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Google Fiber Won’t Ever Confess Motives

April, 2019

 “It’s clear that Google Fiber’s presence in Louisville led other providers to step up and increase investment in Louisville, and that was good news for consumers everywhere,” Louisville Metro’s Grace Simrall said.

Naturally, the impetus for Google Fiber, since the beginning, almost a decade ago, has been totally transparent in impelling other service operators to build Fiber-to-the-Home (FTTH) infrastructure, while maintaining any construction by itself to a minimum. Yet, the trade press and industry analysts in the space have and will continue to avoid outright dismissing Alphabet as a serious player in the FTTH market, despite any evidence to support such a viewpoint. The situation in Louisville may have been the most egregious example of its insolence in using the city as a guinea pig to try out a new means of installing fiber. In potentially demonstrating the utility of a novel, low-cost solution, which other operators could have employed, the mammoth search engine supplier would have benefited greatly from larger amounts of bandwidth to residences. Also, fibeReality hardly believes it was an accident that with the exception of two situations, all of the municipalities that were chosen are in the incumbent AT&T territory, principally in the South.

The large-sized ISP had taken a conservative stance with its broadband deployments, with a heavy focus on Fiber-To-The-Node (FTTN). (This FTTN type of philosophy manifested itself with AT&T adopting an intermediate approach regarding 5G fronthaul.)

Further extending out the fiber by AT&T, as well as by the MSO, which owned the franchise in a particular area, were influenced by the “threat” of Google’s encroachment into their spaces. In addition, with Google Fiber being a marketing-centric operation, rather than really a networking concern, Kansas City as its initial selection, made the most sense as it is obviously located in the geographic middle of the US mainland.

When it came to the other choices, with the exception of a single instance in California, as well as two in the Rocky Mountains region, the eight others were all in the southern portion of the country. To the extent that Google was willing to construct networks in a very limited way, it likely wanted to evade as much as possible the significantly higher percentage of unionized labor costs found in the ex-Pacific Bell and ex-Ameritech territories.

In the case of the latter, there would have also been harsher weather conditions which would have resulted in delays. Moreover, there were probably political/prejudicial explanations for Google’s concentration on the South.

In our opinion, a good number of elitists at the firm undoubtedly enjoyed taking unfair advantage of portions of the US (along with Orange County in California and the two cities in Utah) that they tend to ignorantly view with contempt. Once again, the fact that countless, hard-working people shelled out premiums based on a pledge for what appeared to be prestigious “Google Fiber” properties (as well as businesses making investments in new real-estate ventures), only to be disillusioned by massive cutbacks in those plans, apparently does not keep Alphabet executives up at night.

They are not suffering from “embarrassment” in the least in pulling out of Louisville, nor “was [it] a very difficult business decision,” for them based on the original rationale for this kind of investment. As could have been easily deduced in 2010, just swaying greater penetration of broadband networking would inherently result in more advertising dollars coming into the corporation.

As always, fibeReality does not recommend any securities, and this writer does not invest in any companies being analyzed by us.

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[written by Mark Lutkowitz]

 

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