Google Executive Chairman Eric Schmidt in an earlier appearance at the World Economic Forum. Photo: World Economic Forum
Kansas City is just the first stop for Google’s ultra-fast Google Fiber broadband network, Google Executive Chairman Eric Schmidt said today.
Speaking at The New York Times‘ Dealbook Conference on Wednesday, Schmidt corrected himself after initially referring to the first, and thus far only, Google Fiber network as an experiment.
“It’s actually not an experiment; we’re actually running it as a business,” Schmidt said. He described the influx of bandwidth hungry startups to the parts of Kansas City where the fiber has been laid and hinted at expansion of the service to “hopefully more cities.”
Sadly, Schmidt dodged the all-important question of where. “We’re trying to decide now,” he said.
There will be no lack of places dying to get the service, especially after Netflix just designated Google Fiber the “most consistently fast ISP in America.” The average speed in November of Netflix streaming over Google Fiber was 2.55 megabits per second. Second place was Verizon’s own fiber network at 2.19 megabits per second.
Still, just calling Google Fiber a business doesn’t mean it will be a viable one.
A recent report from Goldman Sachs highlighted by Business Insiderestimated that bringing the service to 50 million homes, or less than half of all U.S. homes, could cost as much as $70 billion. In its most recent quarter, Google had about $45 billion in cash on hand. In other words, Google would need to borrow money to embark on a massive fiber build out.
Is that really the business Google wants to be in? Not likely, at least not at that expense and scale. Google’s bread-and-butter is still its online advertising business, and its nascent content business. But if it turns out Google Fiber helps Google sell more (and more valuable) ads and content, that gives Schmidt’s comments a bit more weight. Google can justify funding a modest expansion of Google Fiber. Will it blanket the nation? Probably not. But just ask those happy Kansas City web heads; there’s always the chance your neighborhood could get lucky.
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