Google Inc (GOOG): What Is Google Fiber?

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July 1, 2015 11:29am ETF BASIC NEWS

wall-street-etfTara Clarke:  There’s a new Internet service provider in town, and it’s almost assuredly faster and cheaper than the plan you are currently paying for.

Google Inc.’s (NASDAQ:GOOGL) Google Fiber is already available in Austin, Texas; Provo, Utah; and Kansas City, Mo. And it’s about to expand to five more cities: Atlanta, Ga.; Nashville, Tenn.; Salt Lake City, Utah; and Charlotte and Raleigh-Durham, N.C.

But exactly what is Google Fiber — and why is it shaking up the entire ISP industry?

Let’s take a look…

What Is Google Fiber: The Basics

what is google fiber internet

Google began rolling out high-performance optic cables — the “Fiber” — in U.S. cities starting in 2011. The Fiber provides broadband Internet and cable television. And it’s really fast…

For roughly $70 a month, customers get Internet connection speeds up to 1,000 megabits (one gigabit) per second. That’s as much as 100 times faster than other ISP service providers. It also includes a wireless connection. There are no limits on the amount of data users can send or receive.

Customers who pay $120 for the package deal also get high-definition TV service and a DVR. The DVR can record up to eight shows at once and has two terabytes of storage — which equates to up to 500 hours of television.

In November 2014, Google expanded its ISP service beyond residential to commercial.

what is google fiber package

Three years after Kansas City beat out 1,100 cities across the nation to become the first

American “fiberhood,” it was the first to receive “Google Fiber for Small Business.”

For $100 a month, companies get one gigabit upload and download speeds, Wi-Fi, dedicated support, firewall protection, and more.

Now that Google Fiber has

been around four years for lucky residential customers (and a little under a year for commercial customers), let’s take a look at the service’s track record to see if we can truly call these recipients “lucky”…

What Is Google Fiber: The Reviews

On the non-commercial side, reviews of Google Fiber are overwhelmingly positive.

According to a May 2014 survey by Bernstein Research, residential Fiber users were satisfied with the service. Most customers said they’d recommend Google Fiber to others and would not switch back to their old ISPs — even if those companies matched Fiber’s higher speed and lower price point.

“Google is clearly trying to offer something different,” Bernstein said in its report. “Google will deploy multiple Wi-Fi-enabled boxes in the home, trying to achieve better in-home coverage and throughput. While we think it is extremely hard to differentiate the linear TV content offer due to restrictions imposed by content licensing agreements, Google is trying and will continue to try to differentiate the feature set of its video offer.” The Wall Street research firm has rated Google “Outperform,” its highest rating, at a target price of $1,000.

And the commercial numbers speak for themselves…

As of April this year, 121 businesses have launched or relocated to Kansas City’s Google Fiber area — well over the typical amount, according to the city manager’s office. The increase suggests innovators actually followed Google’s new form of connectivity.

Fiber has “raised awareness inside and out of Kansas City of the possibilities of our tech community,” Rick Usher, assistant city manager for Kansas City, told CNBC on April 22, 2015. “Businesses are relocating because the talent that they want to employ are now downtown.”

Indeed, positive reviews from small business owners can be found in plenty, while negative ones are hard to come by:

“Google Fiber’s business service will be a huge competitive advantage to companies like Hint, where our digital artists and developers need to edit and deliver content in real time both in our home market of KC, and with our partners in Los Angeles, Silicon Valley and New York,” CEO Teri Rogers told PCMag on Nov. 12, 2014.

Here’s where Google Fiber is heading next…

What Is Google Fiber: Expansion Plans

In April 2013, analysts from Alliance Bernstein predicted it would cost Google a whopping $11 billion over five years (4% of its net worth) to bring Fiber to the rest of the nation on the scale of other large ISPs like Comcast Corp. (Nasdaq: CMCSA) or Time Warner Cable Inc. (NYSE: TWC).

“We remain skeptical that Google will find a scalable and economically feasible model to extend its build out to a large portion of the U.S., as costs would be substantial, regulatory and competitive barriers material, and in the end the effort would have limited impact on the global trajectory of the business,” the report read.

But two years later, we can see Fiber’s sizeable price tag hasn’t deterred the Silicon Valley giant’s expansion effort…

On Jan. 27, 2015, Google announced it had selected Atlanta, Nashville, Charlotte, and Raleigh-Durham for its next Fiber expansion. Then on March 24, it tacked Salt Lake City onto that list.

what is google fiber map

After the announcements, the company wasted no time. Construction began in the new Fiber cities throughout June:

  • Nashville: June 5
  • Salt Lake City: June 10
  • Charlotte: June 17
  • Raleigh-Durham: June 23
  • Atlanta: June 25

Google has additionally named Phoenix, Ariz.; Portland, Ore.; San Antonio, Texas; and San Jose, Calif., as potential future “fiberhoods.”

Money MorningWritten By Tara Clarke From Money Morning

We’re in the midst of the greatest investing boom in almost 60 years. And rest assured – this boom is not about to end anytime soon. You see, the flattening of the world continues to spawn new markets worth trillions of dollars; new customers that measure in the billions; an insatiable global demand for basic resources that’s growing exponentially; and a technological revolution even in the most distant markets on the planet. And MoneyMorning is here to help investors profit handsomely on this seismic shift in the global economy. In fact, we believe this is where the only real fortunes will be made in the months and years to come.

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