The whole reason Google is developing Fiber? They want everyone in the US to have a fat pipe so they can deliver services / advertising over it. They cherry-picked a few markets where overbuilding is potentially profitable and post stories about it all over Google News. That puts pressure on ISPs to deliver a better product, because honestly customers didn't see a need for gigabit pipes before. They still don't really, but Google tells them they need it so people think they do.
Google will never expand Fiber to the entire country, and I'd be surprised if they don't sell the infrastructure to another company in 5-10 years once they've achieved their goals. If the ISPs are providing better service, customers can upload more personal / sensor data to the cloud for Google to mine, and Google can cram more ad-laden services down the pipes. It's a win/win for them.
This whole endeavor is about Google flexing its muscles as a media power player to ensure their content/ads aren't held for ransom by any ISPs. Any company can try to build a national fiber network; but it takes Google (and their army of media contacts thanks to Google News) to talk this much about what amounts to a minuscule infrastructure investment (~$150 million over 5 years - or about what Comcast spends on infrastructure in a week).
Always a good idea to weigh financials heavily when analyzing a company's strategy. After all, that's what the C-suite and investors are doing. Granted, they have more info than us, the public, but sources of revenue are an important part of the framework for sure.
Perhaps it makes more sense that Google is investing in high-cost infrastructure because they want to move away from the ad-model business. It's risky to have 95% of your revenue coming from a single industry.
Google can eat a lot of the costs of setting up a better network, which is a great investment in the future if you're betting that a majority of people will need high speed internet access 10-20 years from now. Then they can start extracting monopoly profits just as AT&T, Verizon, Comcast etc. do now.
Except that it's a terrible idea. Why would you take billions you make from doing work at a 30-40% margin and blow it buying a business that returns 5-10% margin at scale -- but only after 5-10 years of cash flow negative investment? Wouldn't a better idea be to invest in businesses that could potentially return 20% and are closer to your core skills as a business?
Google has many skills, but last-mile delivery networks aren't one of them. Not that they can't be, but it's just not that profitable of a business to waste their time on. The business itself is just a math problem balancing quality of service with investment -- and not a particularly difficult one.
Fortunately, that's not their play here: Google has invested far too little money in Fiber to be truly serious about it as a business. Fiber is just their way of generating consumer demand for higher speed pipes by saying "hey, look at this! this is how it should be!" They did the same thing on Android with the Nexus phones, so it's not even a new tactic for them.
> Google can eat a lot of the costs of setting up a better network, which is a great investment in the future if you're betting that a majority of people will need high speed internet access 10-20 years from now.
The problem is that you can't just build the network and be done with it. It costs a lot of money to maintain and provide service (approx. 10% of the original cost of the network per year), and that's money that Google will want to spend on other, more profitable things. Hell, if they want to get into infrastructure, the smart play would be free wireless Internet for the developing world (i.e. what Facebook is doing).
But again, Google hasn't spent anywhere near the amount of money on Fiber that they would need to in order to make it a commercially successful business. Because that's not the point: they're using cities like Kansas City and Austin to showroom their vision of what the Internet should be.
