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 .
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.
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.
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.
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.