April 2016, Vol. 71 No. 4
Editor's Log
Google Fiber Plans Expansion In Several Cities With Pending Deals In Many More
by Robert Carpenter, Editor-In-Chief
Google Fiber is a remarkable story and the tale keeps growing. At the recent Power & Communication Contractors Association annual convention, one of the speakers included a senior representative in charge of the Southeast U.S. construction. When I asked what the formula was for selecting where the company would invest next, I got the predictable two-step (“it’s a complex algorithm”).
For now, it seems like Google doesn’t have a preference as to whether systems are overhead or underground. However, the Google speaker did suggest that when underground costs come down, it would be better for all systems to go underground. We’ve all heard that tired assumption before – that going underground for telecom or electric is always more expensive. That’s simply not true. It all depends on circumstances and job conditions. Matter-of-fact, we have an article coming out this summer about one regional provider that believes, at least in its geographic area, that going underground for new construction always makes better economic sense.
Google also claims to be a good neighbor wherever it installs. The company cites instances where it is supplying free internet to low-income neighborhoods. While that is indeed impressive, the cynic in me is a little suspicious of their projected magnanimous persona. There is a business model at work here – carefully crafted and continuously developing. Google didn’t rise to the top by being a poorly run company. Indeed, it is one of the most vibrant and intelligent businesses of the last 15 years. The leadership team has plans – layers of plans – which will serve a long-term purpose and revenue goal.
Google, to some degree, takes credit for driving competitors into the gigabit mindset for internet systems. AT&T is the latest major telecom to aggressively roll out its Fiber-to-the-Home (FTTH) system.
Fiber means business opportunities. Frequently we learn of success stories where having fiber optic systems has generated economic activity to a high degree. Not necessarily attracting large businesses, but more often bringing a plethora of small companies springing up from fertile fast-internet soils to take advantage of what having strong internet power can do for business opportunities.
AT&T is an interesting model. It’s been just 10 years since that AT&T started rolling out its U-Verse triple play platform across 21 states. It marked a radical new venture and transition as AT&T evolved from a telephone company to an entertainment and data-based provider.
At that time, Verizon was already gaining much fanfare with its new fiber construction program. Verizon was great on homes passed, but it was slow on homes connected. Plus, the company indirectly spurred additional competition. Verizon’s business model focused its build-out in denser population areas and business-rich opportunities. The company would frequently jump over smaller cities figuring it would return at some point in the future. But for several cities, “some point in the future” was not definitive enough. The cities wanted the economic drivers which frequently accompany fiber capabilities in the present. City after city in Verizon’s service areas have started municipal fiber systems to great success.
For AT&T, timing was critical and the company was not in a rush. Company leaders waited to see how the market reacted, what mistakes were made and how successes were achieved before jumping into the entertainment business. AT&T was a telephone company trying to also be-come a communications and entertainment behemoth, but management didn’t have a clue how to do that. AT&T also realized that it had to re-invent customer service, something telephone companies in general had become seriously deficient in.
Thus, the U-Verse concept came about. Working with Microsoft, a two-way communication network was developed to allow quick and close immediate interaction with a fiber trunk line. The only data being sent down the copper “last mile” was what the customer needed rather than having hundreds of television channels, internet and phone services all flowing into a home at once.
AT&T’s U-Verse gambit predictably has its fair share of critical and complimentary comments. But the company does now know how to operate a powerful entertainment venue. Company executives know how to negotiate for programing and indeed, to innovate with things like movies on demand and multi-tasking with the system. Remote access of your system and even home security have been developed. They also learned how to return to courteous, efficient and fast customer service – at least for U-Verse. For regular telephone service, not so much. In a nutshell, AT&T learned how to innovate again.
AT&T is now venturing into direct FTTH and its plans are picking up speed. Did competitive pressures from Google force its hand? While that probably contributed to the speed of the planned FTTH deployments, AT&T, like Google, has a long-term plan and now the company is ready to implement its strategy.
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