How Google Fiber is revolutionary -- and how it's not

Google Fiber is revolutionary with the medium of its infrastructure: fiber all the way to the customer premise and the enormous headroom it offers to accommodate future bandwidth growth and new, high bandwidth services. This will allow Google Fiber to leap past the big incumbent national telephone and cable companies bogged down by their existing investment in wire cable infrastructure designed for a pre-Internet era. As Marshall McLuhan put it, the medium is the message. And the medium is fiber to the premise.

Google Fiber also has a revolutionary business model that lessens the pressure to get customer premises to subscribe in order to make the network economics pencil out. It allows customers to sign up for a low cost, multi-year, flat rate connection designed to cover the cost of connecting the premise. The big telcos and cablecos, by comparison, typically charge many thousands of dollars to connect a premise lacking access to a connection, with cablecos charging about $65,000 per mile.

Where Google Fiber's business model is not revolutionary is that like the big legacy incumbents, it is a closed "walled garden" that seeks to own the customer rather than an open access network that sells access to customer premises on a wholesale basis to those wanting to market services over it. This imposes major marketing costs to acquire subscribers one at at time, limiting Google Fiber to those areas where it can get a good return for its marketing and infrastructure investment.

Critics of this business model such as Michael Elling (featured in this video) contend it degrades the value of the network by limiting its ability to scale, invoking Metcalfe's Law -- that implies a network is only as valuable as the number of subscribers on it. Since fewer subscribers can connect to a limited, closed network, it becomes less lucrative in the larger scheme for those at the core providing Internet delivered services such as Netflix, Amazon and ironically, Google itself.

Holy disruption, Batman! Tech upstarts threaten TV broadcast model | Reuters

Tech upstarts threaten TV broadcast model | Reuters

Around the time television began to reach most U.S. homes in the 1940s and 1950s, cable TV came into being with CATV (Community Antenna Television), using a single large antenna to pull in and pipe weak, distant TV signals via cable into communities at the fuzzy, snowy edges of metro area TV broadcast signals.

Now just as it has distributed broadcast radio from all over the globe for the past decade and longer, the Internet is becoming a global CATV of sorts, capturing broadcast signals over thousands of antennas, according to this Reuters dispatch.  

This poses a major disruptive threat to the business models of paid cable TV and satellite featuring packages of hundreds of channels. Not to mention over the air TV broadcasters that have invested large sums to upgrade to digital TV broadcast equipment and transmitters with the end of analog TV broadcasts.

As the late mass communications theorist Marshall McLuhan wrote of television in its 1964 heyday, "The medium is the message." Now that medium is no longer TV.  It's the Internet.

Online-Only TV Shows Join Fight for Attention - NYTimes.com

Online-Only TV Shows Join Fight for Attention - NYTimes.com: The companies are, in effect, creating new networks for television through broadband pipes and also giving rise to new rivalries — among one another, as between Amazon and Netflix, and with the big but vulnerable broadcast networks as well.

As Marshall McLuhan famously said, "the medium is the message."  And the medium is fiber to the premise.

Emergence of Internet TV reinforces end of “broadband” era

The emergence of the Internet ready or “smart” TV marks the graduation of the Internet to a full featured, multiple service telecommunications service. It also marks the beginning of the end of siloed, single purpose video programming providers such as cable TV and satellite. Now that HD video content of all varieties is available via the Internet, the medium is the message in the words of mass communications theorist Marshall McLuhan and the medium is the Internet.

The Internet or “smart” TV also marks the end of the “broadband” Internet era, where the Internet was mostly used for viewing web pages and email — and later Voice Over Internet Protocol (VOIP). It’s notable that TV manufacturers aren’t marketing the latest sets as “broadband” TVs. That reinforces a point I made in December 2010 when I declared distinguishing “broadband” from dialup “narrowband” was growing increasingly irrelevant since dialup was becoming technologically obsolete. Consumers either have functional Internet infrastructure connected to their premises, or they don’t. And if that infrastructure can’t deliver HD video while simultaneously allowing them to browse the web, download email and make a voice call, they’re effectively disconnected from the Internet.

Google's fiber foray: Likely goal is to test alternative business model

Google's demonstration of concept fiber to the premises "experiment" announced last week could represent the start of a major transformation of how consumers receive information in an age where information is increasingly delivered via Internet protocol.

The potential transformation: from the telco/cable business model that brings the bulk of Americans Internet access that due to CAPEX constraints cannot reach about 12 percent of U.S households to the advertising-based business model used for decades by mass broadcasters. Investors provide much of the funding needed for costly transmitters and other broadcast equipment. But advertisers provide another deep and ongoing source of cash to invest in the necessary broadcast equipment to reach consumers.

Google's experiment isn't likely about testing fiber to the premises technology. Fiber is a well demonstrated means of getting lots of bits and bytes to the doorstep with plenty of capacity to spare. Rather, I suspect it's to explore an alternative business model to bring Internet protocol-based services to homes that is to a large degree based on the network broadcasting business model.

Notably, Google's announcement comes as the U.S. government struggles with the inherent conflict of implementing policies to expand advanced telecommunications infrastructure to all Americans while paying homage to the privately owned telco/cable dominated Internet "ecosystem" that makes doing so impossible without substantial subsidies in a time of economic penury.

In the 1960's, mass communications theorist Marshall McLuhan predicted an electronic global village linked together by a broadcast television -- a medium so powerful that the medium itself would be as important as its content. "The medium is the message,” he famously declared. While McLuhan's observation was about TV, in retrospect it applies even more so to the Internet. Google's foray into fiber may well have been undertaken with McLuhan firmly in mind.

Content providers could make a big play for the pipes

When television was a relatively new technology, mass communications theorist Marshall McLuhan predicted it would produce an electronic global village linked together by a medium so powerful that the medium itself would be as important as its content. Thus, McLuhan famously pronounced in his 1964 book Understanding Media: The Extensions of Man, “the medium is the message.”

If McLuhan were alive today, he’d surely say the same about Internet and with great emphasis. It’s become such a powerful global medium that it’s threatening to reshape TV itself along with other traditional media outlets such as radio and print publications. Because the Internet can transport all forms of communication and do so interactively, it’s arguably McLuhan’s uber medium. It’s no wonder that newspapers, television and radio are paying homage to the Internet, scrambling to get their content on it.

Given the power of this emerging medium, expect to see content providers to take a greater stake in owning Internet infrastructure directly as cable provider Comcast already does. Last year, News Corp. owner Rupert Murdoch complained about the current patchwork state of Internet access, with large numbers of people unable to obtain broadband connections to the Internet. Murdoch and other media titans could end up making plays for telcos and cable companies to speed broadband deployment in order to reach larger audiences for their content.

If they were joined by big Internet content amalgamators Yahoo! and Google, their economic power would be enormous, able to finance a crash program to upgrade the nation’s infrastructure to support near universal broadband access. It’s also quite conceivable that the debate over network neutrality in which the cable and telcos claim they should be able to charge media content providers for access to their systems (net neutrality advocates say they shouldn’t) could provoke media content providers to launch hostile takeovers of big telcos and cable companies. You want to charge us to use your pipes? Forget about it; we want those pipes!

Telcos like Verizon that are putting in fiber optic based systems that offer adequate bandwidth to easily carry all types of Internet content now and in the near future will likely be the most attractive takeover targets. By contrast, AT&T’s strategy utilizing both fiber and its legacy copper cable plant could make it a less attractive target for a media company. But Ma Bell would certainly have to be on the list by virtue of her sheer size and ownership of vast swaths of the nation’s Internet infrastructure.