The tech world perks up any time Google states its intentions in a new field, and the reaction was no different when the company first launched Google Fiber in the U.S. back in 2010. There seemed to be some initial media optimism that the innovative tech giant could find a way around the typical implementation roadblocks – budget, regulations, infrastructure – traditional telcos are familiar with.
Fast forward seven years, and it seems even Google can’t dodge these roadblocks. In a blog last year, the company said it will scale back its fibre rollout plans, tabling proposals to deploy fibre in ten new cities but continuing to provide service to existing customers while finishing up other ongoing rollout projects. Most recently, tech pundits have speculated that Alphabet, Google’s parent company, might sell off the fibre division altogether.
Among operators, Google’s struggles won’t come as a surprise. Thinking back years ago, to the initial reactions toward Google’s entry into the market, I recall many telcos were neither panicked nor dismissive at news of a new competitor. On the contrary, many operators – while acknowledging that the disruptive company could figure it out – must have been quite happy to see Google join the party and see what life is like when you have to manage the pipe, not just pump your content through it.
That’s not to say that operators revelled in Google’s exist, nor that they looked at the Google story as an indictment on the company or on fibre’s potential as a whole. Instead, operators will, and should, keep charging forward on intelligent, considered fibre deployments. Indeed, fibre still offers a major opportunity for smaller regional U.S. telcos in particular to compete against their larger national counterparts. Here’s what Google may have learned from its rollout, and what tier-2 telcos can gain from it.
Different Provider, Same Challenges
A few different factors may have come into play for Google. First, there’s the unavoidable reality of the economics around fibre deployment. A nationwide fibre buildout is an ambitious and expensive endeavour, at least $1 billion per American city according to one estimate.
Alphabet is publicly traded, and its investors may have simply wanted to control spending on a portion of the company that’s outside the core Google service.
Google isn’t the first provider that needed to scale back its scope in the face of high costs. In Australia, nbn initially wanted to connect 100 million customers to fibre fairly quickly, but switched to a more gradual approach once the government chose to cap financing.
Google may have also learned that network providers have to deal with municipal quirks and competition when they step into new cities. In its Nashville project, Google needed to attach new wires to 44,000 utility poles owned by an incumbent service provider. The awkward working arrangement with a local competitor meant a slower (and costlier) rollout, and Google only managed to access 33 poles in nine months.
Finally, Google may simply have realised that there’s a wider landscape for high-speed access technologies that are more cost effective. They said as much in their own blog, writing that the gigabit speeds that were unheard of when Google Fiber launched are now much more commonplace. Gigabit wireless technology could be a more appealing option for the company, and Google Fiber did recently acquire WebPass, which offers bandwidth speeds up to 1 gigabit per second via rooftop antennas. T-Mobile has run tests of 5G wireless technology that showed speeds up to an eye-popping 12 gigabits per second. Perhaps by scaling back on fibre, Google can focus more on wireless.
How Regional Telcos Win in Fibre
What does Google Fiber’s pause mean for telcos?
Regional operators remain in a position of power when it comes to fibre deployment. To start with, these providers are already established in their market, already own infrastructure and should be more familiar with local regulatory nuances.
They also enjoy an established customer base that is likely already eager for faster internet. In terms of new business, regional telcos benefit from the fact that very few consumers today will stay loyal to a provider if they can get better service elsewhere. So, if a national provider in their market lacks fibre service, customers would be happy to switch to a regional alternative that offers it.
An additional advantage is offered for regional telcos that embrace the agility of virtualisation. Software-defined networks (SDN) and network functions virtualisation (NFV) will even the playing field between small or regional operators and their national competitors. Agile networks will be enable tier 2 and tier 3 telcos to move faster than a conglomerate. The speed advantage should still be on the regional telcos’ side even when national competitors adopt NFV, because those larger competitors are often inherently slower to react to market shifts.
From a service orchestration perspective, the New Zealand operator Chorus offers an important lesson for telcos who want to get a fibre service up and running quickly. Faced with providing service to all schools and hospitals, and 90 percent of all businesses in the country, Chorus didn’t overhaul its entire service ordering and delivery framework.
Instead, the company implemented an automated, intelligent modern fulfilment system based on an industry-collaborated framework. As a result, they reduced the time required to provision fibre services to customers’ homes by 40 percent, reduced the time needed to train staff on fibre technology and completed the entire project in just one year.
These are just a few of the considerations regionals telcos must keep in mind as they explore the possibilities in fibre. Google’s stumbles shouldn’t discourage operators; it should embolden them. Regional operators have the infrastructure, agility and local knowledge their larger competitors just can’t offer.