The plan, one of many proposed to the city, would offer free access to more than 750,000 Bay Area residents, potentially slicing into profits of entrenched local broadband providers, SBC and Comcast, that now offer high-speed Internet at costs from $25 to $70 a month. To compete in the thick of Google's "Wifi cloud," these incumbents would have to slash prices, increase speeds and improve services.
Throughout the summer, speculation over Google's designs on America's broadband market has shaken a sector that is still controlled by a handful of giant cable and telephone companies. These internet service providers are loath to lose their hold on a market that, according to the Telecommunications Industry Association, could yield $212.5 billion in revenues by 2008.
Media reports in September suggested that Google is seeking to offer broadband access on a national scale. Sources contacted by mediacitizen believed that the company was merely trying to pump its stock value in anticipation of a massive offloading of shares by founders Larry Page and Sergey Brin. Google's share price has soared from $85 when it was floated last year to more than $320 this week.
The company's announcement for San Francisco adds fuel to the fire. The wireless proposal aims to reach the city's handheld organizers, computers or mobile phone devices, from the financial district to low-income neighborhoods. While a Google spokesperson said that the company didn't "have any plans to expand this community service beyond the (San Francisco) Bay Area," others suspect its desires run further afield.
Building a national broadband network massive enough to rival even the country's biggest Internet service providers would require an investment in the tens of billions. Business 2.0 reports that Google is already gathering the fiber backbone for such a system. Over the past year, it has quietly been shopping for miles and miles of "dark," or unused, fiber-optic cable across the country from wholesalers such as New York’s AboveNet, Cogent Communications and WilTel.
By mapping the elusive final mile using affordable WiFi systems and working with city networks, Google could leapfrog lumbering cable and DSL providers into American homes and save on a significant portion of infrastructure costs. With its announcement for San Francisco, it's become clear that Google has opted to bridge the divide using more affordable Wireless technology.
Still, the shift from search engine to national ISP would require an overhaul of Google's corporate culture. Anything is possible for a company with mountains of cash, extremely positive brand recognition and a market capitalization of more than $88 billion. But, essentially, Google is several smart engineers and marketing people sitting on massive warehouse of web servers. Google has made bold moves in the past, but none has so significantly changed their way of doing business.
Perhaps, even more significant an impact will be felt by the likes of the competition. Comcast, Verizon, Qwest and SBC had long been planning to boost their bottom line by hoarding the billion dollar broadband market. But hundreds of locally-based services, many of which are public-private partnerships have rushed in where the large incumbents have failed, meeting America's broadband needs with local networks.
The explosion of "Community Internet" initiatives was documented recently by the media reformers at Free Press with the release of a national database that maps more than 270 Community Internet projects across the country. The map is the most comprehensive list of such projects available. It shows projects operated by local governments, partnerships, schools, non-profits and community groups. It includes wireless mesh networks, fiber to the home systems, and those using broadband over power lines.
Over the year, the largest cable and DSL providers have attempted to squash local initiatives by introducing prohibitive legislation in statehouses across the ocountry. In May, Congressman Pete Sessions (R-TX) sponsored a House bill that would "prohibit municipal governments from offering telecommunications, information, or cable services." Sessions -- who was a 16-year SBC executive prior to taking office -- still owns more than half a million dollars worth of stock options in the telephone giant; his wife, Juanita, works for the company.
In June, a more credible piece of legislation was introduced by Senators John McCain (R-AZ) and Frank Lautenberg (D-NJ). Their "Community Broadband Act of 2005" would specifically permit municipalities to offer low-cost broadband service and overturn all state legislation prohibiting municipal broadband systems.
Should Google decide to charge into the space, the broadband dynamic -- both in the marketplace and on Capitol Hill -- would take on a radically new dimension.