I’m going slightly off topic today. Recode has a nice article on the story behind Fiber, the good and bad sides, and the disruption it’s caused. I’m a fan of Google Fiber because the direction it’s moving will be how we access the internet in the not too distant future and I dislike Comcast.
A small piece stuck out to me because it was something I discussed several years ago about how everyone and everything will connect to the internet soon.
Last month, the business embarked on the next wave of its strategy, starting in Kansas City again. It won approval to place special antennas on city light poles that could potentially beam broadband directly into homes, over the air. Fiber wants to start testing out the equipment in November and plans to have a network up and running by the end of 2017.
Wireless is a big deal for Alphabet. If it works, it means it can deliver broadband without having to build out or buy fiber networks. No dirt to dig up; no last mile to cross. That means its network can swell much more, much faster.
Here in the U.S., most people don’t have a choice between internet providers. It’s either a monopoly or duopoly at best. That usually means fat profit margins for companies in those areas.
But a fully wireless network capable of gigabit broadband speeds would finally commoditize your internet service. If one company achieves it, the rest must follow suit to survive.
It opens the door for more competition between internet providers and mobile providers. The added competition – Fiber, Comcast, Time-Warner, AT&T, Verizon, Sprint, T-Mobile – is great for consumers. I can’t say the same for the companies. More options for the consumer means lower prices and compressed margins for the companies involved (I see potential similarities between this and the long distance price wars of the 90s. Though, the price war was due to a regulatory change and the network already existed).
Of course, the internet has been a thing where hardware was always a few steps behind the imagination of the user. Just think back to the 90s internet boom and 56k modems. A lack of capable hardware helped contribute to the inevitable internet bust.
Similar ideas behind a few of those failed dot-coms are back because they have access to a wider potential user base, all thanks to better and faster hardware. The play off those two – end user creativity and hardware advances – continue to drive this computer age. It will be interesting to watch what comes next as we move further down the smart – smartphone, smart home, smart car, smart everything – phase.
Last Call
- Bubble Indemnity – NY Times
- Banking’s New Normal – New Yorker
- The Pain Gap – M. Housel
- When the Rich Jump Ship – The Atlantic
- Negative Rates Require Flexibility in Fixed Income – Blackrock
- Hedging on the Case Against Hedge Funds – C. Asness
- Warren Buffett 1998 Talk at University of Florida – Base Hit Investing
- GMO Quarterly Letter 1Q 2016 – J. Grantham
- Druckenmiller’s Sohn “The Endgame” Transcript – ValueWalk
- How Epic Fortunes Were Made in the California Gold Rush – Priceonomics
- How to Become Great at Just About Anything (podcast) – Freakonomics
