Google Fiber: Small-Batch Super-Fast Broadband

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I have no doubt that Google Fiber is amazing -- tons of people would jump at the chance to get a dedicated symmetrical 1 Gbps Internet hookup for $70 per month.

But will they be able to? This is where reality intrudes.

Will the search giant be able to scale up operations to bring 1-Gbps Internet to more than the well-to-do areas of Kansas City? It’s still a question mark whether Google will have the intestinal fortitude to keep writing checks to fund the buildout of Google Fiber, which industry estimates put at up to $2,000 per home passed, if take rates are less than spectacular.

Right now, Google is hooking up the fiber-to-the-home service only in parts of two neighborhoods in Kansas City, Kan. Its rollout officially started earlier this month in Hanover Heights, according a company blog post, which noted that Google crews had already pulled fiber to “several houses.”

Well, you have to start somewhere. Clearly things will get more interesting once Google isn’t counting customer installations on one hand.

Most KC residents will have to wait until next fall before the Google trucks roll down their street. Of the 180 neighborhoods targeted in the initial fiber-to-the-home buildout in Kansas City, Mo., and Kansas City, Kan., Google won’t begin construction in 53% until next fall at the earliest; 14% are targeted for spring 2013 and 28% are slated for next summer.

For now, Google Fiber is what you might call small-batch broadband. Years ago, I used to brew my own beer in my basement. My homebrew was awesome. Truly delicious -- it made even microbrewery beers taste like stale dishwater. But it was very labor intensive and time consuming: There was no way I would have been able to scale it up to anything close to a profitable business.

In a blog post last week, BTIG’s Rich Greenfield and Walt Piecyk raved about their first look at Google Fiber in a visit to Kansas City. They specifically gushed over its customer service aspects and the Google Fiber Center showroom, while they also said the TV interface “still needs work and the content offerings need to expand.”

What about whether Google will actually make money? Greenfield and Piecyk said “it would not be a stretch to say that Google is not recouping its costs” but predicted the company will invest in the project (as a loss leader, apparently) in the hopes of bringing super-fast broadband to the masses. The theory is that this will drive usage of Google and YouTube, boosting ad revenue.

But it’s one thing to open a micropub. It’s another thing altogether to grow that into a huge commercial brewery. And you’re going to become the King of Broadband while sustaining negative cash flow for the foreseeable future? Cheers and good luck, Google.

Follow me on Twitter: @xpangler

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