Google’s announcement that it will build out open-access FTTH networks in the USA has generated significant interest, and introduces a new potential business model for fibre roll-out. The Google initiative will support 1Gbit/s symmetrical service for anywhere from 50 000 to 500 000 users. The project raises the hopes of US communities that are looking to circumvent the incumbents’ stranglehold on access networks and to see what economic and social benefits they may be able to derive from the introduction of super high-speed broadband services.
Google has not yet announced – and may not yet have determined – the details of the business model for rolling out the networks and providing the service, but has stated that it intends to offer open access to the networks. It has invited applications and consultations from public sector leaders at the municipal and state level, as well as from interested community members. Providing retail service to consumers is not among Google’s core strengths, and the company has not specified whether it would look to offer retail broadband services itself, or simply to serve as a wholesale provider of high-speed bandwidth.
While there is undoubtedly an element of publicity-seeking in Google’s decision to pursue the initiative, we believe it has two primary goals: to gain a clearer view on how access to very high-speed broadband will shape user behaviour, and to increase the pressure on US network owners to open up their own networks (see our press release for further details). Google is unlikely to use this as a platform to becoming a large-scale network operator. Its previous access network efforts have remained small in scale, despite initial fanfare (for example, its the municipal Wi-Fi network in Mountain View, CA).
Google is unusual in having the financial means to undertake a fibre network roll-out without necessarily needing to meet the 3–4 year ROI timeframes that private sector investors in such networks would normally impose. It may seek joint investment from communities, which could be funded via the USD7.8 billion set aside for broadband development in the American Recovery and Reinvestment Act of 2009. Alternatively (or in addition), it may insist that communities provide access to publicly owned infrastructure (such as ducts) to ensure that its partners provide a clear contribution.
The Google initiative offers a new twist on the growing trend for public–private partnerships to fund NGA roll-outs. A recent study undertaken by Analysys Mason for the FTTH Council Europe found that the private sector is participating in an increasing number of FTTH network build-and-operate partnerships. Most roll-outs initially require a significant amount of public funding or subsidisation, although the network operating company may ultimately become self-funding (for example, wilhelm.tel in Germany). The need to develop services that actually make use of the newly available bandwidth continues to be a challenge for even the most successful initiatives. This is not surprising given that such projects are led by supply rather than demand at present.
Google’s project is unlikely to set a broader trend for private investment-led FTTH roll-outs by non-network operators. It helps the company to promote its net-neutrality agenda, and echoes Google's efforts to drive openness in the mobile market during the US 700MHz spectrum auction several years ago. Google is unusually positioned: its objectives and primary business model mean that it shares the public sector’s goal of increasing broadband service availability and take-up, and ensuring competitiveness in the market. These factors help to create the conditions required for continued growth in Google's core business. With regard to FTTH investment models, the most important outcome of the initiative may be to provide an early indication of the types of service that users might find attractive if they are given access to reasonably priced, super-high-speed broadband. Such knowledge could ultimately enable other FTTH deployment efforts to pay for themselves more quickly.