ANALYSIS GOOGLE FIBER


@fibresystemsmag | www.fibre-systems.com


A construction worker setting up the steerable bore head that creates the path to run optical fibre underground


could deploy much cheaper and much faster than anybody else had ever done. Tat’s fully in line with the Google mindset, but unfortunately it ignores the fact that hundreds of companies have been deploying wireline access infrastructure for years by the time Google Fiber decided to give it a go. I would suggest that we’re now seeing the


fall-out from that misguided assumption: Google is finally admitting (in a roundabout way) that, despite all the clever people they have on hand, they haven’t revolutionised fibre deployment. It still takes time to do the planning properly, to work with local authorities effectively, to do the outside plant layout efficiently. Did Google manage to do things cheaper than others did? Probably, but not by a wide margin. As it decided to scale beyond Kansas City, Google realised that the efficiencies it found there didn’t translate easily to other locations because a lot of those things are down to local specifics and relationships. So Google is deploying fibre in the access,


they’re doing it well, but they’re not doing it so well that it’s hugely more profitable for them than it would be for anyone else. In other words, the cost side of the equation is roughly on a par with


26 FIBRE SYSTEMS Issue 14 • Winter 2017


industry norms (again, my speculation). On the revenue side, the two key metrics are


take-up and ARPU. Te first of these is much more important than the second. Google understood this and went with a, frankly, very cool product at an affordable price point. I’ve never been really convinced by the need to have a linear TV-play, but that’s beside the point: if they wanted the chance of a high take-up, they needed a low price point and a kickass product. Tat’s not always enough though: incumbents respond by lowering their prices locally, and migration is a painful process for customers. Tere are many reasons for inertia in customer acquisition, even with a good product, a fantastic brand and a collaborative local community. My bet is that Google’s take-up is not that great


in the markets they’ve started commercialising. It may be good by industry norms, but remember that Google expected to blow away industry norms from the get-go. If I had to guess a number, I’d say Google Fiber is in the 30–40 per cent take-up range in areas that have been open for service for three years. Te industry average is about seven per cent per year, so that’s very good, but probably not enough by Google standards. Keep in mind also, that the pre-sales in Kansas


City were astounding. When that data was still publicly available, we scraped the website and analysed it. Some areas had more than 100 per cent pre-subscription rate and, as I recall, the average pre-subscription rate was already in that 30–40 per cent bracket even before Google had started deploying. Te problem is that these people want to be connected now, and in fact it’s going to take months, if not years, to get to them. By the time Google actually gets there, they may have moved out, they may have finally had a good offer from their cable operator, or they may just be upset that it’s taking so long to serve them. And that (in my opinion) is what’s happening


at Google Access right now: costs are higher than planned (even though lower than industry norms would suggest) and take-up is lower than expected (even though higher than industry norms would suggest). Since Google isn’t really looking at this as an infrastructure player would, it’s time to reconsider.


Wireless substitution In parallel to this, wireless is starting to look like a potential solution to some of the problems. Don’t believe the hype about residential fixed service being substituted by wireless access anytime


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