Google has officially rolled out its long-touted Google Fiber Project showcasing what broadband should look and feel like to all users. Yes, it sets the new standard for broadband connections with a 1Gig speedster, over 100 times faster than current broadband offerings in the U.S. Not-withstanding, just speed will not be the determining success factor; the availability of competitive programming will become the deciding judgment in Google's move to tout reasonable costs to bundled broadband.
Programming Rights Historically Elusive
Obtaining rights to mainstream content producers is the key to a Google Fiber success. Without the likes of HBO, The Discovery Channel and other must-have content for any TV package, the prospects dim for any competitor trying to enter the broadband-cable bundles which dominate the market. Time Warner Cable will be watching closely as Google moves forward to secure rights and compete head-to-head in Kansas City. Just broadband alone, using Netflix, YouTube and others to compete is not enough. Historically, incumbent service providers have been able to lock-down competitors in any semblance of affordable programming from top content producers.
"Fiber's biggest problem is that it needs backing from the big players, says Marguerite Reardon at CNET. The Discovery Channel, CNBC, AMC, TNT, Comedy Central, ESPN, CNN, and HBO are all glaringly absent. And Google may have a hard time convincing the owners of those channels — like Disney (ESPN, HBO) and Time Warner (TNT) — to climb onboard." From (Can Google conquer Cable TV?)
Google needs economies of scale going forward. That means it must target additional cities for Google Fiber, and quickly, in demonstrating to programmers it has staying power to compete effectively. Otherwise, programmers will shy away from any substantial deal with a new entrant. This entails having deep pockets and a willingness to compete for the long-haul.
By-Passing Hardware Vendors
Google Fiber seems intent on holding costs down by combining its own research and hardware. Project engineers have taken research from related Google hardware molding new hardware into low-cost products. The devices include a cable box, and hand-held device all seem to come from Google resources, like Google TV, Nexus 7 Tablet. New devices created include a stackable storage and network box. All these components add up to a quick and nimble broadband and TV package available for $120.00 per month. Boxes for additional TV's are separate from this package. Learning from those going before it, Google is forging a seemingly level-headed approach to combine resources in the venture, thereby keeping the $500 million price tag in check.
Potential Customers Must Show Interest
Kansas City's potential customers must register online for the project by paying a $10.00 fee, and their neighbor's must do the same to get in line for initial installation of Google Fiber. This pre-qualifying aspect is the marketing component which Google foresees as a must-have in moving forward with actual deployment. If the interest is not concentrated enough within neighborhoods, roll-out will be delayed until enough interests warrant the cost of installation. This could save tons of money on the front end with less truck-roll for individual installations.
Residents can either pay a $300.00 fee or sign up to an initial package like broadband and TV or just broadband to waive that fee. There will be a 2 year contract for packages. Signing up for free broadband is also available, but does not include the 1Gig version, only a standard speeds. Google is playing it smart, at least on the front end of their historic project, using milestones to move from one level to the next in roll out. If insufficient interest by neighborhood does not materialize, those neighborhoods will have to wait for the fastest broadband available.
While these factors; using in-house hardware, and qualifying potential customers will save money on the front-end, as stated, the determining factor will be competitive programming acquisition. It is worth watching to see how Google handles entrenched competitive forces with what many think is an innovative project at its best. But the Internet giant must not only navigate a competitive environment, it also must offer the best product on the market. That will ensure success over the long-haul, which means, pouring money into build-outs, programming, and marketing costs for a multi-year investment.
By Leonard Grace, Founder & Editor - Broadband Convergent
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