Today, U.S. households suffer from extremely high costs for Internet access, as well as mediocre download speeds. Many net neutrality advocates have pointed to Google (NASDAQ:GOOG) (NASDAQ:GOOGL) Fiber as a prime example of how competition will reshape the ISP market for the better.
In theory, a broad rollout of Google Fiber could break the local monopolies on super-fast Internet held by Comcast (NASDAQ: CMCSA) (NASDAQ: CMCSK) and other cable companies. Unfortunately, that would only solve half of the dual problem faced by U.S. consumers today.
Not much for the money
Today, people in the U.S. pay some of the highest prices in the world for Internet access, but they don't get very much bandwidth for the money. (The U.S. recently ranked No. 27 in the world for download speed.) In many cities across the U.S., only the local cable monopoly offers download speeds of 25 Mbps or more.
The only exceptions exist in areas where telecom companies have built out fiber networks to challenge traditional cable companies on speed, which has led to more competition and better service.
For example, after Google announced plans to expand its fiber service to Austin, AT&T (NYSE:T) quickly responded by upgrading its own network there to support gigabit connections. It is also matching Google Fiber's $70 price for gigabit Internet -- with some caveats.
So, it's clear that as Google Fiber enters new markets, connection speeds will increase, even for people who don't switch ISPs. That could move the U.S. toward the forefront of the world in terms of broadband speed. But what about the second issue: high prices?
Personally, I have no use for gigabit Internet. In fact, I'm perfectly happy with the speed of my 6 Mbps connection from Frontier Communications -- formerly AT&T -- although to be fair, I've been getting closer to 7.5 Mbps in recent speed tests.
That's always been enough for me to watch streaming video from any of the major services with no buffering. It's also been reliable, which is important given that I work from home.
However, I pay an exorbitant $51/month for this service. That's only $19 less than a gigabit connection on Google Fiber, but I'm getting less than 1% of the bandwidth!
Comcast, the other option in my area, is no better. I could get a short-term promotional rate of $29.99/month for a 25 Mbps connection, but the ongoing charge would be $66.95/month -- or more, if I decide to a lease a modem rather than buying my own. A 6 Mbps connection would be $50/month from Comcast -- and I'd still need the modem.
Stuck in the middle
If I wanted a super-fast Internet connection, I'd probably be salivating over the possibility of getting Google Fiber. But what I really want to do is to save money.
Google Fiber wouldn't necessarily help on this front. As my colleague Daniel Kline recently pointed out, one of the best ways to keep your ISP bill down is to make sure you're not buying more than you need. I might feel like I was getting a better deal with Google Fiber, but I'd really be paying $19 extra for something I don't need.
Google Fiber does have a bargain option. For just $300 up front (or payable in 12 monthly $25 installments), you can get up to seven years of free basic Internet service from Google Fiber, with 5 Mbps download speeds.
That's really cheap. However, it's also a step down from what I have now, and it might not be quite enough. In other words, with Google Fiber, you have two choices: far more speed than you probably need at an above-average cost, or not quite enough speed at a bargain price.
This leaves consumers like me stuck in the middle. Furthermore, to the extent that cable and telecom companies make big investments in particular cities to counter Google Fiber, they won't have much incentive to offer cheap mid-range services since they will need to recoup their massive capital investments.
If Google eventually adds a mid-range option -- 10 Mbps-20 Mbps download speeds for $30/month or so -- I would be eager to get on board. But for now, Google Fiber doesn't solve the most pressing problem for at least this American consumer: getting a reasonable Internet connection speed at a reasonable price.