Google bets on OTT services to sell FTTH

Thursday 10 November 2011 | 13:19 CET | Background

Google is working on a pay-TV offer for its trial fibre network being rolled out in Kansas City, according to the Wall Street Journal. This is likely to be an IPTV service, possibly similar to what Iphion is doing in the Netherlands. In Kansas, the services will compete with Time Warner Cable, AT&T and the satellite TV providers Dish Network (a distribution partner for Google TV, see below) and DirecTV. Google is reportedly already in talks for content with Walt Disney, Time Warner and Discovery Communications. Jeremy Stern, who previously worked at MediaOne and the cable industry association NCTA, is thought to be leading the negotiations.

Google of course also competes in TV, connected TV and IPTV with the other big American internet companies and content aggregators:

  • Apple: offers the Apple TV box and is rumoured to be working on a TV; in addition it has iTunes and is reportedly planning a streaming video service;
  • Amazon: offers the streaming video service Amazon Prime Instant Video;
  • Netflix: streaming video as well as rental DVDs by mail;
  • Dish Network: offers the Blockbuster streaming service and also owns the Blockbuster shops;
  • Hulu: streaming TV content from Fox, NBC and ABC;
  • Comcast: offers the Xfinity app for the iPad, which recently received an Emmy for engineering;
  • Microsoft: a wide range of assets, similar to Google, such as the Xbox 360, Xbox Live, Kinect, Bing and Skype, which can form a 'connected TV' service;
  • Yahoo! and its Yahoo! Connected TV platform delivered directly to TV manufacturers.

Google is increasingly active as a content aggregator, both in print and music, as well as video. Occasionally it branches out into exclusive or its own content, such as the recent agreement between YouTube and Disney Interactive Media. This expands its inventory, the time consumers spend with Google and subsequently its (potential) advertising income, plus income from paid services. These moves by Google can also be explained from another viewpoint: the company is huge online and also strong in mobile internet (mainly through Android), so TV is clearly the 'next frontier'. It's already built up significant assets here:

  • YouTube, with all its plans and agreements;
  • Google TV, the software platform for which v2.0 has just launched in the US, which has a number of content, hardware and distribution partners (eg Dish Network, Sony and Logitech);
  • Any number of Google services, which alongside YouTube can be adapted to the TV, such as Google Maps and Google Earth.

At first glance, Google's move to offer TV on its own in Kansas goes against the principles of open access and structural separation, where providing services is left to third parties. However, it's questionable whether Google could find an independent player of sufficient stature that's willing to offer its services on someone else's infrastructure. The existing players are built around vertical integration, although Dish, already a Google partner, would likely not take much persuading. Such a deal would allow it to immediately add interactive TV, VoD (through its own Blockbuster service), telephony and broadband. 

Google is also likely to rely heavily on OTT services, something we've also seen at the fibre project Broadband for Rural North (B4RN) in Lancashire (see our article 'B4RN: limited broadband availability drives fibre demand in rural areas'). Broadband can be considered an access service, and for the other services (telephony, video, TV) Google can offer its own products, as well as give subscribers a choice of other providers such as Skype and Netflix.

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