Google is allegedly looking at potentially offering a cable TV service with its high-speed broadband access in Kansas City. Analysts aren't so bullish on this prospect.
In a move that could be a bold bet or a
gambit for misdirection, Google (NASDAQ:GOOG) is reportedly mulling offering
paid cable TV services as a way to build out its ultra-high-speed Internet
The Wall Street
said the search engine provider has engaged in
"exploratory" discussions about launching such as service in Kansas City, Mo., and Kansas
, with TV powerhouses such as Time Warner and Walt
Kansas City beat out almost 1,100
cities clamoring to be the guinea pig for Google's proposed broadband test,
which will bring Internet access speeds of 1G bps to thousands of homes in the
Google declined to comment, but putting
the obvious pieces together makes it clear why the company would be interested
in beefing up its high-speed broadband access.
Faster Internet connections open new
opportunities for programmers to write gaming applications and other
graphically intensive programs. Google's own YouTube video-sharing service
would benefit greatly from speedier data facilitation, generating more video
views and more ads served on TVs and set-top boxes running the Google TV
service, which lets consumers access TV content with Web applications.
Google is producing fresh TV content with its YouTube channels
which it plans to serve via Google TV, ideally to tap into TV's huge
advertising market. But Google lacks major, mass-produced TV content
traditionally controlled by the cutthroat cable TV providers, including
Cablevision, Charter, AT&T U-Verse, Comcast and Verizon FIOS.
Tapping Disney, Time Warner and other
providers would give Google access to high-quality content to lure users to the
combination of Google TV and high-speed broadband.
This would help the company compete
with video services from Amazon and Apple, which is expected to launch a major
Web TV platform in 2012. Google could subsidize such a service for consumers to
undercut the pricey TV services from incumbent providers.
Analysts are dubious about Google's
cable TV gambit, especially at a time when Google TV has yet to lure many
consumers to its fold.
"I think Google is experimenting
with the network they are deploying, and it is just that-an experiment,"
Gartner analyst Van Baker told eWEEK
"I sincerely doubt that Google has any real intent in getting into the
cable television business, as that would be very far afield for them."
All too true, though the advertising dollars
are clearly too lucrative for Google to ignore at a time when growth for its
search ads has slowed, while Facebook's social ad revenue is expanding at a
Moreover, Google has an affinity for
kicking the tires on services that can disrupt existing market paradigms. See
the company's bid to market and sell its Nexus One smartphone unabetted by
phone carriers (that didn't work out so well).
Sanford Bernstein analysts Craig Moffett and Carlos Kirjner
put forth a compelling case
against Google offering cable TV service
in a research note Nov. 4, echoing Baker's angle that Google is merely using
its high-speed Internet play as a research experiment.
This play will help Google push for
faster broadband Google, which would lead to more Internet searches and ads
served. Google would also be able to test newfangled, rich ad units on speedy
broadband and figure out how to build its own infrastructure, Moffett and