Google Fiber Threat to Cable Is ‘Like Ebola,’ Analyst SaysScott Moritz and Gerry Smith
Google Inc.’s foray into high-speed Internet and TV-service has signed up an “incredibly small” number of customers and isn’t a threat to cable and satellite investors, according to MoffettNathanson analyst Craig Moffett.
Google Fiber, which started in 2012, has 27,000 video subscribers combined in Kansas City, Kansas, and Kansas City, Missouri, and less than 3,000 in the other cities, according to U.S. Copyright Office data collected by MoffettNathanson. The service originated in Kansas City and expanded to Provo, Utah, and later Palo Alto, California.
“Google Fiber is a bit like Ebola: very scary and something to be taken seriously... but the numbers are very small, it gets more press attention than it deserves, and it ultimately doesn’t pose much of a risk (here in the U.S. at least),” Moffett said in a note Thursday.
Kelly Mason, a spokeswoman for Mountain View, California-based Google, declined to comment.
The fiber-optic-based service was started by Google as a showcase for high-speed Internet service and advanced video features to help spur competition: Rivals including Comcast Corp. and Time Warner Cable Inc. responded with faster Web speeds. Last year, AT&T started a competing service called GigaPower, in select cities.
Video subscribers for Google Fiber in Kansas City have more than doubled in the past year, Moffett said.
Time Warner Cable, which is awaiting approval to be acquired by Comcast, had 193,208 video subscribers in Kansas City at the end of last year’s second quarter, according to data compiled from the Copyright Office by Moffett.
Nationally, AT&T Inc. has 5.9 million TV customers throughout the U.S. and plans to add 22 million with the acquisition of DirecTV. Verizon Communications Inc. has 5.6 million TV subscribers throughout the U.S.
While Google Fiber’s actual impact, attaining an 11 percent share of the Kansas City pay-TV market, has been small, the political gains have been meaningful, Moffett said. Google has played a big role in the Net Neutrality debate in part because of its investment in faster network access, he said.
Google charges $70 a month for 1-gigabit Internet service, which is about 100 times faster than 10-megabit speeds, and $120 for a TV and Internet package. For a one-time installation charge of $300 customers can sign on for seven years of slower speeds at no additional charge.
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