If one accepts the logic of building new fiber-to-home (FTTH) facilities on the basis of neighborhood demand--building first where there is the greatest chance of getting a significant customer base--then it makes sense that some potential customers who live in neighborhoods without such critical mass might have to wait for facilities to be built.
Some appear to think there is mystery around what Google Fiber is up to, as reports surface of customers in Kansas City having their install orders cancelled. There might be less mystery than some would think.
Google Fiber has halted expansion, using FTTH. It is just that simple. So potential customers in new areas are not going to get that particular service. That means cancelled orders in areas Google Fiber will not now reach. In some cases, it is possible that even new orders in existing areas might be refused. That tends to happen for a number of logical reasons.
An ISP might have made a decision to switch technology platforms. An ISP might be planning to sell the asset, or exit the business.
And, if an internet service provider decides it is having trouble with the business model for FTTH, then it is not unreasonable to see a halt, or a pause, in new construction, as was the case with Verizon’s FiOS deployments.
If you have been around actual installation operations, or the people who have to manage those operations, you know there always is a risk of irritation when a new network is built, as “demand that cannot be immediately fulfilled” is created. In other words, potential customers hear that a new network (cable TV where there was none, 4G or 5G, fiber to home, gigabit services) is coming, but do not understand that it might take several years to build out a whole metro area.
Similar irritation happens when a formerly-announced project is cancelled, because the business model comes into question. That seems a large part of the apparent “mystery” about Google Fiber’s pause in construction of FTTH in existing and proposed markets. There should be no surprise. Google Fiber is not the first to discover the potential business model challenges.
Nor is Google Fiber the first to discover potential customer irritation when construction does not happen everywhere, right away.
In other words, almost by definition, some potential customers live in areas where demand is less than in other areas, which will be built first. That is the whole idea behind the “neighborhood” build approach. ISPs build first where demand--and therefore breakeven--can happen fastest, building revenue and cash flow to support more construction.
All that will cause some irritation, but not as much as when an ISP has to halt construction for some business reason.
There is no mystery about why Google Fiber install contracts might be cancelled. Aside from the clear halt in network expansion for business reasons, and the possible use of different access platforms (which might not be ready yet), some neighborhoods might well be marginal in terms of business case, using any access technology.
There is no mystery here about cancelled install contracts.
No comments:
Post a Comment