Sunday, July 24, 2016

If Portland Does Not Get Google Fiber, the Business Model Most Likely Will be the Reason

Sometimes the business case--not “evil” Internet service providers or clueless municipal officials--is responsible for some hoped-for new service, product or network not to be launched.

One might argue that is precisely the point where it comes to a potential Google Fiber launch in Portland, Ore. It is one thing for Google Fiber to come to market with the “only” gigabit Internet access service in a market.

It is something else again if the incumbent suppliers (cable and telco) up their game before Google Fiber can launch, and deploy their own gigabit networks.

If that happens, the suppliers of nearly 100 percent of the consumer Internet access connections have a much more compelling value proposition, while any new Google Fiber offer--even if better--differs mostly incrementally.

That might also be the case if the incumbents come up with “hundreds of megabits per second offers” that cost less than Google Fiber, and also meet virtually all present customer requirements.

It is “Marketing 101.” An attacker has to come to market with a value proposition that makes sense, has clear value and often, “costs less.”

While Google Fiber arguably has technical advantages over the current CenturyLink and cable offers (symmetrical bandwidth, for example), it is not clear that most consumers actually believe they get much incremental value from a gigabit service, compared to one operating “up to” 300 Mbps or 500 Mbps.

In fact, many would argue that, for most consumers--and most multi-person households--a 100-Mbps to 500 Mbps downstream connection does “everything” a gigabit connection does, with the possible exception of some upstream apps.

Some of us would argue that, in most cases, even a 100-Mbps connection actually supports all typical applications for a multi-person household. Beyond that, it is not clear that actual perceived value exists.

If Google Fiber increasingly finds the incumbents (telco and cable) offering gigabit connections, the business case for launching Google Fiber might not be attractive.

That is not to say a fixed wireless service has the same economics. The business case arguably will be better with the latest generation of fixed wireless platforms, and should be even better in the future.

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