Om Malik writes:
What if Google wanted to give Wi-Fi access to everyone in America? And what if it had technology capable of targeting advertising to a user s precise location? The gatekeeper of the world s information could become one of the globe s biggest Internet providers and one of its most powerful ad sellers, basically supplanting telecoms in one fell swoop. Sounds crazy, but how might Google go about it? First it would build a national broadband network — let’s call it the GoogleNet — massive enough to rival even the country’s biggest Internet service providers.
Business 2.0 has learned from telecom insiders that Google is already building such a network, though ostensibly for many reasons. For 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.
It’s also acquiring superfast connections from Cogent Communications and WilTel, among others, between East Coast cities including Atlanta, Miami, and New York. Such large-scale purchases are unprecedented for an Internet company, but Google’s timing is impeccable. The rash of telecom bankruptcies has freed up a ton of bargain-priced capacity, which Google needs as it prepares to unleash a flood of new, bandwidth-hungry applications. These offerings could include everything from a digital-video database to on-demand television programming.
An even more compelling reason for Google to build its own network is that it could save the company millions of dollars a month. Here’s why: Every time a user performs a search on Google, the data is transmitted over a network owned by an ISP — say, Comcast — which links up with Google’s servers via a wholesaler like AboveNet. When AboveNet bridges that gap between Google and Comcast, Google has to pay as much as $60 per megabit in IP transit fees.
As Google adds bandwidth-intensive services, those costs will increase…
Of course building a nationwide wireless network would cost a fortune. Some estimate the tab for nation-wide WiMax would be $3-4 billion, with 700 MHz one half to one third the cost. Operating costs will be high, too.
TelcoTV costs are going to be enormous.
Verizon hopes fiber will pass three million homes by the end of 2005, 7 million by the end of 2006 and 15 million by the end of 2008. That’s about half of their 1/3rd of the country target – for $15-20 billion. Can wireless undercut them by a factor of ten (or more) offering 10-20 Mbps wireless and multicasting? It’s hard to predict. New technologies get faster and cheaper.
Airwaves are cheap and the effectiveness of targeted, 2-way advertising is proven.
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What if VoIP telephony, games, music and video on demand could be added as premium tiers to the “free” platform. What if Google AdSense (and location) advertising could include video advertising with a transactional element?
How much would you pay now?
About $60 billion is spent on U.S. television advertising, annually. National advertisers need a low CPM and an effective delivery platform. The $250 billion domestic ad market might support the $3-5 billion required to establish a national WiMax service (half that for 700 Mhz). Location-based advertising and AdSense could create a delivery system right out of “Minority Report”.
Targeted to you.
If Google teamed with national broadcast networks like ABC, CBS, CNN or Fox, they could deliver a dozen “free” TV channels over 700 Mhz, 1.7 GHz or 2.5 GHz using DVB-H in the top 50 markets. Clearwire and Charles Townsend’s 700 MHZ band could deliver it.
RF Magic integrated a DVB-T tuner on a $5 chip, for PVRs, laptops, PDAs and cell phones. Meedio TV records ATSC, DVB-S, and DVB-T on a Windows PC and includes a free electronic program guide.
The revenue comes from the premium packages. That might include Skype and Vonage for telephony, music services like iTunes, Video game services and Movies On Demand like CinemaNow, MovieLink, Netflicks or Starz.
Datacasting to TiVos late at night lowers VOD overhead. Freeview does it too.
Now add up the revenue for a nation-wide, “free” wireless service:
- VoIP/Cellular – $25/mo
- VOD – $15/mo
- Music – $5/mo
- Games – $5/mo
That’s $50/month. Plus another $20-$50/month per person revenue average for Google AdSense and location-based advertising click-throughs. The wholesale bandwidth cost might be less then $10/month per person with another $10/month for operational overhead.
Why shouldn’t Google spend $20/month for “free” internet and off the air television? A ubiquitous broadband network might generate $50-$100/month off transactional advertising and premium service tiers.
Is this a great country or what!
They’ll need a test market. How about Hood River, Oregon?
Multichannel Video Distribution & Data Service could deliver 2000 Digital MPEG2 Channels or 6 Gb/s Wireless Internet on the North side of The Gorge.
Dave Burstein follows the broadband industry via his DSLPrime. Broadband Reports has a golden interview with Burnstein covering fiber and IPTV deployments by Verizon and SBC, and other related topics.
Related DailyWireless articles include Broadcasting Not Dead, The Free Triple Play, VDSL-2 Ratified, IPTV: Is It Soup Yet?, MeetroNet (rumored to be target of Yahoo), 700 Mhz Worth $28B, The 700 MHz Club, The Smartest Guy in the Room, Telecom Gets Grid, Big Science Projects and Unlicensed Spectrum: The Sum of All Fears.
