The company announced that 180 of 212 "fiberhoods" had gotten $10 deposits from potential customers, so it will begin the process of "overbuilding" phone and cable networks. This comes with an offering that starts at $70/month for speeds to 1 GB/s, firewalled, with a wireless router offering 360 Mbps throughout the home.
This blows away competing offers from AT&T (NYSE:T) (an $89 bundle for U-Verse), Comcast (NASDAQ:CMCSA) (top speeds of 105 Mbps) and Time Warner (NYSE:TWC) (70 Mbps and you need to buy their TV offering), all of which offer asynchronous speeds, meaning faster downloads than uploads.
The speeds being offered here are synchronous, not asynchronous. They're the same in both directions.
AT&T apologist and blogger Scott Cleland has been apoplectic about Google for a long time now on his Precursor blog, accusing the company of being a thief and unaccountable monopolist.
But here are some facts for Cleland and any other Bell lobbyist out there. Over the last decade, y'all have gotten literally hundreds of billions of dollars in subsidies from the government, for maintaining "universal service," and you have had things completely your own way in state capitals and on Capitol Hill. What do we have to show for it? Meanwhile, how much government subsidy has Google gotten while building a better Internet infrastructure than you can even dream of? Zero.
There are lots of arguments and excuses. Google isn't subject to government oversight. Google can supposedly "cherry pick" its customers, while phone and cable have to serve everyone. But both phone and cable infrastructures were built under government-guaranteed monopolies -- AT&T through the Bell System, cable through local franchises. Google was created entirely in the private sector. You know, the market economy.
Forbes, which always claims to speak for the market but never met a monopolist it didn't like, insists that Google is wasting its money, that connecting everyone to fiber would cost $500 billion, and that you can't use Google's offer to justify national fiber builds.
Maybe. But what Google is really doing here is setting out a marker, and issuing a warning to the telco industry. This is what can be done. We can do it. We want more connectivity, more broadband speed, from your industry or you can be replaced.
This is a very big deal.
As clouds become networked, rather than stand-alone data centers, more and more ISPs are building the fiber capacity needed to bring service directly to neighborhoods. Microsoft (NASDAQ:MSFT) will have it, Amazon (NASDAQ:AMZN) will have it -- maybe even Apple (NASDAQ:AAPL) will have it someday. The days of the telco industry's free ride are ending because tech companies are tired of the last-mile bottleneck.
And there are other ways in which this can go, beyond Google building out the country. It can deal with small ISPs that might want to tie in to its fiber and provide wireless broadband in competition with phone companies. It can offer one-off fiber connections to large commercial and residential clusters, rather than whole neighborhoods.
You are going to be hearing a lot more about this issue over the next few years. You're going to hear Bell apologists like Cleland, and even better-paid lobbyists, claiming the government is giving Google huge advantages, that their ability to compete is being hobbled, all the while demanding that special favors for themselves be continued, while providing little in the way of upgrades to customers.
But that game is ending. If telcos and cable operators won't invest in their own plant, the Internet will simply replace it. The market is coming after the monopolists.