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Google Fiber Already Has Cable Reeling, But This Could Bury Them

By Tim Brugger - Jan 4, 2015 at 11:26AM

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A significant roadblock to bringing the search king’s lightning-fast Internet service to the masses might soon disappear.

It's no secret that cable companies, as a rule, tend to bring up the rear in virtually every annual customer service survey. In part, the cable industry's poor service record is due to its seemingly never-ending excuses -- in other words, denial -- and providers' sense that they are untouchable; after all, Americans' cable alternatives are limited based on geography. And that's where Google (GOOG -1.79%) (GOOGL -1.77%) Fiber enters the picture.

In addition to offering an average Internet speed up to 100 times faster than standard U.S. connections, Fiber gives consumers an alternative to cable, which in and of itself makes Google's service worth exploring for the lucky regions of the country with access. Despite the nearly unanimous good tidings Fiber elicits from customers, bringing it to the masses is not without its challenges. Beyond the regulatory processes, the infrastructure required to install Fiber is onerous and expensive, to put it mildly, which is a big reason Google has not rolled Fiber out across the country. But that might be about to change, and if it does, cable won't be able to play down the impact of Fiber much longer.

The challenge of Fiber
Google requires cities to commit resources and tax incentives before it will install Fiber. As the Portland, Ore., City Council demonstrated recently, when it comes to Fiber, city governments are proving more than happy to work at warp speed to give Google what it wants. However, even after being approved, it can take a year or more before Fiber is ready for consumers.

In part because of the time and cost involved with installing Fiber, Cable execs such as Frontier Communications (FTR) CEO Maggie Wilderotter still don't see it as an immediate threat. The Frontier exec went so far as to say Fiber isn't a viable alternative because consumers don't want it, nor do they need it.

According to Wilderotter, in a sentiment echoed by other cable execs the past couple of years, Fiber is "about the hype," though Frontier, like other ISPs, will begin offering gigabit service -- to match Fiber's connection speed -- in coming quarters. But what's the hurry, really? Installing Fiber requires tearing up property, accidentally busting gas lines, and surprising consumers with construction workers in their yards -- all concerns voiced by Kansas City residents as Google prepped the municipality for Fiber.

But what if rolling out Fiber to all those U.S. consumers was considerably easier, faster, and less expensive?

The upside to net neutrality
The Federal Communications Commission, or FCC, and President Barack Obama have talked a lot about regulating broadband Internet providers, including cable companies and suppliers like Google, as telecoms. Naturally, additional regulatory oversight isn't at the top of any company's wish list, but in this instance there's an upside for Fiber.

As a regulated telecom-like provider, Google would immediately gain access to existing infrastructure telecoms and cable companies have long taken for granted. Utility poles, conduits, ducts, and rights of way would be available to the search giant, just as they are to Fiber's competitors. How big a deal is gaining instant access to all that infrastructure? According to former FCC Chairman Reed Hundt, connecting homes via utility poles would cost Google about a tenth as much as it spends to dig trenches and lay pipe for the service.

"Pole access is fundamental and Google will never be able to make the case for Google Fiber without pole access," he told The Wall Street JournalThat might be a bit dire, but Hundt's point is valid. Though Google has not officially said it supports the FCC's Title II regulatory proposal, dramatically cutting Fiber's overhead and speeding up the installation process would immediately jump-start its introduction to U.S consumers.

If Wilderotter and her cable cohorts aren't worried about Fiber now, they will be soon.


Tim Brugger has no position in any stocks mentioned. The Motley Fool recommends Google (A shares) and Google (C shares). The Motley Fool owns shares of 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.

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