Tag Archives: google-internet-using-balloon

What are Google’s Untold Plans about FTTH Rollout ?

What is Google Fiber ProjectEverybody is keen to make of Google’s FTTH initiative, with some believing the Google is serious about developing a local market development strategy that would be the basis for a more significant roll-out over time and with others believing the Google is simply attempting to spur greater competition and innovation by the incumbent broadband providers. Based on Google’s history with the wireless spectrum auctions, on the way in which Google has addressed its Fiber plans and based on the potential expense involved we get a sense to lean towards the argument in the latter camp.

We have already seen signs of competitor responses (e.g., recent reports that AT&T is contemplating offering 1GB broadband in Kansas City). Without including the economic benefits of its TV offering and without including the optionality that could come with owning the video and broadband pipe into the living room and on the (interactive) TV, the roll-out of Google Fiber (FTTH) to as much as 55% of the U.S. households that are viable targets could be done at least at a breakeven proposition if the company were successful in signing up 45-50% of the homes passed. Including the economics of TV service, which we believe is taken by many / most current Google Fiber customers, suggest breakeven could occur with 25-35% penetration.

A back-of-the-envelope analysis suggests that the costs for Google to provide service to this universe of 65mn U.S. households will be a whopping $90 Bn which is equivalent to 4 Years of the company’s operating profit assuming Ad dollars stick at the same run rate and don’t shift to competing platforms of Facebook and other platforms. Of course, these costs would be offset by the cash margin made on its monthly service fees that range between $70-120 per month – as well as any other revenue streams developed (e.g., advertising). Theoretically, with existing Google’s FTTH model, breakeven with an Internet broadband-only service would occur at ~45% homes passed penetration and breakeven with the TV service taken by half of those subscribed homes would occur at the 30-35% penetration level. This is without ascribing any value to the potential optionality from new revenue streams like interactive TV advertising. We are unsure what goes inside Googleplex but for sure it is an attractive proposition as the U.S Economics of Video consumption shifts from TV to IP based delivery and FTTH service providers can vie for a piece of this hot cake.

Google’s Project Loon to Provide 3G Broadband Experience in Under Served Areas – Disruption in Tower Infrastructure

Internet Using Baloon - GoogleI’ve been tracking Google very closely for years now and they don’t like to do things traditionally – be it their IPO or the Organizational hierarchy where Engineers are ranked higher compared to Management / Accounting folks in the company. Larry Page in an interview early this year had said,

Our job is to think of the thing you haven’t thought of yet that you really need. And by definition, if our competitors knew that thing, they wouldn’t tell it to us or anybody else. I think just our strengths, our weaknesses, our opportunities are different than any other company

Continuing their innovation in serving High Speed Internet, Continue reading Google’s Project Loon to Provide 3G Broadband Experience in Under Served Areas – Disruption in Tower Infrastructure