1 Gig for $26, should sound a carrier alarm

1 Gigabyte per second for $26 a month sounds impossible, well it is being offered in Hong Kong by Hong Kong Broadband Network as a fiber to the home service. The Hong Kong market is competitive and it is has a high population density which makes it ideal for broadband economies of scale. Still, the Hong Kong Broadband network will suffer years of loses before it turns a profit. See New York Times article:

So what will it take to get these types of speeds at competitive pricing in the US? A third major competitor outside of telcos and cablecos that can take a loss and may have another benefit to offering these services. Enter Google. Google is starting off slow after its initial muni broadband deployment hype has not came to fruition. It is working with Sonic.net, an internet service provider, to offer 1 gigabyte service to a subdivision of Stanford University.

Implementation of these broadband speeds is also going to take municipal and legislative support due to the deep political entrenchment of the telcos and cablecos. Still, cities are looking for ways to draw in companies and create a high tech image, but may not want to spend the additional money in these tough economic times. Because of this most of the financial risk would fall on Google’s shoulders.

Yet, the threat to carriers is real. Not just for broadband but for landline phone service, and for TV and video services. Google has the basic customer interfaces to offer these services via Google Voice and Google TV. The incentive to take a financial hit on the deployment of 1 gigabyte fiber to the home maybe offset by the additional charge for phone and TV service. In addition, Google gets to know the customer in all parts of their lives on the PC, TV, mobile phone and landline phone. This leads to a highly targeted and segmented customer, and the platforms to sell to that customer. Google may stop faking at being a carrier and actually become a carrier.By Yankee GroupTuesday, March 8, 2011

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