Google Inc. picked tech-savvy Austin on Tuesday as the next city where the search giant will wire homes with ultra-fast internet connections, but did not say how much customers will pay or when the fiber-optic experiment might expand elsewhere in the U.S.
Austin and Kansas City are the only places to get Google Fiber – a broadband service 100 times faster than the competition and an alternative to cable or satellite providers.
The rollout is an expensive undertaking and gamble for Google, which must first build costly new broadband pipelines that can handle “gigabit” speeds. Google hopes the rollout will drive innovation and pressure phone and cable companies to improve its networks, since Google benefits when people spend more time online.
Google expects Austin homes to begin receiving Google Fiber in mid-2014.
“Equipping them with a gigabit network will allow them to build new kinds of applications and services that will help write the next chapter in the story of the internet,” said Milo Medin, Google’s vice president of Access Services who heads up Google Fiber.
What Austin residents will pay is not yet known. Medlin said the prices will likely be “roughly” similar to what Google charges in Kansas City, where customers pay $70 a month for a gigabit connection.
Google says more than 1,100 cities applied starting in 2010, and some used gimmicks or elaborate videos in hopes of outshining the competition. Topeka even informally renamed itself to “Google, Kansas.”
Kansas City wound up prevailing, and Google began signing up residents there last year. By the end of 2013, Google expects that 180 neighborhoods that were selected for service based on demand will be completed.
The $70 fee in Kansas City is more than what cable or phone companies charge for basic internet service, but the service is much faster. “Gigabit” speeds, or 1,000 megabits per second, are generally unavailable from other companies. One exception is the city-owned electric utility in Chattanooga, Tenn., which has pulled its own fiber and sells gigabit service for $350 per month.
However, it’s expensive to pull optical fiber compared with using existing phone and cable lines to provide internet service. Verizon Communications Inc. is the only major U.S. telecommunications company to have connected homes directly to fiber. Wall Street analysts have estimated that that project, which has cost $23 billion, is not paying off.
Kansas City residents can sign up with Google for a slower, standard internet connection at no monthly fee for a one-time cost of $300. Medlin said Austin homeowners will also be offered free standard broadband.
Google made the announcement in a sleek and trendy downtown warehouse building, where a giant video board greeted guests with “Hello, Austin. Goodbye, loading bars.”
Gigabit customers are unlikely to notice substantial difference with basic activities, such as web surfing or email. Higher speeds are most desirable for uploading, creating online backups and playing video that doesn’t buffer – what Google calls “instantaneous internet.”
Google has not revealed how much the company is spending to build gigabit networks. A report this week from analysts at Bernstein Research put the cost at $84 million for Google to pass through 149,000 homes in Kansas City.
The authors of that report were skeptical that Google Fiber made financial sense to be expanded to a large portion of the U.S.
“In the end the effort would have limited impact on the global trajectory of the business,” the Bernstein report concluded.