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Google (s GOOG) has filed for a video franchise license, which if approved could allow it to take on cable providers in markets in which it’s hoping to deliver fiber-enabled Gigabit broadband services. The license, as reported by the New York Post and Wall Street Journal, was filed with the Missouri Public Service Commission and is tied to the search giant’s plans to roll out fiber-to-the-home in Kansas City, Mo., and Kansas City, Kan.
The video franchise license application follows an application that Google submitted to the Federal Communications Commission a few weeks ago to build a receive-only satellite farm in Council Bluffs, Iowa, which is about 200 miles away from the Kansas City markets and close to one of its major data centers. Together, the applications point to a serious effort on the part of Google to introduce TV services on top of its fiber broadband plans.
That Google would attempt to enter the video market isn’t totally unexpected: The WSJ reported late last year that the company was out seeking TV rights from major content owners such as Disney, (s DIS) Time Warner (s TWX) and Discovery Communications. (s DISCA) But it appears that Google is laying the groundwork to make a serious assault on Time Warner Cable, (s TWC) which is the primary cable provider in its fiber markets.
But there are still some major questions left unanswered, as Google works to pull a video service together:
- Will Google be able to get content owners on board? Some major content owners, like Viacom (s VIA) and Fox, (s NWS) are notoriously suspicious of Google’s video ambitions. Due in part to the perception that its search business aids piracy — and that YouTube is a haven for unlicensed, copyrighted content — there are some content providers that so far have been unwilling to work with Google. Writing big checks has a way of helping to make friends, but there might be some holdouts… Which raises the question: Will consumers sign up for a video service if some of the major networks are missing?
- Will Google TV extend beyond the Kansas City markets? Google has been busy promoting the Kansas City deployments, but some believe that there’s an opportunity to extend its fiber ambitions beyond its initial test markets. There’s even some evidence in recent job listings from Mountain View. Check out this listing for a Google Fiber Business Analyst: Google says it’s “building one of the fastest national broadband networks to deliver next generation Internet content to users.” [Emphasis mine] If Google Fiber really is a national project, then we could see Google video services extended to other markets as the company lays down fiber.
- What will Google’s TV service cost? This is potentially the toughest sticking point as Google negotiates rights with content owners. Most-favored-nation clauses, which are placed in deals struck by existing video operators, do not allow new entrants to negotiate better contracts than those already in place — one reason why the price of content continues to go up with every new deal. That means Google will be paying more than other providers for the same content, and will be unable to offer its TV services for less than existing providers. But! Given the high-speed-data nature of Google’s fiber product, I could see a product in which Google charges a one-time fee for the broadband service and video is an add-on service.
- Will YouTube be integrated? Here’s a big wild card, especially as Google thinks about what the future of TV looks like. It’s spending big bucks on building TV-like channels of content for YouTube, so why not place those channels alongside more mainstream content from the major cable networks. Given the Gigabit speeds of the fiber product, all indications are that Google’s video product will be delivered via IP, so there’s no reason that YouTube — or really any streaming video content — couldn’t be a part of the broader video service.