Because Google will be so much better? Look, I hate telcos just like the next guy, but the suckage is mostly due to the nature of the business. They form natural monopolies and that sort of thing doesn't lead to customer satisfaction. The only way that sector is going to get truly disrupted is through gigabit wireless internet. You can have multiple competitors in one space with comparatively limited infrastructure investment on their part.
That free tier? That is outright illegal and its sole purpose is to eradicate all competition. It' a good thing for Google that sort of thing isn't really enforced anymore. They'll still get sued though. Look up price bashing.
Once Google is the only player in town, you still think they'll shit lilacs and spread rainbows and unicorns? That's just not how monopolies work.
"That free tier? That is outright illegal and its sole purpose is to eradicate all competition."
No - the purpose is to increase people willing to pay for installations in a given neighborhood so they can go ahead and roll out service to more people.
It's kind of ridiculous to talk about "natural monopolies" when often it is a government-mandated monopoly via cable franchise agreements.
It's also ridiculous to talk about predatory pricing when historically all major telecom infrastructure has been government subsidized.
The major ISPs are all capable of competing in this market (Comcast and Time Warner Cable both have had profits growing at rates many times higher than that of revenues this year. AT&T has as well, but I couldn't find a split for just their ISP numbers), and disruption is exactly what will help them start doing so.
Those franchise agreements aren't a something-for-nothing type of arrangement.
In exchange for a franchise, a telco has to guarantee coverage to a certain area and give up other things called "proffers." That usually includes things like public access channels and money/bandwidth for schools/libraries.
In Northern Virginia, Cox Cable has to provide FREE public access INTERNET which includes colocation of a server.
Consider also that building a network isn't cheap and franchise agreements are a way for a city to get a service that wouldn't otherwise arrive without some guarantee of a market.
"That free tier? That is outright illegal and its sole purpose is to eradicate all competition."
Why don't we sue Google for providing free WiFi in Mountain View? And Google Fiber isn't free - its $300 to cover the equipment costs. I'm pretty that 12 months of basic DSL for less than $300 anyway, installation included. Some neighbors will "freely" share their internet, should incumbent cable co sue them aswell for unfair competition?
What is to stop a cable co "recycling" old equipment to provide basic freemium internet to people who don't want to pay more for premimum plans.
The unfairness of having all that equipment already owned and built out... somebody stop them... oh wait what is Google doing?
Yeah, I wouldn't consider $300 up front "free". It's an amortized price, similar to XM Radio's $400 lifetime subscription fee. Frankly, I'd like to see more amortized pricing like this.
I'm cynical about this kind of pricing. Once you've paid up, in the companies' books you're in the minus column until the end of time. Incentives are no longer aligned. Combine this with the way that telcos treat regular paying customers ... I wouldn't like to put myself in that position, even with a company that tries to be aggressively benevolent.
Just about every single person who uses the internet in any way is in Google's positive column. They might not be a positive for the Fiber division alone, but given where the vast majority of Google's income comes from, Fiber will have a lot of pressure to keep customers happy.
Google provides free WiFi in Mountain View? I didn't know that. I worked at multiple buildings on Salado Dr. and a year at Marine Wy. I get no signal if I park across the street.
It's funny, because in my (shitty) country, we have a "communications industry regulator" that basically does only this: sue people who give free internet.
Well I get 30Mbps for less than 40€/month, so I can't complain I guess...
Canadian telcos seem to be universally worse than their US brethren, as they appear to be aided and abetted by a corrupt CRTC (Canadian FCC). Witness the CRTCs approval of bandwidth caps in order to delay/prevent users from moving to internet-only plans and using Netflix for their entertainment. [http://www.huffingtonpost.ca/2011/11/15/crtc-ubb-ruling_n_10...]
I'm fortunate to be using a Teksavvy connection with no caps. However, they're still running on Videotron's equipment, meaning I'm still paying Videotron-like prices for cable internet. Teksavvy's Ontario rates appear to be cheaper for exactly the same speed tier.
Overall, the CRTC is less interested in competition, and much more interested in serving the interest of the established telcos (Rogers, Bell, etc). They seem especially afraid of foreign competition; witness what happened initially with Wind Mobile's efforts to break into the market.
Another vote here for Teksavvy. They would be better if unhindered by the CRTC and other telcos, but I'd rather give my money to them than to the telcos both out of principle and because the service is better.
You know, I've never had trouble with Google customer support. I've contacted them twice: once for a Google Maps issue and again because I couldn't access my account. No problems for me. I find these kinds of complaints strange. Most of the time I hear this complaint the person doing the complaining hadn't ever even tried to contact Google; they just read that it was a problem somewhere. Oh, I will admit they don't make finding the contact information easy but with the number of users barely able to order a happy meal without calling 911 when their fries aren't right who would want to make it easy?
Plain and simple: Google makes money if people use the internet. Anything that increases the number of times someone views a website makes google money.
It's like a billboard company offering to add free windows to your house so you watch their ads from your living room.
I agree with the motivation of your post. Monopolies are bad and customers have a vested interest in preventing google (or anyone else) from having monopolistic control of consumer internet. Unfortunately this is already true in many parts of the United States (Comcast is the only game in town where I live). At least in the short term Google entering this market should reduce monopolies not create them.
I'm pretty sure it's not illegal to pay up front for service. Note that the "free" tier is either $25/month or $300 up-front. I never heard anyone accuse e.g. TIVO's lifetime service of being illegal, or any other such pricing scheme.
> Once Google is the only player in town, you still think they'll shit lilacs and spread rainbows and unicorns?
Actually, yes, because unlike most telcos, this isn't Google's core business. The only reason it exists is to drive people towards their core business. They have a wider, longer-term view of their business goals.
> You can have multiple competitors in one space with comparatively limited infrastructure investment on their part.
Spectrum and tower licensing is off the hook, and it's unlikely that more than a handful of companies will have the business acumen, capital, and regulatory skill to build up a network of significance. Any 'gigabit wireless' scheme will likely look the same it does today: a handful of key players with reciprocal data roaming agreements, and a few MVNOs which piggyback off the big guys. Wireless infrastructure is so expensive that carriers don't even have full coverage: they share. You're not always on 'Verizon's network,' sometimes you're on Sprint's network shared to Verizon. For CDMA, these are sent to the phone via PRL lists[1].
The MVNO scheme happens in DSL where it is called a CLEC[2], where the local telco is required by law[3] to allow other companies to lease its lines. This is how companies like Sonic.net exist. If I understand correctly, the same forced-lease agreement is not in place with cable, which is why people are talking about a 'cable monopoly' here. There is no such thing as Sonic.net for cable, and DSL is physically limited to about 20down/1up. Thus, there is no competitive high-bandwidth pipe to the home until fiber comes into play. Note that DOCSIS3 can easily push 300Mbps down 100Mbps up[4]. You already have this capability if you have cable, it's simply not turned on. If you were a cable company, why would you?
"In the UK, broadband provider Virgin Media announced on 20 April 2011 an intention to start trials with download speeds of 1.5 Gbit/s and upload of 150 Mbit/s based on DOCSIS3.0.[4]" <---- this is with literally the same kind of coax and modem in your home right now.
I'm getting 60+ Mbps down and 20 up on my DSL line. With vectoring it could go to 120 down. It is VDSL not ADSL, but still over copper pair - significantly more than 20 down.
I thought with more vectoring your latency continues to jump?
Who is your provider? I don't recall anyone advertising that kind of speed on a real ADSL or VDSL line. You must be sitting on top of the local DSL drop either way to get that kind of transmission speeds.
All I know is that I tried U-Verse (which is a VDSL product) and they couldn't consistently even keep me at 19.2, from which TV has to come out of that as well. I'm not even that far from the "central office" drop either.
"Any 'gigabit wireless' scheme will likely look the same it does today: a handful of key players with reciprocal data roaming agreements, and a few MVNOs which piggyback off the big guys. Wireless infrastructure is so expensive that carriers don't even have full coverage: ... "
Ubiquiti, among other vendors, now sells various flavors of cheap ($50-$100US) 802.11n and now 802.11ac radios that purport 100Mbit/s of actual throughput. I use slightly older versions of these radios outdoors, and can verify 40Mbit/s throughput on point-to-point links spanning a mile or so.
Furthermore, Ubiquiti has also just rolled out 20GHz unlicensed radios with expected 700Mbit/s throughput on p2p links, costing $3k per link, a price which will likely go down as time passes.
The wireless hardware does not have to use a licensed band.
You're making a few assumptions there that I wasn't making. Just because it's wireless, I don't have any expectations of using it outside of my home.
I could technically run my own ISP in my apartment building by hooking up a router to a cable connection and charging a minimal fee for access. In fact, I'm sure quite a few people are already doing that. It would just be a problem if the cable company found out and terminated the account. If I were to get a business level connection that doesn't have those sorts of restrictions, there would be very little to stop me from running my own ISP. Well, except the government and the local corruption racket.
The free tier? That's $300 up front. I expect some of that $300 defrays their ongoing marginal costs. See also sibling comments by eavc and EthanHeilman.
Free Internet
$0/mo
$300 construction fee
(one time or $25/mo for 12 mo)
40% the cost is hardly nothing, and it's quite possible Google has arranged for lower costs. Also, the fiber stays even after the current owners leave, so Google might just want ubiquity and be willing to take a small hit to get it.
FTTH install cost is entirely dependent on the territory.
Overhead vs underground, apartment buildings vs. single family homes, number of directional bores (to get under streets), miles of sidewalk torn up to lay cable, etc. etc.
It's expensive and how expensive all depends on the neighborhood.
Consider this: you can't do $700 to just one home. That's the AVERAGE cost once you've decided to do a neighborhood. You sometimes need to do those homes 1000 at a time. SO: network build >= $700K minimum.
Which Google makes in... about ten minutes (according to 2011 revenue of ~$38B). That's a rounding error if I've ever seen one, never mind the future revenue it will bring them: some customers will be a straight $300, the rest will be $70-120/m recurring on the fiber service alone, plus the added use of their services bringing in advertising dollars, etc.
Heh. Well you've obviously got it all figured out.
Just keep this in mind: running a telecom network that requires lots of field personnel isn't something that GOOG has a proven capability in. For their money, their BEST bet would have been to BUY a cable company for the network. They get all of the customers in one fell swoop along with a network that can be upgraded to FTTH or low-split HFC.
One city doesn't a telecom company make. I would be VERY surprised if the monthly ad revenue pulled in by a broadband subscriber will cover the lifetime customer acquisition cost.
Exactly why is it outright illegal? I guess Google can make a fair argument that the added exposure to google ads will pay for the running costs of the connection.
Wow. I couldn't find anything either. Then again, I first learned about it in an economics book in the 90s ... and I think that book was from the 70s.
Price bashing is when a competitor lowers prices to the point where they are losing money on the transaction. The desired effect is to destroy the competition and once the competition is eliminated, to raise prices to an artificially high level as a monopolist.
There is little empirical support that predatory pricing happens. The criticism section of the Wikipedia article makes some strong arguments in this vein. The support section contains 3 "citation needed"'s.
Because Google will be so much better? Look, I hate telcos just like the next guy, but the suckage is mostly due to the nature of the business. They form natural monopolies and that sort of thing doesn't lead to customer satisfaction. The only way that sector is going to get truly disrupted is through gigabit wireless internet. You can have multiple competitors in one space with comparatively limited infrastructure investment on their part.
That free tier? That is outright illegal and its sole purpose is to eradicate all competition. It' a good thing for Google that sort of thing isn't really enforced anymore. They'll still get sued though. Look up price bashing.
Once Google is the only player in town, you still think they'll shit lilacs and spread rainbows and unicorns? That's just not how monopolies work.