Google Fiber Could Be Headed To Chicago, Los Angeles

9 Dec 2015 | Author: | No comments yet »

2 Huge U.S. Cities Added to Google Fiber Shortlist.

Bernstein analyst Carlos Kirjner this morning reiterates an Outperform rating on shares of Alphabet (GOOGL) after running through some analyses of potential scenarios for its “Google Fiber” broadband InternetJ service. Internet providers used to battle one another for access to a city, agreeing to a host of demands that often included assurances that the provider would serve the poorest neighborhoods.Just a day after AT&T announced that it’s bringing gigabit fiber internet to the L.A. metro area, Google has announced that it’s exploring L.A. and Chicago as the next possible locations for the expansion of its Fiber network.Google Fiber, Alphabet’s fast Internet service, said Tuesday it is planning to come to Los Angeles and Chicago, the second and third-largest U.S. cities by population, if they pass a long review. “While we can’t guarantee that we’ll be able to bring Fiber to Chicago and L.A., this is a big step for these cities and their leaders,” Jill Szuchmacher, director of Google Fiber’s expansion efforts, wrote in a blog. “Expansion planning for a project of this size is a huge undertaking.” There are now 20 cities where Google Fiber is providing service already, building its network or considering building, including Atlanta and Austin.Following successful rollouts in three markets — Kansas City; Austin; and Provo, Utah — Google is now getting ready to light up its super-fast Internet service in two of the biggest cities in the country: Chicago and Los Angeles.

Then came Google Fiber and its brand cachet, which turned the tables by asking city governments what they were willing to do to be chosen for the tech giant’s ultra-fast Internet. Both cities would be the biggest markets for Google Fiber to date, and a build-out of networking infrastructure across Los Angeles could potentially take years.

Los Angeles Mayor Eric Garcetti announced Tuesday that Google Fiber, a subsidiary of Google parent company Alphabet Inc., is in talks with the city, with the company’s engineers exploring in the next few months the feasibility of a network in Los Angeles. In contrast, our view has been that Google Fiber’s primary objective is to build an at-scale, profitable high speed access business in the United States.

The company will now attempt to collect detailed information about both regions so it can study factors, like infrastructure and topography, that may affect a fiber network buildout. Google Fiber offers consumers internet access with speeds of up to 1 Gigabit per second, which close to 70 times faster than speeds offered as part of Time Warner Cable’s current standard internet package. Los Angeles appears to be following that same path now that the city has been added to Google Fiber’s list of 17 new markets to which it’s working to expand. The goal is to give newer businesses more freedom to invest while making them more accountable for their financial performance. “Google Fiber looking at big cities is a sign of greater aggressiveness,” said Blair Levin, who led broadband Internet initiatives at the Federal Communications Commission for several years. “It is ultimately going to have to stand on its on two feet, without the support it previously required from Alphabet.

To do that, it needs a certain scale that requires a presence in a number of bigger cities.” The Fiber business is expensive because Google has to dig up roads to bury fiber-optic cable, or string it to utility poles, then hire marketers to woo customers. It has plans to expand to Atlanta, Charlotte, Nashville, Raleigh-Durham, Salt Lake City, and San Antonio and in September tapped three other cities — Louisville, San Diego, and Irvine, Calif. Google first started experimenting with providing internet access in Kansas City, Missouri in 2011, and has since expanded the service to 20 suburbs of that city as well as Austin, Texas, and Provo, Uta. The Eighth and Grand and Hanover Grand Avenue apartment complexes in downtown Los Angeles are the first to have access to the gigabit Internet speed service, while access is expected in areas in the rest of Los Angeles next year.

Correspondingly, it increases the chances that we will see Alphabet’s capex in the non-core businesses, or what the company has referred to as “Other Bets,” increase significantly. Jill Szuchmacher, Google Fiber’s director of expansion, said it was too early in the process to determine how and where the company hopes to roll out its service. Evercore ISI analysts estimated recently that Fiber is worth $305 million, versus a total value for the main Google search business of about $450 billion.

By announcing plans to build Internet service that is considerably faster than most existing services in the U.S., Google encourages other communications companies to upgrade their Internet services or lower prices. More from WSJ.D: And make sure to visit WSJ.D for all of our news, personal tech coverage, analysis and more, and add our XML feed to your favorite reader. Google Fiber noted that L.A.’s entertainment industry would stand to benefit first since people in that industry often have to transfer large media files.

Los Angeles recently closed a bid for companies to introduce gigabit Internet access, offering up to $1 billion in incentives, including expedited permitting, discounted real estate to house networking hardware and a guarantee to become a customer. The project revealed Monday uses the company’s existing infrastructure in L.A. and will benefit from expedited city permitting, said AT&T spokesperson Kate Ijams.

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