Originally published on Pandodaily on April 22, 2013
Google is dropping so many futuristic products that industry pundits like Jason Calacanis (and many others) are breathlessly declaring that “Google wins everything” with all these fiber cities, self-driving cars, and Internet-enabled glasses initiatives rolling out lately.
Out of all these efforts, however, the Google Fiber initiative really is the killshot move. That’s because these new products will need a large amount of high-availability bandwidth to keep all those cars between the ditches and glasses cranking out real time data in mass. And being the interface to the Internet and digital entertainment in all these homes sure doesn’t hurt their data-driven advertising business model either.
If your company wants in on this future fiber world, there is a way you can participate right now without spending hundreds of millions of dollars like Google. That’s because there are already fully operational, business accessible fiber networks deployed in cities across the US that you can partner with to deliver a Google Fiber like product. These networks are run by locally-owned electric utilities who deployed Fiber to the Home (FTTH) to enable smart grid electric networks. Smart grids allow for real-time monitoring and control of power usage that save these municipalities millions of dollars a year. In addition to electricity management, these utilities also deploy internet access and TV entertainment through their fiber networks, but these services are not core to their business or success.
That’s where your opportunity to compete with Google Fiber lies. These FTTH networks have been financed by DOE grants and local bond measures, so you don’t have to make a crazy upfront investment of hundreds of millions of dollars to lay your own fiber and have access to a FTTH network.
These local municipalities are also obligated to make these networks available to competition for internet and entertainment services because they are publicly owned services and their first primary business model is delivering electricity. More important to the competition opportunity, they would love to have a technology partner come in and deliver a great digital experience to their customers. This strategy should resonate in the Valley: These companies built a platform and are looking for partners to help them create new revenue opportunities.
I know this, because the town I grew up in – Chattanooga, TN – is one of these cities with a FTTH network built by a local municipality (EPB). Watch this video that CBS News did a few months back on Chattanooga, TN to hear the whole backstory of why they built this fiber network three years ago and how it is already changing the culture and entrepreneurship in the area. [Disclosure, I’m a volunteer mentor to Chattanooga’s fiber accelerator called The Gig Tank, which we’ve written about on PandoDaily before.]
To be fair, I am biased on the untapped value in these small city FTTH networks because I’ve spent time in one. Through my experience with the GigTank, I’ve learned that there are other FTTH networks in operation in Jackson, TN, Lafayette, LA, Wilson, NC and several more in various stages of deployment and development across the country. In addition to these efforts, you also have companies like Gigabit Squared getting ready to light up dark fiber in bigger cities like Chicago and Seattle and bring it to the consumer’s home.
In short, the fiber future is in full swing and will be a sizable market for new, bandwidth intensive services and products in the very near future that will delight customers. Google’s latest fiber announcements have already sparked AT&T’s competitive juices and will more than likely push other MSO’s to revisit fiber deployments. That’s obvious as they are the most threatened by these FTTH networks.
But I think the smart grid energy benefits will push fiber deployment much faster into the market than the advertising and access driven companies can roll it out, because the benefits from energy management are realized immediately on the bottom line. As these smart grid efforts accelerate it will create an opportunity for companies with advertising, digital services, and ecommerce to come in and partner with these municipalities and compete with Google on fiber apps and services. Unless, of course, these companies ignore the opportunity and let Google get too far ahead.
To the Google-getting-too-far-ahead point, I believe Google is making this sizable investment in fiber, because it wants to own and operate the whole stack. Its management understands the competitive advantage of proprietary data better than any other company. With these Google Fiber deployments, it’s going to have tons of even deeper usage data on its customers than it already has through search, browser and mobile products.
For example, one of the really cool features of Google Fiber is that you get a Nexus 7 as a remote. My bet is that Google hopes it will become your “second screen” when watching TV so it can figure out what you’re doing when you’re looking at it and ignoring that commercial on television. So when you think that Google will get even further entrenched in customer data and powering your augmented reality and self-driving experiences, it really does look like it’s teed up for world domination.
Companies like Amazon, Apple, Microsoft, and even Netflix should jump at the opportunity to come in and immediately catch up with Google by partnering with these locally-owned municipalities or risk being marginalized by being too late to the market — especially those companies that are sitting on massive amounts of cash and taking a beating for not innovating or creating new growth opportunities.
It’s easy to understand why these companies would look at these small cities and their FTTH networks and think it’s too small to worry about right now. But that would be classic Innovator’s Dilemma thinking. The fact that these deployments are happening in smaller cities first is actually an opportunity. You can try all your crazy next generation fiber products without the scrutiny of grizzled tech media watching every experiment with the low overhead of life in a small city. That is until you get groups of fiber tourists like Kansas City did last week, who see the fiber future in these small cities.
All this said, maybe Calacanis is right about Google already winning this game. Google’s Provo, Utah fiber announcement last week feels like Google is already moving in this partner and deploy direction.
In short, Google is going to pay $18 million to upgrade the existing fiber infrastructure then distribute Google Fiber. It appears that even before it has fully completed the Kansas City area deployment, it realized the land grab was on. As a result it’s already pursuing these type of partnership deals.
So potential competitors shouldn’t sit idly by and watch the fiber revolution be driven solely by Google. They should get in there and do something big by thinking small (cities), and make their smaller fiber investment seem as smart as Google’s big one.