Google apparently has some great take rates for its gigabit Google Fiber service in Kansas City, with Bernstein Research reporting Google Fiber penetration of 75% in some neighborhoods. These are take rates to ‘die for.’ Most service providers, especially competitive overbuilders, would be very happy with half of that. Of course, this is hardly an apples-to-apples comparison.
Google has successfully changed the overbuild model (and even incumbent models to some extent), and these early indications suggest it’s working. Google extracts concessions from municipalities before laying any fiber and its ‘fiberhood’ approach certainly improves penetration performance.
With ‘fiberhoods,’ Google surveys a neighborhood before committing to build and asks for deposits from would-be customers in order to bring Google Fiber to their neighborhood. Once they have received enough interest/deposits, they build the last mile to that neighborhood. In effect, Google has built in desired penetration performance before they even build the most expensive part of a FTTH network – the last mile.
These are tactics that past overbuilders and incumbents weren’t able to exercise. Pesky rules like franchise build out requirements and carrier-of-last-resort regulations prevented it. Some critics of Google Fiber and the cities that allow them to deploy it label this approach as sanctioned ‘cherry picking.’
Bernstein Research conducted a door-to-door survey in five Kansas City neighborhoods where Google has deployed. In one of these neighborhoods, Wornall Homestead, Bernstein found an 83% penetration for Google Fiber. About 15% subscribed to Google’s double play of broadband and TV, priced at $120/month (to start), and 52% opted for the 1 gig broadband-only option, priced at $70/month. An additional 15% opted for the ‘free’ Google 5 Mbps broadband offer.
Wornall Homestead is a high income neighborhood, which contrasted with lower income neighborhood performance, where Google saw 27% penetration, which is still quite reasonable for an overbuilder. Based on these results, Bernstein predicts Google could achieve 50% penetration for Google Fiber in all of Kansas City within the next 4 years.
Regardless of how Google achieved these numbers, their competitors are taking notice. Some, like AT&T, are mimicking the approach with their GigaPower FTTH project. Others, particularly cable companies, are upping broadband speeds and blanketing markets with WiFi. Smaller service providers like C Spire are also following Google’s lead, particularly with the fiberhood approach.
Google’s impact is undeniable and policy makers like to cite them as a desirable standard. What they are accomplishing is impressive. But it’s important to put it into context, especially when comparing it to historical approaches to FTTH, and overbuilding in general.
5 thoughts on “Google Fiber Penetration Hits 75% in Parts of Kansas City, But Not Without Controversy”
You might note that it was cable and telephone company lobbying to remove citywide deployment restrictions. Many of us continue to have grave concerns about the long term impact of only encouraging essential infrastructure deployment based upon ability to pay.
Point well taken. There has been a lobbying push by telco/cable to reform franchise and other regulatory restrictions. Google is certainly riding that wave, but also making waves of their own, because, well, they're Google and they can. Not sure there is another company that could do it.
Google has been successful at reducing red tape and making ISP services more profitable. They should be praised for what they are doing.
True. However if telco/cable had restrictions lifted long ago, they likely would have deployed speeds like Google way before Google had even thought about it.
Google is such a behemoth in the business world that, as a sports analogy, whenever they take the field, the field actually becomes slanted in their favor simply by their presence.
Bernie is exactly right when he says "not sure there is another company that could do it" (throw their weight around) like Google has, can, and will do in the future. Something to be wary about.
Actually mikeyb, Verizon FiOS is certainly as targeted as Google Fiber. Look at its deployment. Verizon engineers have told me that my community, rural and non-affluent, will never have FiOS.
Remember the 2003 Triennial Review removed many restrictions such as unbundling for new fiber network investment. And many of the concessions requested by Google enable access to municipal infrastructure compared infrastructure incumbents already own.
Are you saying Verizon and AT&T are not "behemoths"?
Bottom line: The technology existed. Verizon, AT&T, Comcast et al could have offered this service years ago. Blaming it on over-regulation, red-tape, etc., is an excuse.