Google's Game-Changing Second Era Has Arrived

Google's Fiber is changing what Internet service was, creating headaches for large U.S. providers.

Aug 13, 2014 at 11:00AM

In an Internet service industry that's notorious for its lack of competitive options and an unwillingness to provide faster speeds, Google's (NASDAQ:GOOG) (NASDAQ:GOOGL) Fiber network is causing widespread change, disrupting the broadband industry as it did with the Internet more than a decade ago.

What the heck is Google Fiber?
Google Fiber is unlike any other Internet service before it, boasting unprecedented speeds of up to 1 gigabit per second, or Gbps. To get an idea of this performance, users can download 100 photos or songs in just three seconds; users can also download an entire HD movie in seven seconds. In other words, it's about 100 times faster than average broadband speeds.

To no one's surprise, the demand for Google Fiber has been incredible, as the company unprecedentedly requires people to sign up in advance of the network's being built. Unfortunately, building a straight fiber-optic network to the homes of customers takes time, and it's pricey, estimated to cost between $20 billion and $28 billion to provide service for 15 million users .

Goog Fiber


Therefore, Austin, Texas, Provo, Utah, and Kansas City are the only three cities to gain Fiber so far, but Google has already announced plans to roll out Fiber in nine additional metropolitan areas as part of its next phase. Typically, these are cities willing to work with Google to accommodate the construction, such as giving it rights to use existing telephone poles and providing certain zoning permits; most of Google's wants would've never been awarded to typical broadband providers. Yet with the demand for Fiber being so high, and countless cities including Nashville and San Jose, California, rushing and pleading to get the network built quickly, Google has an unusual amount of leverage with city officials.

Google forces change
As a result of the Fiber disruption that's sweeping through America, large broadband providers are for the first time having to embrace change. Up until this point, consumers might only have two or three Internet service providers in their region, and sometimes only one. Furthermore, almost all service providers have kept speeds around 10 megabits per second, or Mbps, with the upper echelon reaching 50Mbps; but nothing like 1Gbps.


Source: Google

Yet recently, such providers have been making some big changes. Comcast (NASDAQ: CMCSA) is a top provider, with 21 million subscribers, and is rolling out a 100% boost to speeds, or more, for free! Thus, 50Mbps becomes 105Mbps and 25Mbps will be taken to 50Mbps in certain areas. AT&T (NYSE: T) and CenturyLink (NYSE: CTL) have also taken the high road of trying to boost speeds.

Trying to find an edge against Fiber
Clearly, Google Fiber is working for consumers, providing faster Internet speeds, as large broadband providers seem unwilling to take chances with their current speeds once Fiber begins to see a national rollout. However, Frontier Communications (NASDAQ:FTR), a midsized service provider with nearly 2 million subscribers, is going on the record as one of the first companies to use an alternative approach to battle Fiber.

Reportedly, Frontier will not be boosting the network speeds of its Internet service and will try to fight Google with a value-centered approach. In fact, CEO Maggie Wilderotter's had some very interesting comments about Fiber during a recent interview, and the mechanics of 1Gbps speeds.

According to Wilderotter, consumers don't need a gig, and selling 1 gig is "disrespectful" because it enters a language that consumers "don't understand." She even added that the excitement surrounding Fiber is more because "Google has hyped the gig," referring to the 1Gbps speed. Wilderotter may be right that 1Gbps is unnecessary, but that doesn't mean consumers don't want it.

In today's world, consumers are storing more of their information on the cloud, uploading more pictures to social media, and watching more movies via streaming online. Therefore, one can't deny that there's something appealing about a service that downloads an entire movie almost instantly. Meanwhile, current broadband speeds can take up to 15 minutes to perform the same function, and that's with a solid broadband service.

With that said, Frontier customers will receive a much more modest 15 Mbps and will pay just $30 per month. In a pre-Fiber world, such speeds and price would be phenomenal, yet today this noted 15Mbps speed will fall into the 15-minute category to download a movie. Nonetheless, Google Fiber costs customers $70 a month, more than twice that of Frontier's service, but with far greater performance, customers are more than likely to find Fiber the superior value, and that has proved to be the case in the initial phases of the service.

Foolish thoughts
If lightning-fast Internet speeds weren't enough, there are countless other advantages that Fiber will provide consumers. For one, HDTVs are sure to get more than enough bandwidth, ensuring the best possible viewing experience. Then, Google will give customers other luxuries, like 1 terabyte of cloud storage -- Dropbox charges $19.99 per month for 200 gigabytes of storage -- along with smartphone applications to control your TV and a DVR, with the capabilities to record up to eight programs simultaneously.

Yet perhaps the biggest luxury with Fiber is that with the exception of a few hard-headed companies like Frontier, it forces industrywide change. Thus, the "customers don't need faster broadband" mantra has been forgotten, and for this reason smaller broadband providers and those that refuse to embrace change will be caught in the Google Fiber hurricane that is destroying what Internet service used to be, and creating a faster experience for all users to enjoy.

Leaked: Apple's next smart device (warning, it may shock you)
Apple recently recruited a secret-development "dream team" to guarantee its newest smart device was kept hidden from the public for as long as possible. But the secret is out, and some early viewers are claiming its everyday impact could trump the iPod, iPhone, and the iPad. In fact, ABI Research predicts 485 million of this type of device will be sold per year. But one small company makes Apple's gadget possible. And its stock price has nearly unlimited room to run for early-in-the-know investors. To be one of them, and see Apple's newest smart gizmo, just click here!


Brian Nichols owns shares of Apple. The Motley Fool recommends Apple, Google (A shares), and Google (C shares). The Motley Fool owns shares of Apple, Google (A shares), and Google (C shares). Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

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David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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