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Google Fiber Sets Sights on New Markets

Search giant Google’s recent announcement that it plans to expand its fiber optic-based Internet and television service, aptly named Fiber, offers a counterpunch to Comcast’s desire to swallow Time Warner. If that proposed merger moves forward, it would give Comcast control of an enormous part of the domestic cable market and, by proxy, Internet service. Google’s initial Fiber experiments in Kansas City and Provo, Utah, could have been just that—experiments. With massive stock value and flush with ready cash, Google has identified 34 locales to potentially partner with as it makes a push for more Internet customers in the long run.

What Google Fiber brings to the table that Comcast and Time Warner do not is speed. The Internet access it provides is 1 gigabit per second, an estimated 75 to 100 times faster than current broadband standard speeds. While residential users might not notice a big difference, except perhaps in a smoother streaming video experience, businesses often require much more intensive bandwidth usage. Everything from real-time updates from supply chain partners to maintaining online shopping options for customers puts a serious strain on available bandwidth. The massive jump in available bandwidth will make cities with Fiber service very attractive to businesses and tech startups in particular.

As Google moves forward with the process of selecting the next round of cities to offer Fiber, it is looking for municipalities willing to provide serious assistance and concessions. Among other things, Google wants cities to provide it with access to detailed infrastructure maps. It is also asking for expedited permit reviews and city employees that are effectively on permanent loan to Google for the duration of the rollout. The most controversial, although perhaps inevitable, concession Google seeks is right-of-way to alter infrastructure. Right of way, in normal circumstances, is reserved by government for public improvement projects.

Nor will the rollout process be a free one. An estimate from Goldman Sachs places nationwide rollout of Google Fiber at $140 billion. Even for a company valued at approximately $400 billion, and with tens of billions in cash to invest, that is a steep price tag. That figure may play a large role in the phased rollout and many of the concessions Google seeks, which would help to reduce ongoing bureaucratic costs and allow the company to begin recouping investments from paying customers.

In a move likely to generate goodwill among potential low-income customers, Google has begun offering a lower-bandwidth option with no monthly fee. Customers pay a one-time construction fee, which varies from locale to locale, and receive 5 megabits-a-second Internet access. While not the blistering 1 gigabit-a-second access offered at the $70-a-month rate, it is more than fast enough to allow users to employ the Internet for educational and entertainment purposes.

Among the 34 cities in nine metro areas that Google has pinpointed, which one(s) do you think are well-positioned for Fiber?