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Google Fiber’s customer numbers remain small, analyst says
Google’s foray into high-speed Internet and TV service, which originated in the Kansas City area, has signed up an “incredibly small” number of customers and isn’t a threat to cable and satellite investors, according to MoffettNathanson analyst Craig Moffett.
Google Fiber, which started in 2012, has 27,000 video subscribers combined in Kansas City, Kan., and Kansas City, Mo., and less than 3,000 in two other markets, according to U.S. Copyright Office data collected by MoffettNathanson. Since its launch, the service has expanded to other communities in the Kansas City area and to cities such as Austin, Texas, and Provo, Utah.
“Google Fiber is a bit like Ebola: very scary and something to be taken seriously … but the numbers are very small, it gets more press attention than it deserves and it ultimately doesn’t pose much of a risk (here in the U.S. at least),” Moffett said in a note Thursday.
Kelly Mason, a spokeswoman for Google, declined to comment.
A survey released last spring by Bernstein Research suggested that Google Fiber was selling better than the Copyright Office numbers suggest. Bernstein acknowledged its numbers, showing Google Fiber selling to 80 percent of customers in some neighborhoods, reflected those areas that most aggressively courted the service. It also found the Google product especially popular with more wealthy households.
Still, other industry analysts have said their surveys found Google Fiber capturing close to 40 percent of the business in neighborhoods where it chooses to expand its network.
The fiber-optic-based service was started by Google as a showcase for high-speed Internet service and advanced video features to help spur competition.
Kansas City now has what are likely the cheapest and most robust broadband offers in the country.
Time Warner Cable still dominates the market. After Google’s arrival, it cranked up speeds without raising its Internet service rates.
AT&T has begun to match Google’s gigabit-per-second Internet speeds and, essentially, its prices in Kansas City. But AT&T does not offer that ultrafast service everywhere in the market. Likewise, Consolidated Communications has matched the speed and prices to a limited section of its Johnson County footprint. Yet executives at that company, formerly known as SureWest, say the vast majority of customers choose cheaper service.
Time Warner Cable, which is awaiting approval to be acquired by Comcast, had 193,208 video subscribers in Kansas City at the end of last year’s second quarter, according to data compiled from the Copyright Office by Moffett.
Nationally, AT&T has 5.9 million TV customers and plans to add 22 million with the acquisition of DirecTV. Verizon Communications has 5.6 million TV subscribers throughout the U.S.
Though Google Fiber’s actual impact, attaining an 11 percent share of the Kansas City pay TV market, has been small, the political gains have been meaningful, Moffett said. Google has played a big role in the net neutrality debate in part because of its investment in faster network access, he said.
Google charges $70 a month for 1-gigabite Internet service, which is about 10 times as fast as 10-megabit speeds, and $120 for a TV and Internet package. For a one-time installation charge of $300, customers can sign on for seven years of slower speeds at no additional charge.
The Star’s Scott Canon and Bloomberg News contributed to this report.
This story was originally published March 12, 2015 12:47 PM.
