Analyst: Google Could Spend $11Bil on Fiber and Still Not Matter

Internet biggie poised to roll gigabit broadband into Austin

Google is ready to unfurl its fiber flag in Austin, Tex., as the second market after Kansas City to get ultrafast Internet and next-gen TV — but even if it spends billions to expand across the U.S., the initiative is unlikely to shake up the broadband landscape, according to a Wall Street analyst.

Company will host an event Tuesday morning in downtown Austin to announce a plan to bring Google Fiber to the city, according to multiple sources.

Google’s strategy is to drive much higher-speed broadband connections and determine whether it can turn a profit as an Internet and TV challenger to cable and phone companies. In Kansas City, Google Fiber offers 1-gigabit-per-second Internet and nearly 200 HD TV channels for $120 monthly.

It isn’t clear how big Google’s appetite for fiber will prove to be. But it would have to spend $11 billion on capital expenditure alone to string fiber to 20 million U.S. homes. That hefty investment would cover just 15% of the country and still have “limited impact on the global broadband access industry beyond these 20 million homes,” Sanford Bernstein senior analyst Carlos Kirjner wrote in a research note.

“We remain skeptical that Google will find a scalable and economically feasible model to extend its buildout to a large portion of the U.S., as costs would be substantial, regulatory and competitive barriers material,” Kirjner said.

Popular on Variety

In both Kansas City and Austin, Time Warner Cable and AT&T are the primary cable and telco providers, respectively. The cable operator has said its Google Fiber exposure in KC is limited to 100,000 video and broadband subs.

Austin, the Texas state capital, has about 820,000 residents; Google would bring fiber to just a portion of the population. The city, nicknamed the Live Music Capital of the World, is home to the South by Southwest (SXSW) fest.

In the Kansas City metro area, Google will spend $84 million to pass approximately 149,000 households in the first phase of construction, Kirjner estimated, and even more to turn on service for individual subs. Austin’s population density appears to be far greater than Kansas City’s, which could cut the cost per home passed, he said.

Meanwhile, Google lists several job positions for its fiber team in Mountain View, Calif., based at its HQ.

But that doesn’t mean Silicon Valley is on deck for gigabit Internet.  The centralized Google Fiber group there is supporting the rollouts in Kansas City and elsewhere, according to a company source. Google currently provides free Wi-Fi throughout its host city via an agreement with the Mountain View City Council.

More Digital

  • Apple-Coronavirus

    Apple Warns of Sales Shortfall for March Quarter, Blaming Coronavirus Outbreak

    Apple said the spread of the coronavirus in China has disrupted iPhone manufacturing and driven down sales in the country. As a result, the tech giant said it now expects to undershoot the revenue guidance it previously provided, of between $63.0 billion and $67.0 billion its fiscal 2020 second quarter (which ends March 28). “Work [...]

  • Jeff Bezos

    Jeff Bezos Forms $10 Billion Fund to Fight Climate Change

    Multi-billionaire Jeff Bezos, the world’s wealthiest person, announced a $10 billion fund to invest in projects that will combat the alarming trend of climate change. The Amazon founder and CEO announced the formation of the Bezos Earth Fund in an Instagram post Monday (Feb. 17).⁣⁣⁣ According to Bezos, the fund will begin issuing grants this [...]

  • Jake Paul

    YouTuber Jake Paul Launches Entrepreneur How-To Platform, Financial Freedom Movement

    YouTuber Jake Paul wants you to be financially free, for $19.99 a month.  At a rally on Saturday, the content creator — along with influencer friends and around 50 teenage and tween-age fans, some chaperoned by parents — launched the Financial Freedom Movement (FFM) in partnership with GenZ Holdings Inc., a Los Angeles-based brand development [...]

  • HQ Trivia

    HQ Trivia Live Game App Shuts Down

    After a two and a half years, HQ Trivia — the live game-show app that gave away cash prizes to winners — is shutting down. HQ Trivia’s move to shut its doors was first reported by CNN. The company is laying off its 25 full-time staffers, according to the report. In a tweet Friday, CEO [...]

  • Golden Mics - The Podcast Academy

    The Oscars of Podcasting? First 'Golden Mics' Awards to Debut in 2021

    The burgeoning podcast biz is looking for its own version of the Oscars, Emmys and Grammys. On Friday, a group of podcast publishers and producers including Spotify, NPR, PRX, Sony Music Entertainment and Wondery announced the formation of the Podcast Academy, a membership-based organization dedicated to promoting the medium. As part of its charter, the [...]

More From Our Brands

Access exclusive content