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Gigabit Internet Service Providers Challenge Traditional ISPs

By J.d. Sartain, CIO
February 18, 2014 01:06 PM ET

CIO - Last fall, the New America Foundation's Open Technology Institute published a study examining high-speed Internet prices around the world. Compared to its international neighbors, the bulk of the United States pays higher prices for slower services than the majority of the planet.

Internet access itself is only part of that cost. Comcast and AT&T, for example, charge monthly fees for modems, routers and additional wiring (along with cable boxes, remotes and recording equipment for cable customers), which almost doubles the advertised monthly cost. Internet service providers can do that because, apart from a handful of spots in America, the competition is severely limited, if not nonexistent.

That could change, experts say - and Google's high-speed, low cost, gigabit Internet service deserves the credit.

Google Fiber By the Numbers: Better, Faster, Cheaper

Google Fiber costs $70 per month, or $120 per month for an Internet/TV bundle, with installation fees up to $30 installation. Google says it's 100 times faster than the average cable Internet connection. Compared to what other services list on their websites, Google Fiber is 22 times faster than AT&T's best offering, 10 times faster than Comcast's and 3.3 times faster than Verizon's top choice - and it costs 24 times less than AT&T, 15 times less than Comcast and 10 times less than Verizon.

Google Fiber is even cheaper than ISPs' slowest connection options. Comcast's slowest plan, at 6 Mbps, costs $8.33 per megabit, while AT&T's comparable package is $7.67 per megabit! Google's gigabit plan is 167 times faster but cost only $.07 per megabit.

[ Analysis: Google to Big ISPs: Fiber is Good for You ]

What's more, Comcast Executive Vice President David L. Cohen has argued that Americans don't need high speed Internet because they can't handle it. (Time Warner agrees.) According to Cohen, even if Comcast could deliver gigabit service like Google Fiber's 1 Gbps), most customers couldn't access those speeds because of insufficient equipment. (He neglected to mention that Google provides its high-speed compatible equipment to all customers at no additional costs, along with a free Nexus 7 tablet, unlike the additional monthly fees Comcast charges for its equipment.)

Forrester communications and networking analyst Dan Bieler says Google Fiber increases Google's leverage in negotiations with carriers regarding connectivity provisioning. Clearly, the carriers and cable providers want to retain a major role in the connectivity provisioning. If Google builds its own networks to the home and business users, carriers risk losing customers to Google.

"Google Fiber has forced the competition to take a closer look at the need to roll out 'real' broadband at a reasonable price," Bieler says. This will happen in areas with "high purchasing power and a high business density, but it's less likely in rural areas, where fiber investments aren't always as easy to justify. "Competition for fiber will increase," Bieler says, "but not everywhere."

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