory advantage? Will municipalities forgo revenue for high quality utilities? That's probably the question that keeps ISP execs up at nights.
- ChuckMcM 13y agoI've had a couple of experiences in my career where the enormity of something just sort of changed my world view. The first time was when I was working as an intern at IBM during the summer and came across the complete list of IBM's property holdings. Back in the 70's they would have made the largest REITs look puny. The second time was about a month into my tenure at Google when I discovered a tool called 'network weather' (which, appropriately, gave an overview of what was going on across the global network). Without being specific, I can say that Google fully appreciated the importance of network bandwidth on their ability to operate.
- ljd 13y ago$11b to destroy a media and internet distribution monopoly? Owning the distribution can allow them to enter markets that don't seem so crazy when you consider that google could do offer a YouTube user an upgrade to publish their channel to their local market for a fee. There are probably a dozen things I can't think of that Google can do with a media monopoly so I'm not ready to say that $11b is too much.
- kvb 13y agoDestroy or create?
- apendleton 13y agoA month ago this would have seemed perfectly sensible, but if this is just a platform for experimentation and data-gathering, why do another city? Austin is apparently similar in demographics to Kansas City, so I'm not sure you'd get considerably different results, and I can't imagine KC is too small to provide a reasonable sample... seems like there has to be more going on here than that.
- clientbiller 13y agoThere is also a great by-product to going national... Google will now not only know everything that passes through their search engine, they will also know every customers web habbits and, unlike traditional ISPs, can capitalize on them. This in itself has to worth a couple Billion. Also, what if, by chance, google allowed you to reduce your monthly bill by say $10 a month by making your default browser google.com?
- tomflack 13y agoIf done by private enterprise, the spectre of blackspots in non-revenue generating areas that would entrench rich/poor district disadvantages is what I'm concerned about.