New glimmers of competition are coming to the Internet fiber-to-the-home business in the United States: Google is branching out from its Kansas City experiment and staking a claim in Austin, Texas.
The company has been saying that its surprisingly cheap one-gigabit-per-second fiber service in Kansas City (see “When Will the Rest of Us Get Google Fiber?), which provided about 100 times the speed for around the same price as the average service in the United States, was more than a PR stunt. The new actions, announced here, back up those words.
In Kansas City, customers can get one-gigabit Internet for $70 per month, or Internet bundled with TV service for $120 a month. One customer I spoke with there explained their new speeds were 50 times what they’d been getting from a similar bundled Interent/TV package from Time Warner Cable, for just a few dollars more. And Time Warner Cable has responded in Kansas City with faster speeds and lower prices, judging by the family of options it now advertises. In Austin, Google will now give Time Warner Cable and AT&T a run for their money.
This kind of competition, more than new technology, is what’s needed to expand and improve Internet communications in the United States. A couple of months ago Susan Crawford, a telecom policy expert at the Benjamin N. Cardozo School of Law in New York, told me she believed that Google was making money on the fiber subscriptions alone. The reason service elsewhere is expensive and slow by comparison comes down to the fact that monopoloies (and a few duopolies) control most markets, she explained to me.
Google has steadfastly maintained that its approach is profitable. Google Fiber “is not a hobby,” Google CFO Patrick Pichette said during an earnings call this year. “We really think that we should be making good business with this opportunity, and we are going to continue to look at the possibility of expanding.”
In its blog today about Austin, Google said: “Our goal is to start connecting homes in Austin by mid-2014. Customers there will have a similar choice of products as our customers in Kansas City: Gigabit Internet or Gigabit Internet plus our Google Fiber TV service with nearly 200 HD TV channels. We’re still working out pricing details, but we expect them to be roughly similar to Kansas City. Also, as in Kansas City, we’re going to offer customers a free Internet connection at five mbps for seven years, provided they pay a one-time construction fee.”