Google fiber and venture capital

The United States' ISP business has been in a strange place for many years. Giants like AT&T, Time Warner, and Comcast hold massively dominant market shares, and though large pie slices aren't of themselves prohibitive to rival companies - small, local service providers do exist - the high cost of setting up a data grid is a significant impediment to competition. Coupled with little FCC regulation and much to gain in profits, the cost of Internet service has remained artificially high in the United States when compared with other parts of the world.

Enter Google Fiber. While much has been promised and little delivered so far, the initiative is bold enough that it just might lead to real disruption in the industry. For a one-time $300 installation fee, any home in the targeted Kansas City area could have unlimited 5 Mb/s Internet - a speed just at or slightly below the entire U.S. average, depending on which year your data is drawn from. And though Fiber's 1 Gb/s offering is enticing, the $70-per-month price tag is the truly revolutionary part: Comcast's and AT&T's most cost-efficient service options were 20 Mb/s for $29.99 and $19.95 for 6 Mb/s monthly respectively. Quick division yields $1.50 per Mb/s every month for a Comcast subscription, and $3.32 per Mb/s with AT&T. To contrast, a paid Fiber Internet subscription of $70 for 1 Gb/s will run a user $0.07 per Mb/s. Those are some crazy numbers.

Here's the catch: Google - like the local contenders - must deploy its expensive infrastructure, and that takes time, money, and support. To maximize construction efficiency and ensure a profitable venture, they're wisely deploying only in neighborhoods that have enough subscribers. However, registration to become fiber-enabled is only available to residents of the Kansas City region. 

Now imagine that Google provides people outside Kansas City the ability to make non-refundable investments (i.e., money would be lost if Fiber fails) in some affordable dollar range and receive a proportional discount on their first year or so of paid Fiber subscription. Essentially, give the rest of us the power to be Google's angel investors. The win-win scenario is evident: 

• Google receives a welcome boost of income from readily-available resources during this critical, experimental phase of the project's life
• Enthusiasts get to personally advance the project toward nationwide deployment while receiving a discount when expansion comes
• Google's financial department can more accurately gauge interest and potential future subscriptions
• Google has ultimately accumulated no extra risk should the initiative fall flat

With the right incentives and a little marketing, Fiber could gain the momentum it needs to mount a bigger assault on the existing stable of ISPs.