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> AT&T is signaling ... it will... reduce your margins Yeah, that's what I took as your original point. I just think "reduced margins" is a completely empty th

> AT&T is signaling ... it will... reduce your margins Yeah, that's what I took as your original point. I just think "reduced margins" is a completely empty threat to Google. Say I sell widgets. Now, you sell widgets too, but your primary revenue stream is driven by "widget penetration," ie, the total number of widgets owned and used. We have a price war. Who wins? You do, because people having widgets is valuable to you, so you just give away widgets at cost. No, wait, you go farther. You split the increased revenue from your primary stream with your widget customers, you give people widgets UNDER COST. And I'm sitting here, giving my widgets away for nothing, thinking, "He's going to rue the day he price warred with me. I have deeper pockets, so I can lose money longer." But you're not losing money, you're increasing your revenues every day. My pockets can be 100 times deeper than yours, and I will still head, puzzled, straight to bankruptcy. I mean, capital intensive, yeah, that'd matter for someone who didn't have cash to burn, but not Google. Maybe this was where you were heading: No one can really join Google in this effort. Google cannot inspire a transformation then step back and let it happen. It now has to see it through, because the economics are unique to it, they don't apply to Joe Schmoe's neighborhood ISP. That might be true.

spikels 14y ago
I don't think Google's strategy is to build these networks themselves but to demonstrate consumer demand and thus entice others to build them for them. I can't imagine they actually want to spend tens, if not hundreds, of billions to wire even most US urban consumers with gigabit connections. This would radically change the nature of Google's financial position. Yes they would gain on search advertising but could it possibly justify the cost? AT&T is seeking to demonstrate how competitive and thus unprofitable this business will be making it very difficult to justify the costs or even obtain financing. Sadly while this is good news for Austin it is probably bad new for everybody else hoping for a gigabit connection.

spikels 14y ago

I don't think Google's strategy is to build these networks themselves but to demonstrate consumer demand and thus entice others to build them for them. I can't imagine they actually want to spend tens, if not hundreds, of billions to wire even most US urban consumers with gigabit connections. This would radically change the nature of Google's financial position. Yes they would gain on search advertising but could it possibly justify the cost? AT&T is seeking to demonstrate how competitive and thus unprofitable this business will be making it very difficult to justify the costs or even obtain financing. Sadly while this is good news for Austin it is probably bad new for everybody else hoping for a gigabit connection.