Google is a highly-profitable search engine, but it has recently begun an expansion into the ISP market, competing against companies like Time Warner Communications and CenturyLink. Google is building expensive new fiber optics infrastructure in the Kansas City area; Austin, Texas; and Provo, Utah. This will enable them to provide much faster speeds than what is available from current providers in those areas. In Austin, speeds may eventually be as much as 100 times faster than current rates. Google is also pricing the service very competitively, and throwing in products like Google TV with certain packages. Oftentimes the construction fees will even be waived, despite an estimated cost of $1200-2000 per house to bring a fiber optics connection into the living room.
Whether or not Google succeeds, or even intends to build out a nationwide fiber optics network is almost beside the point. Mainstream ISP’s are already taking notice of what Google is offering consumers and trying to compete. This will almost certainly result in faster speeds and better service for consumers.
Internet speeds in the U.S. lag behind what would be competitive elsewhere in the world. South Korea has long had the world’s fastest internet speeds, delivering data roughly three times as fast as what the average U.S. consumer is able to receive. Americans also pay more for access than citizens of other countries: in Seoul, South Korea, a 100-Mbps download speed connection costs less than $40 per month. Worse, only 8% of Americans have fiber optics connections to the internet, and nearly 30% of the country isn’t online at all.
What remains to be seen should fiber optics take off is the type of new content that will be created if internet speeds continue to grow exponentially. Technologies that are now mainstream, such as videoconferencing, social media, or watching movies on Netflix would have been inconceivable had dial-up remained the predominant way that Americans could access the internet. Continued growth in upload and download speeds would enable consumers to access more and more data, and allow for more innovation. While Google Fiber’s expansion has proceeded extremely slowly, and may never become more than a novelty, the competition could spur existing providers into continuing to improve on the telecommunications infrastructure.Read More