11 billion dollars! It will be a Google build fiber-optic network input costs

Beijing time on April 9, according to foreign media reports, Google (weibo) and the United States Austin municipal government will be in the us local time on April 9, a joint conference, announced that Google is expected to Fiber optic Fiber (Google) super-fast broadband service will expand to the city.

at the press conference on the eve of Bernstein Research (Bernstein Research) published a report, investigate Google Kansas city project cost and the development prospect of optical fiber and estimate Google cost of laying optical networks across the country. Kansas city is currently the only Google services fiber has the pilot cities.

the company warned in the report, Google laid the possibility of fiber optic service nationwide moot: Google need to cost $11 billion to the gigabit Internet and television services extended to 20 million households. Only at this scale, Google didn’t have enough chips and other competitive telecommunications suppliers.

last year, Google disclosed for the first time the Kansas city Google fiber project, the details of the analyst Ryan (Ryan) is pointed out that Google project is starting from scratch, difficulty is big, the first thing to build better infrastructure, and then link to homes. Bernstein research carlos? KeJiNa (Carlos Kirjner) and ram? Para mei watts lang (Ram Parameswaran) estimates that Google would cost $84 million to make Google fiber covering 149000 households (but not yet access networks) – this is only Google fiber pilot project of the first cost of Kansas city. Initial investment of about $38 million to Kansas city, $46 million to Kansas city, Missouri, household access Google fiber costs $674 and $500 respectively. (note: the Kansas city across the state of Missouri and Kansas, so both states set on one side at the state border a city name).

laid infrastructure is one thing, the family link is another. Google fiber provides three different packages, speed and different payment plans, one of the lowest package is 7 years of free service (users only need to pay the $300 installation).

Bernstein research estimates that only use broadband link of Google users will spend $464 per household, and at the same time the use of broadband and pay-tv services Google users will spend $794 per household. Bernstein research said: “in order to reduce Labour costs, Google will implement mass access services in each community. Before the subscription, it requires the customer to express their needs, facilitate the deployment of the network.” In the first time, a total of 12000 households in the first day to access Google fiber, equivalent to 8% penetration rate. At the same time, the first group of users access to additional cost Google $10 million, the Kansas city pilot project total cost up to $94 million, for each of the Kansas city, Kansas and Missouri costs $42 million and $52 million.

after the launch, new customers to bring revenue to offset the cost of network expansion. Bernstein research, points out that on the basis of the penetration rate of 8%, “the first year to increase the penetration rate to 18% pure investment of $2 million – the expansion of the network cost is $15 million, the new user revenues of $13 million”. It is estimated that each at the same time, use of broadband and pay TV service users can bring us $64/month for Google’s revenue, and only use broadband users only $47/month.

KeJiNa and para mei lang, points out that the Kansas city network expands to 300000 households, the cost will more than double to $170 million. By contrast, is about to become a pilot city of Austin expansion costs or smaller. While expanding the network and the underground facility will be multiplied, but because the population density is larger than a Kansas city of Austin, so the average cost of access may be smaller.

however, Bernstein research on Google nationwide expansion of optical fiber are more skeptical.

“whether Google can be found in terms of scale and economic a feasible model, in order to scope to expand its network in the United States? We are sceptical. Extension is very huge, the cost of regulation and barriers to competition is also a problem. Eventually, Google fiber can only bring limited role in promoting its global business.”

by comparing with the existing suppliers (comcast, time warner cable and Charter services cover 53 million, 30 million and 12 million respectively), Google Bernstein research calculated to achieve 20 million families cover the cost. This is equivalent to the Google location for service coverage for 15% of large and medium-sized network and TV service providers.

according to KeJiNa and para mei lang estimates, if Google to optical fiber network coverage in five years to 20 million households (not access networks), its capital expenditure to $11 billion. Why Google will mount the costly projects? Bernstein research, said: “20 million home users for the effects of the global broadband industry co., LTD. It is estimated that Verizon (Verizon) before stop FiOS expansion project, households in the fiber optic network access to the cost up to $4000.”

again, Google on the Kansas city pilot project is with a dual purpose. Test yourself one is whether can be based on infrastructure service providers; Second, test new applications and services, and accumulate more consumer behavior data.

Bernstein research explicitly questioned Google fiber of the first purpose, but for the second motive. Google the fiber optic network could be extended to the other service providers, and provide more opportunities for Google advertising business and more channels.

please keep in mind that Google’s long-term goal across multiple “screen”. With Android, Google took the many users of mobile phone screen, and Chrome and cloud services also help Google took control of the computer screen. Today, Google is trying to reach out to the user home television screen, but the road ahead is a long way to go.

maybe, Google has never intends to spend $11 billion to expand their network. However, it is one part of money is used.

source: tencent technology