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Google Fiber might really just be a ploy… to lower your cable TV bill

Published Jun 12th, 2013 2:05PM EDT
Google Fiber Analysis Cable TV

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.

Zach Epstein
Zach Epstein Executive Editor

Zach Epstein has been the Executive Editor at BGR for more than 10 years. He manages BGR’s editorial team and ensures that best practices are adhered to. He also oversees the Ecommerce team and directs the daily flow of all content.

Zach first joined BGR in 2007 as a Staff Writer covering business, technology, and entertainment. His work has been quoted by countless top news organizations, and he was recently named one of the world's top 10 “power mobile influencers” by Forbes. Prior to BGR, Zach worked as an executive in marketing and business development with two private telcos.