One of the toughest things about this business is that when a major industry announcement or event occurs, the instinct is often to provide a quick (and perhaps not completely crystallized) opinion. Surrounding Google’s announcement last week, many in the analyst community did just that. I have to confess that, I too got swept into the hype, but forced myself to “sleep on it” before putting pen to paper (or fingers to keyboard). 

The results of my holiday weekend cogitations…

Deep Breaths Everyone, Deep Breaths

For all of the hype and hysteria surrounding what Google’s announcement means for service providers, the Telecom industry and the angle of the earth on its rotational axis, it is perhaps helpful to step back for a moment and consider a few points:

What does Google want out of this?

What is the scope and scale?

What are the potential repercussions?

Google’s Dream of Being a Service Provider?

I will go out on a limb, and say that I don’t believe Google has any intention of being a broadband service provider.It’s interesting to consider this implausible scenario, however, and my industry colleague Dan O’Shea at Fierce Telecom has given among the best arguments for it. Still, it comes down to return on investment. The money is simply not there for Google.

With apologies to Lady Gaga, Google is not out there to change the world “one sequin at a time.” It’s a for-profit enterprise, with an obligation to maximize shareholder value. How does it do that? Tiny Ads. Not in network building.

As we have been saying for years, in the metrics that matter, US Broadband is woefully inadequate. The US lags in household penetration, speed, and affordability. Google has a vested interest in ensuring that the last mile “tap” its customers use to access the Internet is optimized. And it would prefer not to have to do it alone.

So no, I don’t think Google has any ambitions of becoming the next great service provider. Rather, it hopes to optimize the platform it depends on to run its business.

The thin end of the wedge?

Google announced that its “experiment” will begin by offering “competitively priced” service to “between 50,000 and 500,000 Americans,” with individual municipalities competing for the honor. At the high end, this represents less than one half of one percent of total US households.

To be sure, there are those who ask “Isn’t this just the beginning though? Isn’t this just the camel’s nose in the tent?” Probably not.

Why?

Because municipal broadband is still a dog of an idea

My colleague Tom Elliott, in a prescient piece in 2008, Sic Transit Gloria Muni: The Sad State of US Municipal Broadband spelled out problems Muni was having 2 years ago: namely: lack of demand and “harsh economics.” These factors haven’t radically changed.

Remember Google’s failed attempt at Muni, teamed up with Earthlink back in 2007?

Hype for the picking

What to make of all of this? Certainly,  there are many heralding the move as a watershed industry event and a “complete game changer.” While I think it is certainly a notable announcement, I am perhaps a bit more circumspect.

What is likely to come of all of this?

Pressure on Telcos

Google’s move might just provide the swift kick in the pants that US broadband needs to become competitive. While the definition of “broadband” might be a moving target, one thing is clear—what we have today in the US falls way short of where we need to be.  

The Elusive Killer App

A fair question—and the topic of much debate around the water cooler here at Strategy Analytics—is: what exactly one does with 1 Gbps to the home. Though we have made plausible use cases for 1 Gbps scenarios in the 10 year horizon, it’s a difficult case to make today.

Part of the Google plan calls for the open development of high bandwidth applications “We want to see what developers and users can do with ultra high-speeds, whether it’s creating new bandwidth-intensive “killer apps” and services, or other uses we can’t yet imagine,” says the release.

 The more we play together, the happier we’ll be…

One mustn’t overlook the obvious political overtones of Google’s move either. As a key proponent of Net Neutrality/Open Networks, Google can capitalize on this move to prod along the glacial speed of change in Washington.

The ever-animated Gigi Sohn, president and co-founder of public interest group Public Knowledge sees it as a win for consumers as well:

“This project is the kind of forward thinking and investment from the private sector that could jump-start Internet technology while helping our economy and giving consumers the experience of a true next-generation network.”

Household Bandwidth Forecasting: Plausible Case for a 1 Gbps pipe to the home by 2020?