Time Warner Cable will spend $ 25 million to bringing the potential for gigabit broadband to hundreds of New York City office buildings through a fiber to the building rollout. This is awesome. But, it’s absolutely nothing like Google’s fiber-to-the-home buildout in Kansas City despite what multiple press reports may say.
Yes, both companies are deploying fiber and both will offer gigabit speeds, but that’s about the end of the similarity. Let’s start with the scope of the projects. Time Warner Cable is spending $ 25 million to connect “hundreds of buildings” in NYC, which means the cable company will extend its existing fiber to the building. At that point those tenants in the building will have to connect to the fiber in the building and bring it to their floor/offices. Analysts estimate Google is spending between $ 500 million and $ 800 million to connect parts of Kansas City. It’s not just the spending that’s different, and understanding what else is can help explain why the U.S. broadband infrastructure is not keeping up.
This is an evolution of TWC’s network, not a revolution.
Time Warner Cable isn’t providing a map covering the scope of the deployment, but it’s smaller in actual distance and in ambition than what Google is doing. When I asked for details, a Time Warner spokesman emailed me to say:
This will cover core fiber backbone build out and strengthening, as well as build out to individual buildings. With this investment we will be able to reach multiple hundreds of buildings throughout NYC. (Brooklyn, Long Island City (LIC) and other communities in Queens, major office areas in Manhattan such as Flatiron district, the Empire State Building, the World Trade Center, etc, and in select areas of Staten Island)…
However, even in its press release announcing the investment Time Warner Cable noted that the company has just finished deploying fiber to The Empire State Building. So there’s a lot of spin in this news about the investment. Clearly some of these investments have been planned and are even already implemented, making this $ 25 million investment look more like an evolution of the TWC network rather than some gigabit fiber revolution.
The spokesman also specified that the Brooklyn Navy Yard and Greenpoint will get fiber to the building as well, and there is clearly an expansion of TWC’s service to those communities. However, Google’s investment is entirely new, something that happens only rarely. Time Warner Cable, like other networks, is always gradually expanding its fiber closer to the end user. That’s great, but it’s incremental and aimed in an area where it competes heavily with Verizon and Cablevision so to avoid these investments would mean lost business.
Density and customers are key.
Another point of difference is that fiber to the building in NYC is different from fiber to the home in middle America. Google’s fiber to the home will give a household (the American average is 2.59 people) a gigabit to share. The TWC investment will deliver a gigabit to a building, where thousands may work and hundreds of customers might tap into the network. When it comes to deploying fiber, density lowers cost, and there are few places in the U.S. that are more dense than New York City. That lowers the investment required to deploy the network, especially when one considers that most of the network has already been built out.
The final point of differentiation is on price and the actual market. Google is charging consumers $ 70 a month for access to its gigabit network (and $ 120 if customers want TV with that) while TWC is going after business customers. Those customers generally pay at least five times the price of consumers or more depending on the services they want. That makes the economics of offering business-class service very different — and generally make it easier to justify investment.
So, higher prices (although also higher service levels), greater density and the evolutionary as opposed to revolutionary nature of Time Warner’s investment here make it very different from Google’s gigabit build out in Kansas City. As a final quibble, I’d also note that Google is building out its network in a way designed to challenge the economics and status quo associated with residential broadband, while Time Warner is merely continuing a gradual investment in its business.
Comparing TWC’s investments in its network to Google’s network investments, just because TWC tosses the words gigabit and fiber around, is like comparing McDonald’s oatmeal to the porridge nutritionists recommend because both contain oats. Don’t buy into that hype.
Time Warner photo courtesy of (CC BY 2.0) Flickr user The Consumerist. NYC skyline photo provided by Shutterstock.
