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Summary:

Google today announced an audacious plan to build what a cutting-edge broadband network. It is an experimental network, much like Google’s Wi-Fi network in the city of Mountain View, Calif. Google’s planned FTTH network won’t be cheap, but in the end it is worth the price.

Google on Wednesday announced an audacious plan to build what is essentially the most cutting-edge broadband network in the U.S. While it’s being misportrayed in certain segments of the media as an ISP effort, in reality it’s nothing more than an experimental network, much like Google’s early efforts to provide municipal Wi-Fi in the city of Mountain View, Calif.  It will be a trial-only network, not Google’s entry into telecommunications services. And while the planned network won’t be cheap, in the end it will be worth the price.

The idea behind the network: provide bandwidth and see if it fosters new user behavior and thus innovations.  I admire Google for creating a real-life laboratory that will provide intelligence to predict not only the future of the web, but also help it develop new products to stay relevant. By announcing this network, Google also showed why it’s quite distinct from its onetime peers such as Yahoo and AOL.

When I said that Google’s plan was audacious, I said so because of the cost. For starters, Google wants to offer 1 gigabit-per-second speeds to some 50,000 to 500,000 people. At 2.6 people per household, that roughly translates to between 20,000 and 200,000 homes. Our friend Ben Schachter, Internet analyst with Broadpoint AmTech, estimates that it will cost Google between $3,000 and $8,000 per home, or roughly $60 million to $1.6 billion, depending upon the final size and footprint of the network. If Google reaches, say, 100,000 homes, it would cost the company about half a billion dollars.

The folks from Calix Networks, a company that sells gear for FTTP networks, have developed an equation that allows them to calculate the cost per household depending on population density, which, according to them, is the single most important factor in calculating the cost of FTTP connection per home. These costs are quite varied, in some cases as much as $4,000 to connect a single home. Google’s final tab will depend on where it decides to build out the network.

The end cost is also determined by the kind of technology the company uses. While Passive Optical Networking technologies have come a long way — newer versions of Gigabit PON (GPON) have a range that extends up to 40 kilometers — there is a better than good chance that Google will opt for an all-Active Ethernet approach. Mike Fox, business development manager for the carrier networks division at telecom equipment maker Adtran, says that both technologies can get the job done. It just depends on how Google wants to build its network. Fox helped me break down the comparative costs of the two technologies.

A typical PON is made of two pieces: an optical line terminal (OLT) at the service provider’s central office, and an optical network terminal (ONT),  which is used to terminate the fiber optic line and is typically outside the customer’s premises. A single ONT costs about $330, according to Fox. Since PON is a shared fiber technology, OLT costs are calculated in terms of ports and are about $80 per port. So the total per household is about $410. The fewer the number of ports, the higher the per-home costs.

Of course, when taken together with other costs such as fiber and construction, things start to add up pretty fast. In comparison, an Active Ethernet-based network is pretty much like a corporate Ethernet network. It’s a giant switched Ethernet infrastructure. It costs over $600 in electronics for an Active Ethernet-based network. This is closer to what Google has in mind, according to some experts I spoke with. But that’s not all.

Mike Day, chief technology officer of ADC Telecommunications, told me that this network is going to be a lot more expensive than somewhat similar ones. It would need a really fast switching fabric that in turn would be connected to the Internet backbone at astonishingly fast speeds. This seamlessness is what will bring true speed to the homes on the test network. Think of this as building a smooth Autobahn from the home to the backbone. Day said the network would need to overcome some major design challenges such as different data center architecture and a different style of servers that don’t become a bottleneck and are able to leverage the 1 Gbps speeds.

Is spending this much money — even for Google, which has about $25 billion in cash — a good idea? I think so. Just as car companies spend their R&D dollars on Formula One Racing teams to get a better idea of what new features could be included in their commercial vehicles, a company such as Google needs to explore the outer limits of broadband. (I will explore more on this topic in a different post.)

In addition, “Google has a secondary motivation here and that is to also push the FCC to accelerate its examination of using TV white spaces for wireless broadband,” says Jeff Heyman, broadband and video analyst for Infonetics Research. He points out that if “Google can make this endeavor successful for a number of communities, why couldn’t they do so for even more using white spaces? This FTTH initiative, in other words, could be a proving ground for Google as infrastructure provider.”

Is that likely? Perhaps not — but as someone who hearts broadband, I hope Google’s desire to push the limits brings about the change we so badly need.

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  2. Partho Choudhury Thursday, February 11, 2010

    I especially like the analogy with Formula One being used as an incubator for newer ideas to put into commercial vehicles.

    The super-high bandwidth rollout just announced by Google is just one of those rabble-rousing ego-trips that they will continue having for some time (they have a ton of money in hand to afford as such)…..they also bet heavy on the 700 MHz wireless spectrum auction, but had no intention whatsoever to run a wireless service….they just wanted the American consumer to get a taste of what a truly open wireless access system would look like, and now that the consumer had tasted blood, I hope better sense prevails. Moreover, Google never cared about the nitty gritty of running a wireless service (since they had no intention of doing so in the first place). They only wanted open networks in order to ensure that their own services are not restricted/outright blocked by AT&T or VZ….same case here – they want to scare the hell out of VZ, Comcast and their ilk (but they wont actually become an ISP – that would mean too much regulatory headaches, like the one in which they had to roll back the ETF for Nexus One under pressure from the FCC last week).

  3. I think the cost estimates that you quote are highly over-inflated.

    Two things to keep in mind: Verizon is deploying exclusively to single dwelling units (homes) and only very recently have they started to deploy to multi-dwelling units in NYC. The cost differentials are huge. Depending on Google’s chosen location, the costs could be significantly lower. The other thing to keep in mind is that Verizon is deploying using a two-step model where they only pull the last few meters and connect a customer when he signs up to the service. That means a truck roll for each customer signing, which inflates the overall cost per home connected.

    The second thing to take into account is that Google is clearly not looking to deploy from scratch. The whole RFP to communities thing means they want municipal involvement, and that in turn means ducts. It’s even explicitly stated in the FAQ.

    With available duct space (from municipal infrastructure) the costs could drop considerably as the amount of digging needed suddenly goes down.

    I would think that if they get the right choice of municipalities (and I’d be surprised if they didn’t already have something in mind) they can deploy for less than $600/home all things considered.

  4. Wonder if Google will be employing Infinera’s super fast PIC project here>

  5. The “new behaviors” implied must be both television/video related as well as apps related. In order for these things to succeed we need data throughput. It can be incredibly frustrating to want to watch a video and sit through a slow load or erratic behavior. If something like YouTube is ever going to replace television — I believe it will be content delivered through Wave-like tools — then a new network is required. And, the majors are not going to build it without competition.

    1. I agree with you video — considering they own YouTube, it behoves them to understand the usage behavior on a higher speed network and if it actually impacts their infrastructure needs.

  6. I’m just gutted that i am not in the States, the broadband in the U.K. is a joke.

    1. You’d be disappointed at BB performance in the US. Jam tomorrow too.

  7. Good and interesting analysis. I am intrigued by this:

    “…there is a better than good chance that Google will opt for an all-Active Ethernet approach.”

    Why is this? One of the attractions of passive architectures is that there is less downtime and risk–i.e., the more passive, the less stuff there is that can break. You seem to imply that it will be active. Why?

    1. A PON network uses splitters to deploy services. Meaning that from a single port in a CO you will split upto 32 or 64 times. When you “split” the single, you share the bandwidth. So, on a GPON it is roughly 2.5G down by 1.25G up. Split that 32 times and you about have 70Mbps to the home. GE-PON (or E-PON) is better, but I am not sure of the specs, but I think it is around 10G. But that 10G would still be “shared” I think.

      “Active Ethernet” is a dedicated “home-runned” fiber from the customer prem to the CO/Node. Making the link between A & B more “future” proof and only needing to change out the electronics on each end to speed it up. Which in turn does increase the cost to deploy though.

      As far as equipment failures, on PON when a port or splitter goes bad, you could loose upto 32 to 64 customers. On active it would be just 1. I do know that all equipment can fail so it’s hard to say you can’t loose more with either technology.

      So to get 1G to each home today, Active is the way togo.

  8. Forget current-gen solutions (especially GPON), there’s way too much cost & baggage built-in to those solutions to accommodate things which won’t be needed here: RF over Glass? POTS? Connectivity to STB’s… forget it. This is where Google can really showcase what a clean network approach can do – they don’t have legacy crap to worry about.

    A few additional thoughts I scratched out yesterday after reading the announcement: http://bit.ly/av8dgv

  9. wonder if they’ll use the fiber optic cable from corning that can turn/bend around corners (instead of having to only turn at right angles with a piece of hardware… and i’m curious if they’ll choose a couple of buildings in a downtown area (as @benoit suggested), or choose bigger geographic area in the ‘burbs…

  10. In news that will probably not be heard in the US. Reggefiber the Dutch Fiber network with several hundreds of thousands of homes connected in an active Ethernet network will move to 1Gbps as of this year. XMS an ISP on their open network will offer 200/200mbps in the town of Zeewolde as of today. http://www.reggefiber.nl/detailweergave/items/xms-introduceert-200-mbps-in-zeewolde.html

    The costs of a fiber network are probably more in the range of 500-1500 dollars for the passive infrastructure. IN the Netherlands Regge is paying roughly 800 euro per home connected for direct buried cable.

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