The Ultra High-Speed Internet Race Is On

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By Jeff Kagan

E-Commerce Times

04/17/14 12:07 PM PT

We are in the very early stages of an ultra high-speed Internet revolution that will benefit everyone: carriers, cities, companies and customers. Cities want it because they see it as a way to attract companies. That means they increase their tax base and have a strong growth economy. Companies want it because they see this as a competitive advantage, at least for a while, until everyone has it.

Want to watch a new tech race? Keep your eyes on the new 1 Gbps ultra high-speed Internet race. Over the next few years, this will continue to grow and become one of the hottest races around. So who will the leaders be? Today, entrants like Google, AT&T, C Spire and CenturyLink already have started their race for the gold.

First, it's important to understand this race, so let's pull back the camera. We can see that this race actually has been running for quite a long while. It is not new. Every year, local telephone companies like AT&T, Verizon and CenturyLink continue to increase Internet speeds. So do cable television companies like Comcast, Time Warner Cable and Cox.

However, as fast as these speeds are -- and they are extremely fast -- Google wanted more. Google pointed to other countries where Internet speeds were even faster. Google wanted to speed up the process. So in typical Google fashion, it entered the race in Kansas City with its 1 Gbps service and challenged the existing providers.

Trend in the Making

Google did not do anything the others weren't already moving toward. It just turned up the competitive heat. Remember, the other competitors have huge national infrastructures to maintain. They each spend many billions of dollars upgrading their networks and increasing their speeds. All of that takes much more time than rolling out service to just one city, like Google did.

Kansas City was a success. Customers loved it. The media loved to write about it. Kansas City gained a competitive advantage, and suddenly many other cities wanted to be next on the list.

Over the last few quarters, we have seen a handful of other big-time companies jump into ultra high-speed race:

• AT&T announced it would bring GigaPower to its first ultra high-speed city, Austin Texas;
• CenturyLink announced its first ultra high-speed service in the Las Vegas area; and
• C Spire jumped into the race by offering its Fiber to the Home ultra-fast Internet service in several Mississippi cities to start.

However, many competitors -- including Verizon, Comcast, Time Warner Cable, Cox and others -- havea been silent. Will they eventually join the ultra high-speed race? I would hope so, since this is the future.

However some companies are leaders and others are followers. In this case, the leaders are Google, AT&T, CenturyLink and C spire. The others fall into the follower category -- hopefully, anyway.

The excitement is far from over. A few weeks ago, Google announced expansion of its Google Fiber to a few other cities. That news started getting lots more cities interested. Last week, AT&T announced its moves in North Carolina. It will roll out its ultra high speed U-verse Internet service with GigaPower to six communities in the Research Triangle and Piedmont Triad regions of North Carolina. It will begin as soon as it gets final approval.

What's next? AT&T CEO Randall Stephenson said they would roll out this service to markets around the country. What this says to me is stay tuned, there is much more to come from AT&T. I would say AT&T looks like it is about ready to put the pedal to the metal on growth in this area.

So today it looks like AT&T and Google are the two largest and most aggressive players in this new race.

Here is a nagging Google question. Will it stay in this game as a player? I don't know. Initially I thought it wanted to use Kansas City as a showpiece to help jump-start the industry to a much faster speed. However it is now expanding.

Will Google Fiber stay in the competitive game to keep others building faster, or will it jump out at some point? We'll have to wait and see.

I also watched how Mississippi cities did their research, wrote their proposals, and created compelling arguments to win the first cities in the C Spire region for ultra high-speed service.

What this says to me is ultra high speed, 1 Gigabit Internet service is going to be one of the strong growth engines going forward.

Which Companies Will Catch the Wave?

Cities want it because they see it as a way to attract companies. That means they increase their tax base and have a strong growth economy. Companies want it because they see this as a competitive advantage, at least for a while, until everyone has it -- that will take years. Consumers want it, because they will be attracted to ultra high-speed cities for work and as great places to live and raise their families.

The first stage of this new growth opportunity looks like it will be individual companies moving into individual market areas. I don't yet see multiple operators competing in the same space yet. It will likely be this way for several years, until at least the first wave of cities have one ultra high-speed provider. As the future unfolds, we will see more companies moving into each market space.

That could mean prices for this service will start out higher. However, we can't blame companies for trying to recover their very high build-out expenses. This is the way it has always worked over time. Eventually, as competition grows, prices will come down.

Do you remember how expensive cellular phone service was 20 years ago? I predict the same thing here.

It looks like we are in the very early stages of an ultra high-speed Internet revolution that will benefit everyone: carriers, cities, companies and customers. It seems like everyone will win in this new environment.

Everyone who is a player will win, anyway. That's why sooner or later I see every service provider moving into this ultra high-speed race. It will be interesting to watch other companies jump in and join the fray -- and it also will be interesting to watch the companies that don't.

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E-Commerce Times columnist Jeff Kagan is a technology industry analyst and consultant who enjoys sharing his colorful perspectives on the changing industry he's been watching for 25 years. Email him at jeff@jeffKAGAN.com. - See more at: http://www.ecommercetimes.com/edpick/80315.html#sthash.UdnCw2g4.dpuf