Analyst: Google Fiber can be ‘an economically attractive’ business for Google

It’s taken awhile, but Wall Street is now regarding Google’s deployment of Google Fiber in Kansas City with less animus and more admiration, predicting the new Internet and pay-TV play could be a headache for Time Warner Cable and AT&T U-verse, which both have irons in the K.C. fire, and even become “an economically attractive” stand-alone business for Google.

And, says the Kansas City Star, early users report more positives compliments than complaints since the service has launched.

According to a Multichannel News article, Bernstein Research says the new service has the potential to grab a larger share of the market in Kansas City than a traditional overbuilder would. And, the research firm said, Google Fiber will be able to survive even if incumbents resort to slashing prices, a traditional “scorched earth” approach to competition.

“Google has the resources to continue to build out and extend its footprint, even if the profitability of its initial markets is hampered by aggressive incumbent price cutting,” said Bernstein.

MCN reported Bernstein’s survey of 204 K.C. residents found 98% were aware of Google Fiber; of the 77% that were considering buying the service, 60% classified themselves as extremely or very likely to subscribe. Overall, 52% said they would “definitely or probably” subscribe.

Bernstein said said those results meant it’s possible “Google will indeed achieve very high penetration of homes passed, well in excess of the typical 20% to 30% that over-builders have achieved historically in their most successful markets.”

Bernstein said the service has become attractive for an obvious reason: “Google is clearly trying to offer something different,” adding that Google likely would continue to work to differentiate its video offering from those of its competitors.

Last year, Bernstein—and many other research firms—pooh-poohed Google Fiber as just another Google experiment, and were, let’s say, very cautious about its future.

The latest note, however, is singing a different tune.

Bernstein is now “substantially more positive on the prospects of Google Fiber to be an economically attractive business for Google on a stand-alone basis.”

The Bernstein report isn’t the only one out singing Google Fiber’s praises.

The Kansas City Star last Sunday ran a business feature on the company that shows Google Fiber may not be headed to the same customer service graveyard that many service providers inhabit.

Among the differences between Google Fiber and its competition, the Star reports:

• Customers say installers show up for appointments on time.

• Google Fiber is offering proactive tech support, informing them when something needs to be fixed without prompting. And,

• Customer’s receive credits on their bills for service glitches they may not have even notified the company about.

“The customer service is outstanding. They’re very apologetic if there’s a problem. They do their best to take care of things,” said one customer, whose home was hooked up in November. “It’s not something you’re used to with that kind of service.”

The Star said Google Fiber customers “mostly talk about the delight of dumping predecessors, cable and phone companies that have had the chance over decades to disappoint customers.”