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Google Fiber Going To War With Other Wireless Carriers?

Two years ago, AT&T had a nice deal with Starbucks. The telecom company provided Wi-Fi to 7,000 of the coffee chain’s outlets, a contract won in 2008. Then, suddenly, in July 2013, it’s Starbucks contract was put away.

The new provider wasn’t T-Mobile or Verizon. It was Google.

Flickr

Flickr

Internet service providers, long dogged by consumer dissatisfaction, have been anxiously watching over the past 18 months as the search giant encroaches on their turf. This was not their typical competitor, but a lovable brand with unpredictable, endless ambition.

The Google threat grew last month when the company announced it was bringing Fiber, its high-speed broadband service that competes with AT&T, Comcast and Verizon, to four new cities across the southeast. On the heels of that news, reports emerged that Google is working on another, equally disruptive initiative: becoming a wireless carrier.

Both projects have been dismissed by pundits as inconsequential – cast as a ploy from Google to either nudge ISPs to speed up delivery or to curry favor with regulators. But analysts and marketing executives who have worked with the carriers are taking Google seriously.

“Anytime these companies come up against Google, it’s an unknown quantity,” said Jan Dawson, principal at Jackdaw Research. “That’s a scary proposition for any company seeing Google enter their market.”

Google Fiber launched in Kansas City, Mo., in 2011 and later in Austin, Texas, and Provo, Utah. It’s planned rollout to 34 metropolitan areas has moved slower than expected. Yet ISPs are wary because Google has a critical edge: Before Fiber enters a city, it sizes up demand and looks for the most lucrative households. And unlike the ISPs, Google doesn’t have to worry about replacing existing copper lines.

Analysts said Verizon, which laid its fiber-optic service, FiOS, directly into homes, is less threatened by Fiber than AT&T, which placed its service, U-Verse, into external “nodes” — boxes that sit outside the home and connect copper lines to new fiber ones.

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Google’s advertising war chest lags its competitors. In 2013, according to Ad Age DataCenter, Google spent $1.3 billion on U.S. marketing — roughly half of Verizon’s total and nearly one-third of the spending from Comcast and AT&T. Yet, when it comes to branding, Google is far better equipped. Last year, BrandZ ranked it the world’s most valuable brand. The ISPs are typically loathed by consumers.

As Google moves further into homes, it would cycle that data back to its ad-selling network. It could also, potentially, offer broadband and wireless service as a “freemium” model, supporting the cost with ads and undercutting competitors. “It was always coming,” said one ad executive who works with a major carrier. “It was a matter of who was going to move first – Apple or Google.”

Fran Shammo, Verizon’s chief financial officer, has been more curt. In a recent interview with the Financial Times, he claimed Google is unprepared for the strain on service inherent to MVNOs, before softening his statement. “They are a very large partner. We have bazillions of conversations with them,” he said. “Google needs to do what they need to do.”

Google Fiber Going To War With Other Wireless Carriers?

About Jordanna

From San Diego, California. "Good news is rare these days, and every glittering ounce of it should be cherished and hoarded and worshiped and fondled like a priceless diamond." -Hunter S. Thompson