Google Fiber Was Doomed From the Start

["Dave Farber" <farber () gmail com>]

Almost 12 years ago I attended a tall where analysis was done of the proposed Verizon fiber Instalations. The analysis 
presented show that in order to make money in a community with a competitive carrier Verizon would have had to capture 
70% of the business.

That just wasn't feasible and so, I think, when Verizon woke up with massive fiber plans were shrunk . Google not 
having learned their lessons trip down the same path. If one wants competition one has to deal with the economics of 
established competition when you go into a market.

Dave

Begin forwarded message:

> From: Dewayne Hendricks <dewayne () warpspeed com>
> Date: March 15, 2017 at 10:56:32 AM EDT
> To: Multiple recipients of Dewayne-Net <dewayne-net () warpspeed com>
> Subject: [Dewayne-Net] Google Fiber Was Doomed From the Start
> Reply-To: dewayne-net () warpspeed com
>
> Google Fiber Was Doomed From the Start
> The internet access answer won’t come from private markets, but rather from policies that make for competitive 
> networks.
> By Susan Crawford
> Mar 14 2017
> <https://backchannel.com/google-fiber-was-doomed-from-the-start-a5cdfacdd7f2>
>
> Just a handful of newsflashes have come home to me in such a way that I never forgot where I was when I heard them. 
> Most were disasters, like the Challenger explosion or the attacks of September 11. In February 2010, I was sitting in 
> my office in Ann Arbor when another event made the list — but this one surprised and delighted me. I cheered. Google 
> had announced its fiber experiment, a plan to wire at least 50,000 homes with fast, bountiful connections. Finally, 
> someone was going to try to unstick the monopolistic, stagnant, second-rate market for high-capacity internet access 
> in the US.
>
> Last month, there was a shakeup at Alphabet’s Access division (the new name for what was originally called Google 
> Fiber). It named a new CEO, Greg McCray, and news outlets reported that hundreds of Access employees were being 
> shifted to other parts of the Google empire. The former CEO, Craig Barratt, had already announcedlast year that 
> Access would “pause” plans to launch fiber networks in several cities. Taken together, these news reports all seem to 
> signal that Google is dumping the idea of fiber and moving decisively into wireless access solutions.
>
> The bumpersticker from defenders of the status quo is that this means the Google Fiber experiment was a disaster. 
> That’s simply not the case.
>
> What this set of events does usefully and colorfully signal is that we need an entirely different approach to the 
> country’s desperate need for world-class data transmission.
>
> We do need fiber, everywhere. But we’re talking about basic infrastructure when we talk about fiber. And it is not in 
> any private company’s short-term interest to make that basic fiber infrastructure — which amounts to a substantial 
> upgrade to the last-century copper and cable lines with which Americans are now stuck — available to everyone at a 
> reasonable price.
>
> Google’s retreat is all about the bottom line. It wanted an unrealistic rate of return on basic infrastructure. It 
> wanted to see rapid cost declines per subscriber, like the Moore’s Law changes in productivity that have taken place 
> when digital technologists squeeze costs from other legacy businesses.
>
> But although the cost of fiber — the glass itself — has fallen through the floor, and the gear needed to deliver 
> signals over fiber has gotten cheaper over time, 80 percent or more of the cost of installing fiber is labor. The 
> high upfront cost of getting all that labor to rip up the streets and hang wires on poles can’t be paid back in just 
> a few years. The cost of that labor isn’t going down right now.
>
> Basic physical infrastructure is like that. It requires long-term vision and patient capital — think horizons of 10 
> years or more, rather than two or three. In return, investments in basic infrastructure will pay steady, reliable 
> returns until the sun explodes. And the spillovers from those investments in terms of economic growth and social 
> justice for everyone in a community are routinely extraordinary. Think subway systems, railways, and telephone 
> networks: Fiber optic internet access for everyone, and for every other form of infrastructure, is the most important 
> recent addition to that list of physical networks.
>
> As Google’s comfort with longterm returns waxed and waned, it labeled its fiber project an “experiment” (2010), then 
> a “business” (2012), and finally a “bet” or “moonshot” (2015). Now it’s hoping to avoid many of those labor costs by 
> experimenting with what can be done using its Webpass wireless access unit, rather than solely installing cables 
> itself.
>
> [snip]
>
> Dewayne-Net RSS Feed: <http://dewaynenet.wordpress.com/feed/>



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