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.
