[samelawrence]

Also worth noting that Google isn't doing this because:

1) They want to be an ISP

2) They feel bad for America and want us to enjoy faster internet.

They're doing it because they have plans for products which necessitate nationwide high speed internet. I don't know what those plans are... maybe making YouTube the everything-video-delivery-system, maybe massively collaborative work tools as they expand Google Docs et al... maybe something we haven't even heard about... but they've got something coming that they require Fiber for.

This is a business plan.

[bsder]

> This is a business plan.

It is, but not because they have a plan beyond it, though.

Cox/Time-Warner/etc. basically shook down Google for money a couple of years ago. Google backed down and the last-mile ISPs thought they won.

Google, of course, was extremely unhappy to painfully discover that there was insufficient competition if the ISP's decided to play dirty and block their ads. So, Google now looks at the ISP's as a pure, existential threat that they must neutralize.

So, even if the ISP's upgrade or get really cheap, Google doesn't care. This is about making sure that no company ever has the ability to cut off Google's flow of ads to the consumer ever again.

Google will roll out fiber even if it's somewhat unprofitable just to slowly squeeze the ISP's into obeisance.

[aquadrop]

If that's the case, it would be more effective to settle on something cheaper, let's say program '100mbit/s to every home' and cover larger area faster. I also think that it has something to do with making major ISPs less aggressive, but there's probably something else, why Google needs 1 Gb/s

[mahyarm]

I think as far as last mile costs goes, 100mbit or 1gbit, it isn't much different in price. It's running the wire in the first place.

And 1gbit is impressive like gmail was. It blows everyone out of the water because their competitors stagnated.

[hkmurakami]

Think about this in terms of a startup vs incumbent problem. The newcomer often needs to be 10x better than the incumbent in order to change the customer's habits.

Fiber is just that.

[mkr-hn]

I learned a new word today.

[daniel-cussen]

Yeah me too.

obeisance: noun: deferential respect.

[Jgrubb]

He, me three. I thought they mistyped obedience.

[jksmith]

Apparently you guys haven't heard enough church sermons in your lives.

[mjgoins]

Or maybe didn't read any Poe.

[bsder]

Glad to provide a valuable public service. :)

[diminoten]

But it is profitable, isn't it? Google keeps telling everyone that they're not going into the fiber business to lose money.

I think what's more important is that they're willing to spend money on fiber that they could spend elsewhere to get better returns. Returns on being an ISP probably aren't as good as returns on other kinds of infrastructure, at least up front.

[sushirain]

Vertical integration is a powerful business strategy.

[rayiner]

> Google will roll out fiber even if it's somewhat unprofitable just to slowly squeeze the ISP's into obeisance.

Anti-competitive conduct is good when Google does it?

[bsder]

No, but I'm also being generous in my engineering estimates to put Google in the least-flattering light. And the ISP's started this fight by blackmailing Google--don't bring a knife to a gunfight springs to mind.

Google won't take too much of a loss, if any. Once a fiber network is in place, it's almost maintenance-free for several years. In addition, Google built all their hardware from scratch to minimize cost.

Finally, you may find that Google Fiber turns the network over to the locality for anything too unprofitable. That's a win-win--the locality runs the network (and gains the profit of cable TV, etc.) and Google breaks the monopoly of the last mile.

[enjo]

Seems like the opposite of anti-competitive from my perspective.

[rayiner]

Dumping a product on the market at below-cost in order to force your competitors out of business is classic anti-competitive conduct.

[Gimpei]

Not really... Anticompetitive would be if: 1) The entrenched players were selling at "zero profit" or price equal to marginal cost. (I find this dubious, they are monopolies after all. internet services are a fraction of the US price in many European countries) 2) Google were doing this with the intention of raising prices once all of its competitors go out of business. Since they are behemoths in their own rights, I just don't see Google having the desire to push a price war to this point.

In general "dumping" is hard to establish since no one is going to reveal their cost structure. In my experience it is normally an accusation flung by incumbents because that other guys stuff is too cheap.

If it breaks the back of the ISP monopolies and forces them into the role of unprofitable utility, all the better. That's the whole point of market forces, right?

[snowwrestler]

Google could not force major ISPs out of business even if they wanted to. They just don't have enough money. Verizon and Comcast combined have more than 3x Google's revenue.

And if Google Fiber is indeed a loss leader, then each successive deployment will be more difficult to finance. And they've only deployed a few small communities.

But that's not Google's goal. Their goal is just to make sure that consumers have a broadband alternative in the markets where they currently do not. That's much more modest, and to me it seems competitive rather than anti-competitive. I certainly hope they come to my town, where Comcast is the only option if I want more than 5 Mbps.

[hristov]

They aren't dumping it below cost. I believe the post above was incorrect on that. Google management have said that they profit from fiber.

[bitwarrior]

It's called having a loss leader, and there are hundreds of products/companies that do it. You commonly purchase products sold as a loss leader. Hell, steaks at most restaurants are sold at a loss with the hopes you'll order a drink.

In this hypothetical situation, Google uses its internet access as a loss leader to sell hypothetical services which require high speed broadband. Traditional ISPs will use internet access as a loss leader to other services, such as phone and television.

[ericd]

Downvotes seem unwarranted, this is the definition of "predatory pricing", which is just a company using the profits from one business to undercut in another with the intent of forcing competitors out of business.

Though I don't know that it really applies here - they're unlikely to drive TWC-Comcast out of business by pricing low in just a few areas. It's more of a concern when it's a large monopolistic company doing it to regional competitors to maintain their monopoly.

[Dylan16807]

But those companies do the same thing to competition. If all sides are below-cost then it goes back to being fair competition, and it weakens monopoly power.

[kar2014]

Okay that is anti-competitive, than what shall we call dumping a useless service onto consumers that they have to overpay for? Also these ISP's keep their competitors at bay, so consumers do not have a choice but to pay them high fees for useless service.

[danielweber]

If you sell at a way where you can make a profit, it's not predatory pricing.

[nickik]

Thats the kind of idiotic arguments that were put forth during the early progressivist movment. It used to be that anti-competitive meant actually doing something bad, the progressiv transformed it to 'companys who might do something bad in the future'.

How about we use common sence and let competition work its way until we actually OBSERVE bad effects instead of condemming a company because they might do something bad at some point in the future. Is this not one of the major advances that was made law in the last 200 years?

Most of the historical example of these laws in practice are so absured that you can only laught about them. Companys not allowed to unite because they would togheter have 8% of a market.

This law, since it has been on the books has served as block for competition WAY more often then it has helped. I encourage everybody to look at this history of this law and not JUST the 2-3 partial success story that seam to be the only once that are ever talked about.

[javert]

You are right but it's deeper than that. "Anti-competitive" is not even a valid concept.

Companies are supposed to do everything they can to beat their competition. That is simply called "being competitive."

It's kind of like the word "progressive" as in "the Progressive movement." It's a linguistic deception that started out as a kind of dishonest propoganda.

[mabbo]

And you know what? I'm fine with that. If Google wants to go and improve my internet experience as a part of some master plan where they do make a boatload of money, I'm perfectly happy to go along with that plan.

[cheald]

It's almost like mutually-beneficial exchange is the backbone of our economy or something!

[blueskin_]

Steal even more of your personal data, I'm sure.