Google Fiber’s announcement that it is “exploring” an expansion into nine more U.S. metro areas has sparked a series of knee-jerk reactions that the incumbent MSOs and telcos in those markets will soon find themselves in a world of hurt. The mere potential for expansion by Google Fiber into these territories, coupled with the FCC’s renewed pursuit of net neutrality rules, sent some cable stocks into a mini tailspin.
Ironically, the possibility of a major Google Fiber expansion actually does Comcast a tremendous favor. The MSO presented Google Fiber and its budding 1-Gig network as one of the competitive reasons why regulators should give its merger with Time Warner Cable the green light. Google Fiber currently only poses a threat to Comcast in a small pocket of Provo, Utah, and in Olathe, Kan., where Google Fiber hasn’t even started its build out. The new plan could put Google Fiber in several more Comcast and TWC markets.
But now that the initial surge of Googlemania has subsided, let’s discuss what Google has really committed to do here – a whole lot of nothing. Or next to it.
While it might introduce supersonic speeds in some of these markets, it might not. So companies like Comcast and Cox and Time Warner Cable (which really might mean even more Comcast if we are peering through this lens a year from now) should be shivering in their boots at the prospect of a more aggressive Google Fiber invasion and the devastating consequences to follow. Or not.
After all, Google Fiber made it pretty clear that it will take its ball and go home if cites don’t agree to play ball and offer the requisite concessions. Or maybe they'll discover, heaven forbid, that the ground is too hard.
I’m not making that up. That’s something that could factor into a deal killer. “For example, underground construction might be really difficult due to bedrock or unusually hard soil,” Google Fiber noted in the FAQ about the two-part process it will use to determine who’s in and who’s out. So, if your city is on the shortlist and you want Google Fiber, you'd best get the hoses out and start softening up the landscape. You'll make a good first impression.
That’s an extreme view, of course. And this time around as Google Fiber explores what it might do and analyzes things on a market-by-market basis, it appears more interested in extending the knowledge it has gained so far in the current Google Fiber, and providing a blueprint of sorts to cities that want to make a go of it.
So, all of these metros might get Google Fiber. Or some of them will. Or, maybe none will (the least likely of scenarios). But the market is responding as though this is all a done deal. But, it’s not. Not by a longshot.
But some analysts remain bullish on Google Fiber’s prospects. Echoing an earlier opinion, “[W]e believe that Google Fiber is at attempt by Google to build a profitable, stand-alone business,” Sanford Bernstein senior analyst Carlos Kirjner wrote in a research note issued Wednesday. “It may not make a huge difference for Google or for the incumbents in the next one, two or three years, but Google is taking the long view and we think in 5 or more years, it could turn out to be a significant, profitable business for Google and headwind for incumbents.”
So, from the incumbent view, the sky is darkening in these potential Google Fiber target markets. But it's not falling yet.