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Google Fiber Is Changing Its Strategy as Costs Grow (fortune.com)
Google is taking a strategy timeout on its high-speed-internet business. According to WSJ, the Google Fiber unit is -- including Los Angeles, Chicago, and Dallas -- after its initial rollouts proved time-consuming and expensive than anticipated -- is rethinking how to deliver internet connections in about a dozen metro areas (could be paywalled; alternate source). From a Fortune report: Turns out it is very expensive to run wires -- or in Google's case, fiber optic cables -- to each and every house that wants service. Known as the "last mile" problem, the high costs, in turn, make it difficult for companies to earn a solid rate of return on the installation investment. Google's effort, through its unit called Fiber that launched in 2010, is now seeking alternative means to connect to consumers homes or finding other people to pay the cost. Google has sought deals with municipalities and power companies to pay for the connections and is also exploring less expensive wireless technology. Meanwhile, Google has suspended efforts to add new cities such as San Jose, Calif., and Portland, Ore., using its prior strategy of stringing up cables to each customerâ(TM)s home.
I already have Fiber and Broadband to my house but oh wait, Google can't use those because my local politicians gave certain franchise rights to companies who made the investment in digging up the street. In my case at least it isn't a last mile problem, it's a blocked mile problem.
Harrison's Postulate - "For every action there is an equal and opposite criticism"
"Turns out it is very expensive to run wires -- or in Google's case, fiber optic cables -- to each and every house that wants service. "
Holy cow...did nobody at Google see what happens with similar utilities? Or did they just assume the old rules didn't apply to them since it was "on the Internet"? I thought the 1999 "we'll make it up in volume" rules were already thrown out. I highly doubt Economics 101 courses at Stanford leave out the discussion of natural monopolies.
The only thing I can possibly think that they were thinking is that the value of the data they were able to mine by being plugged _directly_ into your Internet usage habits would be way bigger than the cost to run fiber to thousands of houses.
Why do you think Verizon et al is now trying desperately to get out of the wireline business? They're a public utility and can't raise rates whenever they feel like it, unlike their wireless business. At the same time, you have real physical stuff deployed in the ground that needs to be maintained. It's the same over at the electric company, or worse, the water authority. I can't imagine how much it costs to maintain 100+ year old pipes and clean up after water main failures.
No planning of any kind of coordinated/mandated ditch/tunnel to each home.
Sorry but that kind of micromanagement would be a cure worse than the disease and places incredible restrictions on property design.
It's not that expensive to dig in your own house. It's expensive to outsource the problem to over paid contractors. When we broke our telephone line in the house the local telecom company wanted $12000 to run a new line (we live in an easement so our house to the street was 80m). We made a concession, if I dig a trench to the mandated 600mm depth and lay a piece of conduit for them then the repaired phone line only cost $200.
It took 2min to do a services lookup to ensure I wouldn't hit anything. The cost of hiring a trench digger was $140 for half a day. It took 2 hours to learn how to use it and dig the trench. Another 1.5hours or so for cleaning of the machine and pickup / return to the local hire shop. The conduit cost $60 for the extra heavy duty stuff.
How the heck a $200 expense + 4 hours labour turns into $11800 to this day I will never figure out, but man I need to get into the contracting business.
Roads, electricity, water, gas, telephone: All of these things could only be built with significant involvement/investment/regulation from the government. It should be blatantly obvious that no amount of "free market" magic by itself is going to get fiber infrastructure built to every home in the country which currently already has the aforementioned infrastructures; most of which are much more expensive to build out than fiber lines. This is what I find most aggravating about the whole broadband mess. I'm imagining an alternate history where Eisenhower was never able to build the Interstate highway system because a bunch of powerful monopolies already had a bunch of bumpy dirt roads with exorbitant toll booths.
In June, Google announced that it would acquire Webpass, an urban ISP that delivers ethernet drops rather than requiring cable or DSL modems. WebPass has fiber connections throughout its various cities ("San Francisco, Oakland, Emeryville, Berkeley, San Diego, Miami, Miami Beach, Coral Gables, Chicago, and Boston") and connects the last mile with a wireless connection to the customer's rooftop using point-to-point radios.
This is mentioned in TFA as well:
Webpass already offers 100+mbps (up and down!) for $46/mo ($550/y or $60/mo) at the residential level, and I'm under the impression the speed is actually bottlenecked by the ethernet switching and cabling within each participating building rather than the wireless signal; they support up to 1Gbps using this model.
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