Google is on a mission to bring high-speed data service to American homes at the lowest possible cost to the consumer. Why? Logic dictates that faster data means more Internet usage, and more Internet usage means more Google services (and ads). The real explanation might not be that simple, however, and Citigroup analyst Jason Bazinet has a theory: Google Fiber is actually a ploy to drive down the cost of cable TV service.
During the National Cable Television Association’s Cable Show in Washington, D.C. on Monday, Bazinet theorized that the rising cost of cable TV has the potential to harm Google’s core businesses, Forbes’ Jeff Bercovici wrote. Pricier cable TV plans force households to opt for slower internet plans that are less expensive, and some ISPs are even considering usage-based internet plans.
Google Fiber is the answer — but not for the reason you think.
We already know how expensive Google’s Fiber rollout is, and we know it’s probably not coming to your town anytime soon. So how is Fiber going to help, exactly? According to Bazinet, it’s all about forcing rival companies like Time Warner Cable and Comcast to compete.
“All [Google] has to do is introduce it to a few selected markets and then watch how the cable operators in those markets respond,” Bercovici wrote. “If they drop their prices to compete with the ultrafast, ultracheap Fiber, they’ll have to do the same in other markets or else face uncomfortable questions from regulators about why they charge more in cities where they face less competition.”
It’s an interesting theory indeed, and it could be a bold play by Google.
