For heavy Internet users, having your municipality announced as the next Google (NASDAQ:GOOG) (NASDAQ:GOOGL) Fiber city is akin to winning the lottery. Not only are you provided lightning-fast 1-gigabit upload and download speeds for $70 per month, bit you're also given the option of free Internet service for seven years (although it's limited to 5-megabit download/1-megabit upload speeds).
With so much consumer demand for Google's Fiber service, and equal antipathy toward legacy Internet service providers, you can't blame the company from being rather selective as to what cities it wants to partner with. Bordering on cockiness, Milo Medin, Google's vice president of Access Services, summarized his company's take-it-or-leave-it approach with municipalities by saying that if you make the process to bring Google Fiber to a city difficult, then "enjoy your Time Warner Cable."
Apparently, many municipalities have taken Google's warnings seriously. Just this year, the company announced that Atlanta, Nashville, and Charlotte and Raleigh-Durham, N.C., will get Google Fiber. And this week, Google announced its newest Google Fiber "winner": Salt Lake City.
Will we see Google Fiber announcements pick up?
Although Google's been rather selective in regard to its Google Fiber rollout thus far, it's entirely possible the service will pick up in scale going forward. First, the aforementioned demand for a new and improved ISP could encourage city managers to embrace Google's value proposition. Overall, legacy ISPs are held in low regard, with last year's American Consumer Satisfaction Index reporting ISPs placing second worst out of 33 industries surveyed.
Next, the service could be bolstered not by the ISP, but rather from Google's bundled pay-TV service. Recently, Google rolled out a potential game-changing ad feature for television advertisers. In the past, TV advertisers were unable to target audiences by location and viewing history -- unlike Internet advertisers. With Google's new Fiber service, the company has created that ability. This should provide more granular data than Nielsen ratings.
And as advertisers are able to extract more data from a potential audience, they're able to better tailor their ads for maximum effectiveness. In return, advertisers will pay top dollar for a Google Fiber TV viewer over, say, a Time Warner Cable TV viewer. In the end, advertisers may push for a larger rollout to combine the targeting of Internet-based marketing campaigns with the captive-audience format that pay TV provides.
Google opens itself up to allegations of cronyism
For Google, a company founded on the mantra of "do no evil," its cable and ISP business moves open the company up to allegations of cronyism. While nobody is blaming the company for arguing against a bureaucratic and at times Kafkaesque permitting process at the municipal level, the company runs the risk of appearing to get special treatment. This isn't unheard of with pay-TV providers, but it wasn't really Google's forte before Fiber.
For example, Oregon's House of Representatives recently passed a bill with the main purpose of making it easier for Google Fiber to extend to Portland -- but the bill does the exact opposite, with Google warning that the tax changes in the bill will make it "extremely unlikely" for the company to bring the Internet to Portland without changes. Lawmakers pledged to quickly fix the oversight. It's good to know the legislative wheels are quick to move to ensure tax breaks -- and fix mistakes -- for $400 billion corporations.
Recently, a Wall Street Journal article found that Google spent $16.8 million in lobbying in 2014, more than any other company, and almost one-third higher than No. 2 lobbyist ExxonMobil. In addition, the company held meetings with the White House or senior staff 230 times. Maybe they're discussing rolling out Google Fiber nationwide ... but I doubt it.
Editor's note: This article has been corrected to say that Google spent $16.8 million in lobbying in 2014.
Jamal Carnette has no position in any stocks mentioned. The Motley Fool recommends Google (A shares) and Google (C shares). The Motley Fool owns shares of ExxonMobil, 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.