The Bauminator

Another Google Fiber Non-Believer

5/21/2013 8:05 AM

Google has deep pockets, but another research firm doesn’t think they’re bottomless to the point to justify a national fiber buildout.

Despite recent expansions in to Austin, Texas (in mid-2014), and in Provo, Utah (coming way of an acquisition of iProvo’s fiber network), Google Fiber “is set to remain a minor player in the U.S. broadband market, with the company unlikely to deploy the service nationwide due to its high costs,” IHS Screen Digest said in a research note issued Tuesday.

When combined with the work already underway in the Kansas Cities, Google Fiber’s target markets represent only about 0.4% of U.S. households, and would reach only about 0.2% of them even if Google Fiber “managed to secure a high market share” in those areas, IHS estimated.

“While the deployment of Google Fiber to the cities may capture attention, the company’s plans are miniscule compared to what its competitors undertake in the overall market,” said Dexter Thillien, senior analyst for multiplay at IHS, in a statement. “AT&T and Verizon have spent many billions of dollars establishing fiber networks in larger population centers, something Google is unlikely to be able to match.”

IHS isn’t the first to come to this this conclusion. In April, Sanford Bernstein analysts estimated that Google will spend $84 million to pass (not connect) about 149,000 homes targeted for the first phase of deployments in the Kansas City market, and further estimated that it would have tospend $11 billion to pass 20 million homes – about 15 percent of all U.S. homes – with its fiber network over a five year period.

Even for Google, numbers like that made Sanford Bernstein likewise “skeptical that Google will find a scalable and economically feasible model to extend its buildout to a large portion of the U.S., as costs would be substantial, regulatory and competitive barriers material."

But if one of Google Fiber’s true aims is not to build out wide but to instead provide enough of a threat as to nudge and otherwise incent other ISPs to ramp up speeds, it’s having some limited success. AT&T, for example, said it will bring 1-Gig speeds to Austin as well, so long as it gets the kind of sweetheart deal Google Fiber got from the city.