While Google Inc (NASDAQ:GOOG) co-founder Sergey Brin has been cruising the NYC subway with his Google Glasses, his company has been honing an impressive, readily-available new technology — but only if you live in Kansas City. The almighty search engine has forayed into the world of cable connections — on the cheap and super-fast — with the advent of Google Inc (NASDAQ:GOOG) Fiber. So, why isn’t this a bigger deal, and is the rest of the cable industry losing its cool? And perhaps, most importantly, is this a development worth a shareholder investment?
Defining the fiber
According to its website, Google Fiber users can connect to the Internet at speeds nearly 100 times faster than standard broadband technology. Fiber also offers more DVR space — users can record eight programs at a time — as well as 2000 “crystal clear” HD channels and a full terabyte of cloud storage. If Google Inc (NASDAQ:GOOG) can successfully establish a cable service that’s unprecedentedly fast, cheap, and free of customer service woes, the company could have a shot at reshaping this industry.
Super Bowl traction
Google Inc (NASDAQ:GOOG) Fiber might not be high profile now, but the company is certainly working on it. The first step in grabbing “mind share” over Fiber was in having a spiffy ad grace the elite Super Bowl commercial breaks this year. However, the ad only aired in Kansas City, and featured well-known local celebrities .
While Silicon Valley is considered the reigning home of tech wizardry, it may seem odd that Google has picked the comparatively off-the-radar Kansas City to be the testing site for its cable prototype. However, the city is actually a goldmine for cable start-ups, as it offers potential speeds of a gigabyte per second , which dwarfs the average Internet speed of a household using a cable modem. Compared to the Valley, Kansas City is also a fresh slate for Google Inc (NASDAQ:GOOG) to work on and attract start-ups that want to take advantage of its lightning-quick Internet facilities.
While some non-Kansas-City-centric cable users are begging for Google Inc (NASDAQ:GOOG) Fiber to make its way to their city soon, cable industry giants like Comcast Corporation (NASDAQ:CMCSA) and Time Warner Cable Inc (NYSE:TWC) seem nonplussed by the potential of a new opponent. The reason? Their revenues are more than fine — Comcast’s annual sales have jumped 56% since 2010 , Time Warner’s by 10% — and so are their margins. Time Warner and Comcast had net profit margins of 8% and 7%, respectively.