Newsletter
As a word, “Google” for many has become synonymous with “the Internet” or at the very least, “to conduct a search using the Internet.” When the Google.com site stopped working for five minutes in August 2013, worldwide Internet activity dropped by forty percent. Almost half of Internet users assumed that if Google was down, so too was the Internet. As a word and as a business, Google has moved from obscurity to a household name in under two decades. One of Google’s things is to try new ventures and move into new businesses: sometimes, these new business ventures work and sometimes they don’t. Google Fiber, Google’s ISP (internet services provider) is one example of a business that Google seemed to be dabbling in when launched. However, Google Fiber is still around – and better yet, it arguably has what it takes to disrupt and dislodge the two largest North American ISPs, Comcast and Time Warner.
Comcast and Time Warner are amongst the most hated businesses in North America today. Between them, the are the two largest ISPs and have a vice-like grip on the market. If they have the majority of customers, why are they hated so much? The reason for this is because the American fixed line broadband market – unfortunately as it is in many developed countries around the world – has high barriers to entry for competitors, which means the long-established providers can almost do whatever they want. Comcast and Time Warner do not directly compete against one another and so can charge whatever they want, with whatever level of customer service they can get away with, because customers feel they have no alternative but to keep on subscribing to their service. However, now that Google Fiber is on the scene, things could be able to change.
Comcast’s reputation within the industry is that they don’t like competition, which is why they have in the past tried to buy Time Warner. What better way to rule a market than buying the competition? This is probably not going to happen with Google, and the high barriers to entry and a difficult regulatory environment are almost certainly not going to concern Google. Google being the company with revenues of around $15 billion and one that routinely invites politicians to be quiet. Furthermore, Google’s business is not based around selling the Internet to customers, it’s business is around customer using its services to access the Internet and of learning about customer habits. This means it can afford to undercut the competition – this will not be a difficult task given Comcast and Time Warner’s high prices. Throw in a large number of customers who seemingly would be keen to drop their current ISP for a viable alternative and both Comcast and Time Warner should be concerned about Google Fiber.
It won’t be easy for Google: their record in direct customer services is not the best in the industry, which is something the company would need to think carefully about. Turning customers away from Google’s portfolio of products and services would be very bad news. However, if a business can disrupt the established North American broadband market, Alphabet’s Google has the deep pockets and a related, but different, business to fall back on.