Google Inc. announced an effort Wednesday to drum up new customers in neighborhoods where it earlier had said the chance to buy its Internet-and-TV service had passed.
By SCOTT CANON
The Kansas City Star
Google Fiber earlier had insisted that its now-or-never hookup offers were pivotal to its strategy to keep deployment costs down.
Instead, the broadband seller said Wednesday that households in Kansas City, Kan., and central Kansas City now have through Dec. 22 to arrange to buy service from Google Fiber. Those who agree to service contracts, the company said in a blog post, can expect connections in the spring.
That switch, analysts said, shows Google’s need to extract as much revenue from the Kansas City market as possible to recover the investment in a pricey network that stretches high-capacity fiber-optic lines directly to homes.
“It makes sense,” said Donna Jaegers, a telecommunications analyst for D.A. Davidson & Co. “If they’re building this, they might as well try to get as many people in while they can.”
Other industry watchers had similar reactions, some saying they’d long suspected that Google Fiber would find it difficult to turn away customers within the reach of its network simply for missing the company’s deadlines.
But the change of course challenges slightly the model Google Fiber had said was key to rolling out its service.
Google had said repeatedly it would build only in neighborhoods where it found enough interested customers to justify the cost. It conducted “rallies” where interested customers had to put down $10 to show Google they were serious about buying services ranging from $25 to $120 a month.
Only those neighborhoods — Google’s marketing literature dubs them “fiberhoods” — that met the company’s provisional sign-up goals were offered the service.
(Even there, Google altered its original plan. Some, mostly poorer, neighborhoods didn’t round up enough potential customers. That sparked criticism that Google was denying service to areas where Internet access was already scarce. Google then said the neighborhoods would have a second chance at a sign-up rally.)
By going only to neighborhoods where it found demand, and by going only once, Google said it would avoid the cost of constantly having its crews scattered across the market.
Google Fiber spokeswoman Jenna Wandres said Wednesday that the latest announcement doesn’t ditch that approach. Rather, she said installation crews remain concentrated in the neighborhoods where installations are still underway.
“We haven’t moved away from the fiberhood method,” she said. “People in those areas have told us they still want to sign up for service, so we’re giving them another chance.”
But that second chance, said broadband consultant Glen Friedman, might undercut the urgency of marketing campaigns to come.
Google Fiber announced Wednesday that it would clarify the rollout campaign for Kansas City north of the Missouri River, southern parts of the city, Gladstone, Grandview and Raytown in March.
“Consumers are smart. They’ll see this and realize that maybe the first deadline they see won’t be the last one,” said Friedman, who runs the Ideas & Solutions agency. “But Google is smart, too. They want to get all the customers they can.”
Most of all, he said, added customers give the company a higher return on the money invested in wiring the Kansas City market. Secondly, Friedman said the more customers Google has, the greater leverage it has negotiating with entertainment companies that sell programming for its cable-like TV service.
Google announced its plan for a fiber optic-based network about four years ago, prompting solicitations from about 1,100 communities across the country. It first chose Kansas City, Kan., and has been expanding plans across the market ever since.
That first deployment into the suburbs is coming in Missouri rather than more prosperous Johnson County. Google recently set aside talks to bring its service to Overland Park even though most other cities in the county have cut deals with Google Fiber.
Hard-wired computers in a house connected to Google Fiber can approach upload and download speeds of 1 gigabit per second. That’s almost 100 times faster than most broadband hookups in the U.S. The service is distinctive because it sells industrial-strength Internet access at consumer prices.
Consumer applications that need such speeds have yet to be developed. Google has said, and many analysts concur, that such uses will evolve when enough people have top-speed hookups to their homes.
So a sign-up redo might be valuable to Google Fiber by expanding the number of people with its hookups, tempting more developers to create uses that require faster data speeds.
Meantime, said cable industry analyst Brian Bennett of Kersey Strategies, Google has already made a huge investment in the market.
“When people start inquiring, ‘Oh, I missed my deadline,’ it’s hard to turn away that business,” Bennett said. “It’s also a way to get people excited again by using a second registration.”
To reach Scott Canon, call 816-234-4754 or send email to firstname.lastname@example.org.