What Would You Do for Some Google Fiber?

If Google (Nasdaq: GOOG  ) wanted to stir up public interest in broadband Internet connectivity when it announced a small-scale fiber-optic network project, then Google got what it wanted. Cities across America are coming to Google, hat in hand, to prove themselves worthy of the company's attention.

The most extreme example might be the capital of Kansas. Topeka will be known as "Google, Kansas: The capital of fiber optics" in March, thanks to an official proclamation by mayor Bill Bunten. Remember though, this is a town that renamed itself "ToPikachu" for a day when Nintendo (OTC BB: NTDOY.PK) launched a Pokemon game within city limits back in 1998.

City councils, citizen brigades, and oddball activists are everywhere. Committed candidates include small fry like Topeka and Greensboro, NC; mid-size college towns like Austin, Texas, and Gainesville, Fla.; and even metropolises such as Seattle, Wash., and New Orleans, La. Their platforms range from "look what we can do for Google" to "look what Google can do for us," and everything in between. Some committees even vow to build their own municipal fiber-optic networks if Google doesn't come through for them.

Google says that the purpose of building out a relatively smallish network of approximately 500,000 gigabit-connected homes is to learn more about networking. The company hopes to find innovative uses for a true "information superhighway," along with new ways to build and run the networks cheaper, faster, and better. It will allow third-party service providers to resell Google's connections and share lessons learned with the world. And that is the key takeaway from the whole project: Google wants a faster and more ubiquitous Internet for everybody.

It doesn't really matter to Google whether you surf the bit-waves through the lines of AT&T (NYSE: T  ) , Verizon (NYSE: VZ  ) , or ClearWire (Nasdaq: CLWR  ) . An Apple (Nasdaq: AAPL  ) iPhone is just as kosher for Google's purposes as a Google Android handset, a Hewlett-Packard laptop, or a connected Blu-ray player by Panasonic or Sony. And that's the philosophy I see behind the fiber optics buildout, too: Turn up the fire under service providers, local governments, and federal authorities to whip the Internet into shape. Consider this a well-funded publicity stunt that ultimately benefits network infrastructure everywhere.

Whether or not Google makes money from subscription fees and city-funded subsidies for this project, the real payoff will come indirectly and years later. More network traffic means more eyeballs connected to ad-clicking fingers. That also happens to fit Google's corporate mission to "organize the world's information and make it universally accessible and useful."

Whoever gets this network will only be the first of many large broadband rollouts in the coming years. Is Google the best vehicle for riding that wave, or should we instead stock up on fiber-optic equipment makers like JDS Uniphase (Nasdaq: JDSU  ) ? Share your thinking in the comments below.

Fool contributor Anders Bylund owns shares in Google, but he holds no other position in any of the companies discussed here. His own neighborhood already has Verizon FiOS, so Google isn't likely to lay more fiber for Anders. Biscuits! Google is a Motley Fool Rule Breakers recommendation. Apple and Nintendo are Motley Fool Stock Advisor selections. Try any of our Foolish newsletters today, free for 30 days. You can check out Anders' holdings and a concise bio if you like, and The Motley Fool is investors writing for investors.


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Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On March 04, 2010, at 11:21 PM, PSU69 wrote:

    Disclosure, I own GOOG. I admire their stand on email hacking in China. I like their vision and the business model. I also help clients learn about SEO/SEM and how to drive their business with low cost web marketing thoughts and data and facts. Google Analytics can help marketers learn how to play their web sites like virtuosoes. A website with out SEO/SEM & Google Analytics is like an island hoping someone finds it. Google knows how to drive traffic at very low cost and good web marketing people share this knowledge. Certainly BIDU benefited from GOOG stiring the pot in China. But, I LOVE it.

  • Report this Comment On March 05, 2010, at 7:12 AM, TMFBent wrote:

    "It doesn't really matter to Google whether you surf the bit-waves through the lines of AT&T (NYSE: T), Verizon (NYSE: VZ), or ClearWire (Nasdaq: CLWR). An Apple (Nasdaq: AAPL) iPhone is just as kosher for Google's purposes as a Google Android handset, a Hewlett-Packard laptop, or a connected Blu-ray player by Panasonic or Sony. And that's the philosophy I see behind the fiber optics buildout, too: Turn up the fire under service providers, local governments, and federal authorities to whip the Internet into shape. Consider this a well-funded publicity stunt that ultimately benefits network infrastructure everywhere."

    Well, it matters that you don't surf it through a Google Network, because installing networks is incredibly expensive, as is keeping them running. Thus, the publicity stunt. Google wants to increase its profits by forcing others to invest more in the raw materials that enable Google's business model ("data lamprey") to work.

    "Whipping the internet into shape" is just another way of saying "subsidize more web traffic, either with government payouts or compelling private network builders" so that Google can get the most profitable slice for itself.

  • Report this Comment On March 06, 2010, at 3:59 AM, bottomfishing wrote:

    I own JDSU, for a very looong time. Very negative return. I sold some at 7.50 to avoid tax when I made money, pounds of it, on AMZN toward the end of '09. I have no intention of losing money any more by selling it. Someday it may make me money in my hope against hope. Please someone tell me an outlook price of this stock five years from now. Thank you very much.

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