Jack Clark reports in Bloomberg:
In the long term, fiber is cheaper. In the short term, wireless is vastly cheaper. Wireless is cheap to install initially but the equipment needs to be replaced every two or three years whereas fiber can generate consistent revenue without major maintenance after the initial expensive build out. Wireless internet can be installed in a matter of hours.
Google will use know-how from recent acquisition Webpass Inc., and its own wireless technology, to expand its Fiber fast internet business without having to spend so much.
Google parent Alphabet Inc. plans to adopt the startup’s lean approach to extend the reach of Fiber quicker and more cheaply, according to people familiar with the situation.
San Francisco-based Webpass was founded by Charles Barr with savings and credit cards in 2003, taking no outside money, according to former employees. If sales missed targets, there were fewer snacks, said former employee Mark Cyr. Another recalled lobbying hard for Diet Cokes.
Webpass’s business model is equally frugal. It uses wireless technology to cut the cost of building fast broadband service in cities, a typically expensive and complex task that’s drained billions of dollars from the bank accounts of giant companies like Verizon Communications Inc., Comcast Corp. and AT&T Inc.
Pairing the Webpass business model with in-development wireless technologies from Google could turn what’s been one of Alphabet’s most-expensive projects into a less capital-intensive and potentially more-profitable business. That would be good news for analysts and investors who have worried about the company’s big spending.
Fiber hopes to avoid the expense of digging up streets in the future using a combination of Webpass’s wireless approach, its own wireless technology and leases of existing fiber and municipal broadband networks, according to the people familiar with the plans. When the Webpass deal closes in coming days, Fiber will be both a traditional player and what’s known in the business as a WISP, or wireless internet service provider.
In 2014, Carlos Kirjner, an analyst at Sanford C. Bernstein & Co., estimated it could cost Google almost $30 billion over a decade to build, install and maintain its Fiber service for 15 million homes. Now he’s not so sure. It’s "too hard" to re-evaluate those costs without knowing more about the wireless technologies it might use in the future, Kirjner said in a recent interview.
With wireless technologies, Google can expand the reach of Fiber by offering slightly lower bandwidth service to homes and businesses that would otherwise be too expensive to serve, according to some industry analysts.
"If you go to suburbia or further out, the economics are clearly on wireless’s side," said Roger Entner, founder of telecom research firm Recon Analytics LLC. "The more lightly populated the area, the harder the case for fiber and the better the case for wireless," he said.
Fiber Versus Wireless
Kansas City, where Google first built out Fiber, was plagued by costly delays as the company juggled multiple construction projects and negotiated with reluctant incumbent telecom providers for access to their utility poles and other infrastructure.
The Fiber unit plans to offer Internet speeds of one gigabit per second -- about 65 times faster than the U.S. average -- in 22 cities, according to its website. In some locations, such as Google’s home town of Mountain View, California, there’s been little progress lately. That’s partly related to Fiber’s strategy switch to the Webpass wireless approach, one of the people said.
Webpass gets its service to homes and businesses by sending data between drum-shaped transmitters called millimeter-wave radios installed on the top of buildings. Those are plugged into existing fiber-optic cables in the buildings, which lead to Ethernet ports and end customers in living rooms and offices.
Adding these wireless radios to a building typically costs tens of thousands of dollars, whereas digging up streets to bury and connect fiber-optic cables to a building costs anywhere from hundreds of thousands of dollars to millions, said Steve Stukas, a former fiber operations manager for Webpass.
In recent years, Webpass has leased fiber from existing providers, so it can offer higher-bandwidth connections to existing customers. That means it can turn new fiber-equipped buildings into hubs for further wireless deployment, letting it expand its network cheaply by re-using old wireless radios.
"In the long term, fiber is cheaper. In the short term, wireless is vastly cheaper," said Anders Finn, the director of operations of San Francisco-based MonkeyBrains, which provides wired and wireless internet service. Wireless is cheap to install initially but the equipment needs to be replaced every two or three years, he said, whereas fiber can generate consistent revenue without major maintenance after the initial expensive build out.
The key advantage of wireless is speed of deployment. A typical wired internet connection to a building takes at least 90 days to install, he said. By comparison, wireless internet can be installed in a matter of hours. Webpass gives Google "a cheap way of getting a lot of experience with wireless," he said.
While Webpass’s business model is unusual, the startup uses existing wireless technology. Over time, Google may plug its own wireless technologies into the model, said one person familiar with the company’s plans. That would let it eventually build mesh networks to extend internet coverage from individual buildings to their surrounding neighborhood. Though technology challenges remain here. "It’s not obvious that mesh networks will scale," Kirjner said.But Google is working on this. Milo Medin, an executive in Alphabet’s Access division (where the Fiber business resides), has been leading tests of new wireless transmission technology using spectrum in the 3.5 gigahertz range.
Earlier this year, the company won approval to test this in Kansas City, using special antennas mounted on light poles and other structures, according to an April presentation. The internet giant has already laid substantial amounts of fiber in the area. But if the tests work, the new technology could expand Fiber to more homes without digging up any more streets.
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