Rise of the GoogleNet: Page 2

How Silicon Valley is making the Internet faster and cheaper.
Posted December 18, 2013

Mike Elgan

(Page 2 of 2)

In the past, telecoms had to build capacity as a way to keep up with consumer demand, which they tried to limit (for example with Cohen’s op/ed piece). Don’t get me wrong -- in the past 15 years, the telecoms have invested massively. Suddenly, however, they have to compete with their own biggest customers.

It’s not easy. Companies like Google and Amazon are investing literally billions of dollars per quarter on infrastructure to speed up and lower the cost of Internet bandwidth.

And, of course, Google is shaming telecoms with its high-visibility Google Fiber projects, not only in the United States but now even in Africa.

It’s a battle not only over higher speeds, but also for the loyalty of customers.

For example, Austin, Texas, is one of the anointed cities selected by Google to get Google Fiber, which provides an incredible 1 Gbps upload and download speed for $70 per month.

AT&T already offers fast Internet in Austin -- a package called U-verse GigaPower offers 300 Mbps for $99 per month. Apparently in response to Google’s Fiber announcement, AT&T is increasing capacity there to match Google’s 1 Gbps by mid-2014.

Just as Google’s price may be subsidized by advertising -- Google’s main source of revenue -- AT&T will offer a discount of $30 to customers who agree to allow their web histories to be scanned by AT&T to provide contextual advertising.

AT&T is matching Google’s speed, price and monetization model.

The Austin example is the best one I know of where the aggressive investment in fast fiber by the Google’s of the world is not only increasing speeds and lowering costs directly, but forcing telecoms to step up and compete as AT&T is doing.

It’s not that Silicon Valley (and Seattle-area) giants like Google, Facebook, Microsoft and Amazon are “good” and that telecoms are “bad.” It’s just that the tech companies happen to make more money by investing in the very thing users want most: the fastest possible Internet speeds at the lowest possible price.

Photo courtesy of Shutterstock.

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Tags: Google, Web, Internet, Silicon Valley

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