Tuesday, August 09, 2016

San Jose's Google Fiber rollout is delayed while tech giant explores alternatives - Mercury News

San Jose's Google Fiber rollout is delayed while tech giant explores alternatives - Mercury News: SAN JOSE -- Google has told at least two Silicon Valley cities that it is putting plans to provide lightning-fast fiber internet service on hold while the company explores a cheaper alternative. The news comes nearly three months after San Jose officials approved a major construction plan to bring Google Fiber to the city. Mountain View and Palo Alto also were working with Google to get fiber internet service but said Monday that the company told them the project has been delayed.

The economics of selling monthly subscriptions to one customer premise at a time -- the business model employed by the vertically integrated legacy telephone and cable companies Google is challenging -- are difficult. That's why it has produced widespread market failure and disparate access. And when the incumbents throw up legal speed bumps to slow deployment like making access to utility poles difficult, the business case for infrastructure ROI becomes even more difficult.

It's no surprise Google Fiber is reconnoitering. Using the investor owned, vertically integrated, subscription-based closed access business model favored by the incumbents to finance and construct advanced telecommunications infrastructure is like building roads based on the number of occupied garages -- preferably housing BMWs, Lexus and Mercedes. Google Fiber's problem is it's insufficiently disruptive. It's taking on the legacy telcos and cablecos with their own business model -- one that favors established incumbents and not new entrants like Google Fiber -- without any major cost or marketing advantage.

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