Showing posts with label Kansas City. Show all posts
Showing posts with label Kansas City. Show all posts

Friday, November 4, 2011

Google Looking at Triple Play Services

Google, reports the Wall Street Journal, is looking to add video entertainment services, and possibly voice, for customers of its 1-Gbps fiber to home network in Kansas City, Mo., and Kansas City, Kan. The moves would be logical. 


Many observers have wondered how such a network, delivering only 1-Gbps Internet access service, at prices "comparable" to existing services provided by telcos and cable companies, could possibly generate enough revenue even to break even.

As it turns out, Google has no magic rabbit to pull out of its hat. The costs of its network are not dissimilar from the costs any other service provider would incur. And few service providers would contemplate building a fiber-to-home network with a single revenue stream, namely Internet access.

Of course, Google could have chosen to operate as a "wholesale only" provider of bandwidth to other service providers. It could still do so. But the few U.S. examples of access network providers who attempt to operate "wholesale only" have not proven highly viable, most would probably conclude.

The only way to approach break-even apparently is to operate the network the way all other such networks are operated, namely providing retail triple-play services to consumers.

Nobody expects Google to become a "service provider" with its own facilities, on a wider scale. But that isn't the point. To some small extent, Google might become a distributor of voice and video services, not just a broadband access provider. But once it secures distribution rights, there are other possibilities.

So far, it seems unlikely Google would get licensing rights that will immediately save consumers money. In fact, any video rights will likely include the normal clauses that require Google to pay as much as other video distributors. But if Google were to focus its services only on "over the top" delivery, it might still have a clear price advantage, compared to other service providers who must build and operate access facilities, of course.

Google might also find it only can get content rights if it agrees to bundle channels in the typical way cable, satellite and telco TV providers do, which would limit the amount of innovation Google could attempt. Also, until Google got serious volume, the prices it pays for content rights will not allow significant retail price discounts.

But any move by Google into the triple-play services market would be a bit of a shock, even if nobody thinks Google wants to become a traditional service provider. The broader issue is that if Google can get what essentially amounts to "streaming rights" to most of the standard TV channels, it would have a bit of room to challenge not only the telco, satellite and cable providers, but over time might gain some leverage to package those channels differently.

In the near term, we should anticipate little change, as the content providers will act in ways to protect the existing distribution model. Longer term, if Google should get traction, matters will change.

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