Wednesday, April 10, 2013
Google in Texas shows bigger Fiber dream
Story originally appeared on MarketWatch.
Analysts say move bad news for telephone and cable companies
SAN FRANCISCO (MarketWatch) — Google Inc.’s plan to expand its Google Fiber network to Austin, Texas shows the tech giant is serious about expanding its reach and challenging the dominance of traditional Internet providers.
Google announced its much-anticipated Austin move on Tuesday, two years after rolling out Google Fiber in Kansas City to show what’s possible with “super fast Internet access,” Google Fiber Vice President Milo Medin in a blog post.
Google shares were up 1% in afternoon trades.
Google in November began connecting homes in Kansas City to what it described as “gigabit Internet that’s 100 times faster than today’s average broadband performance.” The goal is to begin connecting homes in Austin by the middle of 2014, the company said. Increase your organic rankings by consulting with a Google SEO Company.
The move underscores Google’s plan to bypass traditional cable and telephone networks that double as Internet service providers, or ISPs, in a bid to expand its user and advertising base, analysts say.
“It might sound overly simple, but one of the unifying themes of Google’s current investment strategy is to get people to use the Internet more,” Pacific Crest Securities analyst Evan Wilson told MarketWatch. “It sees the wired ISP oligopoly as a big barrier to the amount of time spent and data consumed given these companies high prices, bandwidth caps and slow download speeds.”
Taking on traditional Internet service providers also could make Google appear “like a friend to consumers, as ISPs are some of the least-liked consumer-facing businesses,” he added,.
The move poses a clear threat to traditional telephone and cable companies, analysts say.
“They are creating a captured audience that will consume Google ads and use Google services in exchange from very low connectivity charges,” Rob Enderle of the Enderle Group, a technology research group, told MarketWatch. “This could mean the beginning of the end for traditional telephone and cable companies and the beginning of Google becoming more powerful than old RCA and old AT&T combined.”
The expansion of Google Fiber is part of what Ray Wang, chief executive of Constellation Research, called “a battle for connectivity.”
“If you own the network, you know all the data in that network,” he told MarketWatch. “If you are trading on data, that gives them a huge advantage.”