Google Fiber Now Sells Gigabit Internet Access as its Sole Offer

When Google Fiber launched its symmetrical gigabit internet access service, typical U.S. fixed network internet access speeds might have averaged about seven to nine megabits per second. In retrospect, that was about the time that U.S. access speeds began a nonlinear ascent, powered by U.S. cable operator speed boosts. 

It is worth noting that fiber-to-home average speeds were not much better, about 7.7 Mbps downstream, with cable hybrid fiber coax average speeds in the 5.5 Mbps range and digital subscriber line lagging with an average speed of about 2.2 Mbps downstream. 

So Google Fiber, offering a symmetrical gigabit connection for $70 a month, was quite disruptive, in terms of reshaping expectations about speed and price per Mbps. 

Of course, perhaps we should not have been surprised at the growth of internet speeds. Back when dial-up modems were running at 56 kbps, Reed Hastings, Netflix CEO,  extrapolated from Moore's Law to understand where bandwidth would be in the future, not where it was “right now.”

“We took out our spreadsheets and we figured we’d get 14 megabits per second to the home by 2012, which turns out is about what we will get,” says Reed Hastings, Netflix CEO. “If you drag it out to 2021, we will all have a gigabit to the home." 

So far, internet access speeds have increased at just about those rates. So what is the meaning of Google Fiber dropping its lower-speed tiers and selling only one service: a symmetrical gigabit service for $70 a month?

There are several likely reasons for the switch. The most obvious is that Google Fiber now routinely competes against cable TV operators offering speeds of a gigabit at prices that are not so different from Google Fiber, in real terms, once bundles and other promotions are included. 

Just as important, Google Fiber’s 100-Mbps service, sold for $50 a month, might actually be more expensive than some cable offers when internet access is purchased as part of a bundle. So one reason for streamlining is simply that the 100-Mbps offer is not getting traction, because it no longer offers value, compared to standard cable TV internet access offers, though it still often does when comparing telco services using copper access plant. 

But Google Fiber does not, as a practical matter, compete against slow DSL, but against cable TV services, as cable has about 66 percent of the installed base of customers, on average, across the United States, and has been from telcos continuously since perhaps 1999. 

Over the last 20 years, it would be hard to find a single year where cable broadband net account gains were not about 60 percent to 70 percent of all net gains, and over the last decade virtually all the net gains. 

To be sure, only about four percent of U.S. fixed network internet access customers seem to buy a gigabit per second service from any internet service provider. Altogether, some 77 percent of U.S. households buy internet access running between 50 Mbps and 300 Mbps.

In fact, 100 Mbps might have become the average U.S. downstream speed in 2018. 

The point is that Google Fiber and other independent ISPs selling gigabit per second service offer the most-distinctive value proposition as providers of symmetrical gigabit services, priced around  $70 to $90 per month. Comcast generally prices stand-alone gigabit service between $105 and $140 a month. 

Comcast has said that 75 percent of its customers now buy services operating at 100 Mbps or faster. 

The point is that Google Fiber no longer is the sole gigabit offer in most U.S. urban or suburban markets and likely finds few customers interested in its 100-Mbps offer. Google Fiber’s uniqueness in most markets is its symmetrical gigabit offer, since cable services remain asymmetrical.