Friday, February 12, 2010

Google's fiber to the premise "experiment" a would be broadband game changer

Nearly three years ago, I predicted Internet-protocol content providers and aggregators fed up with trying to pump their product over legacy telecommunications infrastructure dominated by telcos and cable companies would acquire or build their own infrastructure to reach consumers. It's an expected outcome of a conflict between the content providers' needs for ever increasing bandwidth and the telco/cable companies' need to conserve capital expenditures and place incremental limits on bandwidth consistent with their service offerings in which consumers pay increasingly higher rates for more bandwidth. The content providers want unlimited bandwidth delivered over big pipes. But the business model of the telco/cable duopoly is based on making bandwidth a restricted scarce commodity delivered over little pipes.

So it was no surprise when Google -- which has reportedly been quietly buying up fiber left dark after the dot com bust of a decade ago -- announced this week it would build an experimental alternative business model that would bring advanced telecommunications to consumers over a really big pipe: fiber optic infrastructure to the premises capable of throughput of 1 gigabyte per second.

Google is also clearly holding itself as an alternative to the Obama administration's program to build out open access broadband infrastructure subsidized by more than $4 billion set aside in the American Recovery and Reinvestment Act (ARRA) President Obama signed into law nearly one year ago.

The timing of Google's announcement of its fiber infrastructure test program is also worth noting and shows the company is looking to make a statement. The window for applications for the second round of ARRA broadband infrastructure subsidies opens less than a week after Google's announcement. The deadline set by Google for local governments and communities to nominate themselves for Google's experimental fiber build closes the week after the ARRA funding round application window closes as well the deadline for the Federal Communications Commission to submit a plan to Congress to achieve universal U.S. broadband access as required by the ARRA.

While the federal agencies that will hand out the ARRA infrastructure subsidies have made assurances the money will soon begin flowing in earnest, doubts have emerged due to numerous challenges filed against proposed projects by the same incumbent providers Google wants to go around. Google likely figured amid that uncertainty, the timing was right to make its announcement.

With its self described "experimental" fiber to the premises model, Google may also be trying to debunk skeptics who believe fiber to the premises simply costs too much to deploy. That high cost has been cited as the main impediment standing in the way of investment in the fiber to the premises infrastructure that was to have been at the doorstep of every American home by 2006. If Google can show the cost assumptions upon which the business models of the incumbent legacy providers are based are wrong, then the entire game is changed overnight. That potentially puts America on course to catch up to where it should have been four years ago and where it needs to be for the future.

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