Internet search giant Google Inc. (GOOG) recently announced that it would provide the fastest Internet service through its fiber-optic network and Kansas City, Missouri, will be the first to enjoy the service.
The Internet service, named Google Fiber, will provide speeds of 1 gigabit (GB) per second, significantly faster than average U.S. Internet speed. Google ran a selection process in Kansas City where citizens are required to preregister for the service beforehand. Google is already offering and marketing the service and it also has a dedicated website. This Internet service will provide Kansas residents with an alternative from Time Warner Cable Inc. (TWC), which is the area’s main Internet service provider with a maximum speed of 50 MB.
Google is launching the Internet service under three plans. In the first one, the residents will just pay $70.0 a month solely for the Internet connection. The second one is for $120.0, which will offer TV service, a digital video recorder and a set- top box along with a tablet-computer remote control. The third option offers seven years of free Internet access at slower speeds and the customers need to pay a onetime installation fee of $300.
Google is banking on its speed to attract the users. This can open further avenues for other new online services and can help Google to expand its online offering.
However, the process of deploying the service might be very slow and expensive. Users have to register by paying $10.0 and then Google will verify whether it will be feasible to provide the connection to the residences or not. While adoption could be slow and the service could spread even slower, this may be the right way to ensure profits. Traditional broadband suppliers have had to freeze their fiber optic plans because of technical difficulties and expenses.
According to Global Industry Analysts, Inc. (GIA), fiber optic components market is expected to reach $42.0 by 2012 globally. Fiber optic technology is witnessing decent growth as the speed of data transfer offered by the networks is highly prioritized. Advanced applications, PCs and network servers demand high speed and the optic fiber cable can support the gigabit speeds.
Google has always spent handsomely on research and development to launch new and innovative products. Recently, Google announced that it is testing an eyewear called ‘Google Glass’, which can perform smartphone-like functions through voice-activated commands.
In the second quarter, Google’s gross revenue touched a record $12.21 billion. Revenues from both Google-owned and partner sites continued to grow in double digits on a year-over-year basis.
Google retains a Zacks #3 Rank, which translates into a short-term Hold rating.
GOOGLE INC-CL A (GOOG): Free Stock Analysis Report
TIME WARNER CAB (TWC): Free Stock Analysis Report
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