Google Fiber’s decision to stop offering linear TV service to new customers is a sign of the times as much as it is part of Google’s efforts to realign its diminutive broadband internet business.
Google Fiber announced via a February 4 blog entry that instead of marketing Google Fiber TV to new customers, it will encourage them to subscribe to over-the-top (OTT) streaming services from fuboTV and YouTube TV when they sign up for Google Fiber.
The company has pledged to keep delivering Google Fiber TV to current customers who subscribe to it the IPTV service, though it is also offering to help all its customers explore streaming as an alternative. Of course, Google Fiber customers are also free to sign up for any OTT service on a standalone basis, with service delivered over the Google Fiber broadband network.
Google Fiber is all about the gigabit
Google Fiber’s decision to exit linear TV in favour of promoting OTT TV packages to its high-speed internet subscribers highlights the broader industry trend of cord-cutting that is impacting pay-TV providers in markets worldwide. Traditional linear pay-TV providers continue losing customers to streaming TV and video providers at the same time their programming costs are increasing. Google Fiber’s small size – it is only in 18 US markets – meant that it lacked bargaining power when it came to negotiating rates for content.
Not only is linear TV an unattractive business for Google Fiber, but encouraging customers to adopt streaming entertainment complements its latest brand repositioning. In December, Google Fiber announced it would stop offering a 100 Mbps plan to new customers as it aims to focus on delivering gigabit service instead. And since gigabit internet speeds are perfectly suited to supporting OTT streaming video, now is an optimal time for the company to exit linear TV.
What about the future? Google Fiber’s shift away from linear TV may help convince other internet service providers (ISPs) with pay-TV services that it is time for them to follow suit. High programming costs have made pay-TV a low-margin or no-margin operation for many of these companies, which attract much higher revenues from their broadband operations. Furthermore, ISPs overall continue growing their broadband customer bases with less and less need for a bundled service package to attract customers.
Meanwhile, Google Fiber’s own future is in limbo. Municipalities are no longer vying to win the ‘Google Lottery,’ as it was called when Google was soliciting interest during the past decade from cities desiring its promised gigabit internet service. Google Fiber suspended expansion of services to additional cities in October 2016, and it is still smarting from a deployment debacle that caused it to abandon the Louisville, KY, market last year and pay the city $3.84 million to repair damaged roads and rights of way.
Google Fiber continues to support its operating networks. However, it remains unclear whether Google ever really intended to become a major ISP or was just dabbling in commercial testbeds designed to prompt incumbents and municipal broadband providers to invest in high-speed networks, which ultimately benefit Google’s much larger search and advertising business.