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20-year-old Google, and its "most successful" failure

Date:2018-09-28
Google is 20 years old!
 
In the past 20 years, Google has created countless or successful or aborted products. The failure of this "Google Fiber" program may be its "successful" "big failure".
 
In 2010, Google announced plans to deploy a fiber-based home Internet service that delivers connection speeds of up to gigabits per second. This is 100 times faster than the average speed at the time.
 
The plan, named Google Fiber, entered the market smoothly, which proved to be a business case for ultra-high-speed Internet at the time.
 
The $60 billion broadband industry seems to be swallowing up by Google.
 
However, after deploying to six metropolitan areas within six years, company management announced at the end of 2016 that it would “suspend” future deployment plans indefinitely.
 
According to the theory of “subversion of the big bang”, when the market is ready for innovation, the business model behind innovation will take off quickly.
 
In addition, the emergence of Google Fiber has also broken the long-standing monopoly thinking. City leaders realize that improper construction management can lead suppliers to transfer investment. Network service providers (ISPs) have also found that city leaders must take more steps to improve the economics of upgrades and new deployments.
 
As a result, network service providers and city leaders have followed the example of Google and established public-private partnerships such as Research Triangle’s North Carolina Next Generation Network. Such a partnership, for their goals, both sides will far outweigh the input.
 
Competition and investment philosophy
 
The trial of Google Fiber has enabled companies and investors to re-examine the competitive landscape of the static infrastructure construction industry. New entrants occupying the adjacent market gradually deployed their network services according to the city, and fierce competition caused investment boom, which also triggered new competition among enterprises.
 
As the creators of the National Broadband Plan hope, the enthusiasm for the Gigabit Internet test platform has broken the deadlock in infrastructure investment, making fiber deployment ahead of the past two years and spurring existing investment. About $7 billion to $10 billion in additional capital investment.
 
The introduction of Google Fiber has also changed the mindset of Wall Street investors. Investors seem to be no longer willing to over-invest. For example, Verizon, which invests more in the FiOS network than the market, and companies that are trying to compete with cable networks by upgrading their lower-cost copper-based networks have all failed. Similarly, the continued upgrade of cable network technology that has already surpassed DSL in performance and market share has also failed.
 
On the other hand, investors accepted Google's entry into the ISP market. The major cities and citizens unexpectedly welcomed the emergence of Gigabit Internet, and investors subsequently allowed companies to respond to new opportunities and challenges brought about by Google Fiber.
 
At the same time, as Google enters the broadband market, long-standing problems with the slow, expensive deployment of the federal government, states, and local regulations have been exposed. For the benefit of all shareholders, this uneconomical and wasteful process was reformed, and then suppliers improved the efficiency of their capital investments. Thanks to this, not only consumers have enjoyed new services, urban industry has revitalized, but news reports have also shown a positive outlook.
 
Now, the US and other economies are even trying to deploy the next generation of 5G mobile network technology, but the key to success is whether they can learn from the failure of Google Fiber.
 
What does 5G mobile network mean?
 
 
 
5G means faster speeds and newer applications that make mobile broadband more competitive than fiber. The deployment plan will also be carried out in accordance with the new urban route pioneered by Google Fiber. This seems to imply that local governments need to reconsider their construction supervision methods, including licensing, zoning, franchising, tower site selection and fees.
 
It turns out that this is true. The right to lease, the pole rent and other recurring charges, which have long been used as a source of funds for the prevention of deficits by the municipal government, now seem to require a fierce negotiation with the supplier to determine the number. In Boston, Sacramento and other cities with early 5G investments, local governments have found suppliers to be very willing to trade, but if the official asks for too many concessions, they will refuse to trade.
 
The authorities found that, like Google Fiber, they had to offer competitive prices, otherwise it would be possible to postpone private investment in the new network, which is an important source of local development and competitiveness. In fact, the official government is also learning how to achieve long-term goals and maximize short-term costs.
Only a focus on establishing a comprehensive public-private partnership between network operators and investors will be successful.
 
For a project, this is a considerable legacy, although on paper it looks like a failed experiment. This is another very different example of rules that apply to more and more industries that are being digitally changed.
 
Google Fiber may be seen as an early market trial for Gigabit Internet access. From this point of view, Google's six-year fiber project is a complete failure.
 
But when it comes to a broader perspective, it is Google's "most successful" failure.
 
It has spurred existing companies to accelerate their investment in infrastructure, as well as new applications and new industries, including virtual reality and the Internet of Things, demonstrating the viability of the Gigabit service strategy.
 
The loss of Google Fiber provides valuable lessons for future network changes, especially the global competition for the next generation of 5G mobile networks being deployed.
 
What is the history of Google’s “most successful” failure? Let the digestive bacteria come together for you.
 
In 2009, Congress was responsible for developing the National Broadband Plan (NBP) to the Federal Communications Commission. The program sets a challenging goal for expanding high-speed broadband services throughout the United States and continues to move on almost exclusively relying on private investment.
 
The overall goal: to ensure that at least 100 million Americans will be able to achieve broadband speeds of 100 Mbps by 2020.
 
It turns out that suppliers have surpassed this milestone as early as 2016. But in 2009, no leading operator planned a major upgrade to its existing physical plant.
 
This is different from the past decade, when technological advances and competing technologies meant continuous upgrades, from early cable-based dial-up broadband, to DSL services over analog telephone networks, to early fiber-based deployments (especially Verizon). The last major upgrade to FiOS) and cable broadband is called DOCSIS 3.0.
 
However, by 2009, Verizon has reduced its plans for more fiber, and DSL technology is lagging behind cable improvements. The main market is moving to two parts of the market – the high-end service market for cable broadband and the low-end service market for DSL.
 
The broadband market is experiencing a typical “prisoner's dilemma”. Whether cable broadband or DSL providers do not feel the competitive threat from the other side and need a lot of new investment, they believe that they are relatively peaceful in their own market segments. The continued expansion of broadband capacity is on the verge of stagnation.
 
Google triggered a "Gigabit War"
 
 
In response to the NBP team's request, Google recommends building a fiber-based gigabit test platform to demonstrate the competitive and economic importance of new applications.
 
For these new applications (including virtual reality, smart grids, autonomous vehicles, advanced telemedicine, e-government and distance education, etc.), support without next-generation infrastructure will not be possible.
 
The company did not wait for an incumbent supplier or government-funded experiment, but announced that it would establish a small number of experimental Gigabit networks. To everyone’s surprise, the eagerness of these cities to apply for testing led Google to feel overwhelmed by the fact that they received 1,100 proposals instead of the expected 10 to 50 proposals.
 
These cities have seen the great value of their community as one of the testing platforms. They also understand that what Google is looking for is not tax cuts or other financial incentives, but the speed of implementation, especially the commitment of participating in the community, requiring minimal delays in expansion – and helping to reduce construction costs. In short, what Google wants is a partner, not an opponent.
 
The final selected city provides administrative efficiency – a single main contract, the city's only point of contact, which simplifies the licensing process for installing equipment on city-owned property and allows for the excavation of urban streets.
 
These costs—in dollars, time, and political conflict—have proven to be major obstacles to network deployment. Google knows that its testing will not lead to entrepreneurship and competitiveness if it cannot be deployed quickly.
 
Google has been keeping a close eye on whether its true goal is to become a nationwide broadband provider, or simply to stimulate existing providers and other new entrants to invest in next-generation networks.
 
Obviously, Google's own interest in fiber optics stems from the belief that faster speeds will eventually bring more revenue and services to a wider range of Alphabet companies, making investments seem reasonable in the absence of profit. Becoming a competitive Internet service provider is just a second wish.
 
So Google is starting to announce its position, and existing broadband service providers, including AT&T, CenturyLink, Comcast and Time Warner, are responding quickly to Google’s plans by committing to higher prices, faster speeds, network upgrades or some combination of the three. . A "Gigabit War" has broken out.
 
In the end, Google announced plans to build in 34 cities to dominate the game. Existing broadband providers initially thought the plan was a propaganda gimmick, but as Google announced its subsequent expansion, they accelerated their deployment and redefined their priorities.
 
With the launch of the “Gigabit War”, the city government was forced to provide the same management policy advantages as other companies and Google Fiber. This directly led to lower construction costs and faster deployment. According to the Fiber Broadband Association, only Google issued an announcement. In the next six months, 30% of urban residents used Gigabit Internet services.
 
 
 
Although Google has suspended its future deployment plans, the changes it brings to broadband services are permanent. On the one hand, telecommunications companies have re-started fiber investment, or accelerated the pace of their own fiber investment. On the other hand, AT&T, CenturyLink and Frontier are also following the pace, starting to use more advanced DSL with fiber-optic copper hybrid technology, and have launched a new "fiber to the home" service.
 
In addition, cable companies have upgraded their technology once again, accelerating the deployment of gigabit-standard networks, and applying new technologies such as low-orbit satellites and “fixed wireless technologies” for remote and rural areas.
 
This dual market of high-speed cable and low-speed DSL broadband has made it possible for free Internet access for all, and it has forced companies and new entrants to adopt more disruptive strategies. The result may be an increase in competition between suppliers, between cities, and between regions eager to adopt disruptive private investments.
 
But we believe that the most important impact of Google Fiber is changing the nature of the relationship between infrastructure suppliers and local authorities.
 
Between the 1980s and the 1990s, although the government deregulated the network on a large scale, integrating it with technology on an Internet-based standard, the local government continued to regard network supply as a government-like public utility, still using old prosperity. The procedures to regulate their construction work and public power.

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