Google's Fiber Project: Not Just a Sideline

Includes: GOOG, VZ
by: Yankee Group

By Carl Howe

The recent announcement by Google (NASDAQ:GOOG) that it is exploring deploying an experimental 1 Gbps fiber to the home service in a small number of communities sounds like crazy talk (see Benoit Felten’s analysis for his view on this announcement). Could Google really believe that it could run a fiber-to-the-home (FTTH) service akin to Verizon’s (NYSE:VZ) FiOS as a side business? However, as I reflected on the announcement and my recent reading of Ken Auletta’s book, Googled, I find myself thinking that this is anything but a side business. I think that this project is Google executing on a key element of its BHAG.

What’s a BHAG? A BHAG is a Big Hairy Audacious Goal, a term coined by James Collins and Jerry Orras in 1996 in their article “Building Your Company’s Vision,” and later reprised in the books Built to Last and Good to Great. Their definition of a BHAG is

“…an audacious 10-to-30-year goal to progress towards an envisioned future. A true BHAG is clear and compelling, serves as unifying focal point of effort, and acts as a clear catalyst for team spirit. “

Now if you ask most people what Google’s BHAG is, they’ll probably say it’s something like “to organize the world’s information.” That’s right as far as it goes. However, if you look at Google’s copy of its mission statement, you discover that there’s a bit more to it than that. What it really says is:

“to organize the world’s information and make it universally accessible and useful.” [emphasis mine]

It’s that bold-faced bit of the mission that I think this project addresses. To Google, providing very high bandwidth Internet connections to consumers is just what it has to do to allow consumers to get to the world’s information that Google conveniently organizes. Said another way, Google sees this as a way for consumers to have better access to Google.

What makes Google think it can succeed at such an audacious mission? The whole point of a BHAG is that it’s really a stretch goal — if you can easily see how you can accomplish it, then you’ve set your sights too low. And after Google’s struggles with customer service on its Nexus One mobile phone, it has experienced challenges in dealing with consumer demands.

But Google is nothing if not a business that thrives on tough, hard problems to solve. As an example, a piece of Google’s competitive advantage today is that it runs global search with servers that have about twice the energy efficiency of its nearest service competitors. And it isn’t like Google doesn’t have experience running networks: Recent estimates by Arbor Networks are that Google already is responsible for 10 percent of the Internet’s total traffic.

Google understands that it is to its benefit that consumers can get fast access to their data. This effort in fiber is their attempt to market the value of high bandwidth network access at a reasonable cost, which, frankly, is something that today’s U.S. carriers struggle to do. Need proof? According to the OECD, the United States ranks 15th in the world in broadband penetration (June 2009 ranking), and our broadband prices per megabit delivered are more than 11 times that of the leading country (Korea, as of October 2008).

Given how data-driven Google’s culture is, I doubt anyone in the Googleplex considers being #15 as satisfying their BHAG. This fiber project can’t single-handedly make us #1, but it represents Google saying, “we need better broadband to achieve our mission.” More power to them.