No doubt we have all heard about Google rolling out fiber broadband networks to under-serviced communities in the USA, but we haven’t heard about is how they are going about it. If Stacey Higginbotham at GigaOM has got it right, the telecoms and cable industries may not want to hear the news.

What may have looked like a loss-leader for the search giant trying to prove a point, now has all the hallmarks of being a big money spinner and a serious competitive threat to any operator they cross ‘fibers’ with. It seems Google is now able to deliver one gigabit per second to homes in Kansas City, that’s 100 times faster than most services today, and at a profit.

It appears that Google’s ‘secret’ is that it has found ways to rollout a brand new fiber network at a much lower cost by using common sense and doing developing its own products to roll out with. As Higginbotham points out, “From the infrastructure on the back end to the TV and Wi-Fi routers in the home, Google has built its own stuff. Google is taking the most basic elements of a network and assembling them into custom gear, much like it does on the data center side.“

A lot of the components needed don’t involve rocket-science and using a technique deployed by some CSPs over the years, they invite suppliers in to show their wares, buy some and then construct a custom-made network using those and other components they design and build themselves.

The common sense comes in by reducing the biggest cost of the rollout, physical labor. “Google has already strung cable on power lines throughout Kansas City and lowered those costs by working with the local utility and AT&T to get access to the utility poles without having to pay high fees.” Although a cost-effective way of getting fiber to the last mile, it is not exactly aesthetic as residents in Sydney, Australia discovered when Optus used the same methodology fifteen years ago.

Google has also built its own hard drive to act as a DVR, a TV set-top box to provide channels and a network box that acts as a modem and provides Wi-Fi connectivity in the home — cutting out traditional providers altogether. They have even integrated a QR code on each box that facilitates fast activation that customers themselves will be able to manage in future.

Back in March, 2010 Google’s then CEO, Eric Schmidt, stressed the Google was purely experimenting with fiber in an effort to see what was required to bring networks up to 1Gbps, which could pave the way for more exciting applications and convince telcos to upgrade their networks.

As the Insider wrote at the time, “analysts weren’t buying that and Google’s push into infrastructure would inevitably add to fears surrounding its overwhelming corporate power, and increase regulatory heat on the company.” He also asked then, “Is it time for telcos and ISPs to panic? Probably not, but they should not underestimate the financial and purchasing power Google wields with its established and highly profitable cash-generating search core. Nothing, it seems, is impossible for Google.”

Now we can see that Schmidt’s ‘experiment’ may end up being a master class in economic fiber deployment. Some countries rolling out high-cost NBNs may be wondering why they can’t do what Google is managing to do. Others planning such a capital-intensive exercise may be wondering why they don’t just invite Google to do it for them. In Europe, where private investors and existing network operators are being coaxed into expending hard-to-find capital in major upgrades, Google may just fill the gaps.

After all, it has the size, it has the money, it has the ongoing revenues, it has the technology and it now has the track record to be a network builder – that could all add up to a nightmare scenario for existing players.

First published at TM Forum as The Insider, 27 July 2012.