About a year ago, Google announced the introduction of Fiber to Kansas City, and just a couple of days ago, selected Austin to be the next major city. One of NYC startups’ greatest complaint is the broadband infrastructure in this town, so I’m sure this will be helpful to the budding tech community in Austin.
A couple of things come to mind:
- Lowering the reference price. Google is competing on pricing with the big Telco providers, offering basic internet access for free with a $300 set-up cost. Setting $0 as the cost of internet access could also spur the advent of ubiquitous wi-fi access points across cities, the decrease in pricing for internet (both home and mobile), and increase penetration to low-income neighborhoods.
- When you control distribution, you can control the content.Google is also offering a bundle TV package with Google Fiber, a corollary product to the mostly unsuccessful Google TV. We’ve seen other large technology companies (ie. Apple, Amazon) make media plays into television, so this also seems to be a consolidation move across Technology, Media, and now, Telecom. Controlling distribution is a proxy for controlling eyeballs.
- Customer acquisition is still the name of the game. Amazon lost money in selling the Kindle Fire for below cost, banking on customers consuming more content through their platform. We will see Google do the same by swallowing the costs of rolling out fiber nationwide.
- The beginnings of “Smart Home”. Ubiquitous computing may still be 20 years away, but with Google’s cross-device offerings (TV, Chromebook, Nexus, Glasses), we may not be far away from having our devices talk to each other seamlessly.
- Better infrastructure, more innovation. Not only will startups benefit (as i mentioned above), but so will the consumer as richer content can be delivered. The shift towards cloud-based applications and content will accelerate.