I got a fresh upgrade offer from my ISP, Verizon (NYSE: VZ ) FiOS, yesterday. It's not a bad deal, really. For $10 more per month, I could upgrade my 15 megabit-per-second Internet connection to a 50-megabit account. As Verizon puts it, "Because you're doing more online than ever, you need more speed than ever." OK, I'm convinced. Pay 15% more for a total of $75 a month, but my connection speed would more than triple.
Or, you know, I could just move to Kansas City. There, I would sign up for Google (NASDAQ: GOOGL ) Fiber at $70 per month, and enjoy a full gigabit of online bandwidth goodness. That's nearly 67 times my current bandwidth for $5 more, or 20 times the upgraded Verizon offer for $5 less. How's that for "more speed than ever," or a superior value?
Can you hear me now? Good.
You can bet that service providers are starting to feel the heat from Google's hyper-competitive plans. Big G started slow, taking nearly three years to move from announcement to the first connections in Kansas City, but it has picked up the pace dramatically. Austin, Texas, got the nod for Fiber services last week, and now the service is jumping to Provo, Utah, as well.
The situation in Provo is unique. Google is rolling out its own fiber-optic cables in Kansas City (in both Kansas and Missouri) and Austin, but Provo already has a citywide fiber network. Google can simply step in, upgrade the iProvo fiber mesh to gigabit speeds, and start managing the service. The company promises to connect every home and business along the current fiber backbone routes.
Thanks to the existing infrastructure, Google can offer absolutely free 5-megabit connections for a mere $30 one-time connection fee and will give gigabit hookups to a handful of worthy recipients such as schools, hospitals, and libraries. There's no word yet on what gigabit accounts will cost for everyone else in Provo, or indeed in Austin, but chances are that it will be comparable to the Kansas City service.
Why not sell this everywhere?
There's very little technical reason Verizon's fiber couldn't offer gigabit speeds to consumers well below the magic $100 monthly price barrier. Some new connection cards on the ISP's side, maybe a quick connection box in my garage (or perhaps just a software update done from the central office), and I'd be good to go.
Verizon does have a 300-megabit service available, which is at least in the same ZIP code as Google's high-speed plan. But I'll note that Google's connection is high-speed both ways, while Verizon's fastest plan caps upload speeds at 65 megabits -- and I'd have to pay $210 a month for Verizon's most competitive plan.
Google is showing the ISP industry how it's done. One can only hope that Verizon feels Big G's pressure and takes action to make its own services faster, cheaper, and more competitive. I'll note that Google has cherry-picked fiber communities that don't have FiOS options.
After that, there's no reason cable companies shouldn't follow suit. Granted, coaxial cables don't offer quite the turbo oomph of a proper fiber connection, but the platform can still be competitive with the right back-office equipment. Comcast (NASDAQ: CMCSA ) offers 100-megabit plans to business customers, for example (with 10-megabit uploads, natch). But you do pay through the nose for these deals -- $370 a month for the top Comcast plan.
Google Fiber may not be a cash cow for Google, but the project does accomplish a greater goal for the company. Google wins when more consumers get their hands on faster and more ubiquitous Internet connections. If the fiber project manages to spark some competitive fires in a dangerously stagnant and often anti-competitive ISP market, then it's a job well done -- even if the service never reaches New York City or my native Tampa.
As one of the most dominant Internet companies ever, Google has made a habit of driving strong returns for its shareholders. However, like many other Web companies, it's also struggling to adapt to an increasingly mobile world. Despite gaining an enviable lead with its Android operating system, the market isn't sold. That's why it's more important than ever to understand each piece of Google's sprawling empire. In The Motley Fool's new premium research report on Google, we break down the risks and potential rewards for Google investors. Simply click here now to unlock your copy of this invaluable resource.