5 Things to Know About Google Fiber

As of this writing, the United States has the second most Internet users in the world, clocking in at just over 245 million people, behind China (513.1M) and ahead of India (121.0M). In percentage terms, an estimated 78.3% of the American population has access to the Internet, which is far above the world average (32.7%), and slightly below Eurozone leaders like Germany (82.7%) and the UK (84.1%). Despite these advantages, the U.S. is lacking in one key category: connection speed.  While countries like Japan and South Korea offer their techies an average connection speed north of 8 megabits per second, the U.S. offers just 4.6 Mbps, ranking twelve in the world.  Thanks to Google (NASDAQ: GOOG), this is all about to change.

1) It is fast. Really fast.

Late last month, the company affirmed its plan originally announced in 2011 to roll out Google Fiber, a fiber-optic Internet network capable of reaching connection speeds of 1,000 Mbps.  You read that right.  To give you a little perspective on this speed, consider that it currently takes the average American just under 11 minutes to download 100 songs, whether they’re by Lil Wayne or Lady Antebellum.  With Google Fiber, this same action would take just 3 seconds.

2) The prices aren’t overly expensive.

Compared to traditional cable and DSL providers like Comcast (NASDAQ: CMCSA) and Time Warner Cable (NYSE: TWC) who offer combined Internet and TV packages for $79 to $89 a month, Google Fiber is not that expensive.  The service’s basic Internet package will cost $70 a month, while a combined package will cost $120 a month; both have a $300 construction fee, though this is currently being waved if subscribers sign a 24 month contract.  Considering the fact that Time Warner is the fastest provider in the industry with speeds of up to 15 Mbps, one would expect Google Fiber to be at least 3 to 4 times as expensive, and that’s simply not the case.  Throw in the fact that Google will not impose overage charges or data caps – something that CMCSA and TWC typically do – and we’re even closer to price parity.

3) The first city to get Google Fiber is…Kansas City?

In a surprising move, Google has decided that Kansas City, Kansas will be the technology’s first testing ground, so to speak; its metro area houses more than 2.1 million Midwesterners.  The city outbid more than 1,000 other areas for the honor.  The company has divided KC into distinct zones, where construction will begin when each area reaches a critical number of committed subscribers.  Aside from the obvious efficiency gains that faster Internet speeds bring, it is also estimated that a fiber connection increases median home values by $2,000 to $5,000, depending on the structure’s proximity to the “core fiber.”  While bears might contend that these benefits are overstated, it is hard to argue against Google’s other pledge: it will install Fiber in all schools, libraries, and hospitals within range, for free.

4) Sports and cartoon enthusiasts will be disappointed, at least initially.

That line could have read, “Tiger Woods will be disappointed,” but now is not the time for obscure references to troubled golfers.  Yes, anyone who enjoys watching ESPN or Cartoon Network will be unable to indulge in their favorite shows, as Google has not reached a deal with Walt Disney (NYSE: DIS) or Time Warner (NYSE: TWX).  It is speculated that these agreements were too pricey, though Fiber subscribers will still have access to more than 150 channels, including the option to buy Showtime or Starz for an extra $10 a month.  Now, it is impossible to know what the future may bring, but it is unreasonable to expect that Google will never reach a deal with DIS and TWX.  In the meantime, SportsCenter fans can still catch highlights on ESPN3, the network’s online channel; we’re willing to bet it will work just fine at 1,000 Mbps.

5) The Nexus 7 tablet is going to be Google’s go-to remote.

In traditional Google fashion – as well as a move to dethrone tablet king Apple (NASDAQ: AAPL) – its Nexus 7 device will be able to control Fiber Internet and TV.  Since its debut in late June, the Nexus 7 tablet has been highly regarded as a potential Kobe Bryant to Apple’s Michael Jordan, if you will.  All NBA references aside, the newest Google tablet has been lauded for its ability to stack up with the iPad at a cheaper price point.  It is estimated that Google will sell around 7 million tablets by the end of 2012, outpacing the sales of Amazon’s (NASDAQ: AMZN) Kindle Fire and taking a bite out of Apple’s market share.  While it remains to be seen how the yet-to-be-released iPad Mini stacks up with the Nexus 7, an exclusive functionality with Google Fiber would be a gigantic advantage.

Disclosure: The author has no holdings in the stocks mentioned in this article and has no plans to initiate any positions within the next 72 hours.  He does, however, have the intention of rating these stocks on WealthLift.com, a social media website where investment ideas are shared openly and free.

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