Could Google Fiber Competition Cause ISPs To Cut Rates and Increase Bandwidth?

Could Google Fiber Competition Cause ISPs To Cut Rates and Increase Bandwidth?

Google Fiber is, in a word, awesome. In addition to bringing unprecedented Internet speeds to a few lucky areas in Kansas City (at an attractive price point no less), the presence of the service has apparently been attracting startups to the area and has people calling it the “Silicon Prairie”. Google is also on the record as saying that Google Fiber is not just a one-off thing; it will spread to more locales and will no doubt foster growth in those places, as well.

And perhaps it’s obvious, but Google Fiber may be a problem for competing ISPs. For example, The Consumerist posted a letter from a Time Warner Cable subscriber named Rob from Kansas City who lives so close to a Google “Fiberhood” that he can see hooked-up houses from his dining room window. Unfortunately, Rob’s house isn’t quite close enough to be part of the Google Fiber program, but he did notice something strange happening to his Time Warner Cable service. Specifically, TWC bumped his speed from 10Mbps to 15Mbps and also reduced his bill from $44.94 to $29.99. Clearwire Communications apparently also sent him a mailer about a new, fast, less expensive Internet service.

Google Fiber map
A Google Fiber map

Assuming everything “Rob” said in the letter is true, it’s reasonable to infer that Google Fiber’s presence in Kansas City is causing the competition to jack up its speeds and cut its prices. This development is further striking when you consider that right now in Los Angeles, for example, TWC is actually raising rates for its cable and Internet service, according to the L.A. Times.

Complete Google Package
Complete Google Package

At the same time, TWC just had a year where it fell short of its earnings estimates, so one wouldn’t think that discounts combined with service boosts are necessarily appealing to the company right now.

Thus, Google might be shaking things up a bit over on the Silicon Prairie, and that’s a good thing. There are only so many ISPs people can choose from in a given location, so it’s always healthy to have competition around. Just a few years ago, who would have thought that it would be Google turning the screws in the ISP market in Kansas City?
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