Google Fiber Has Time Warner Cable Tripping All Over Itself
May 4th 2013 10:18AM
Updated May 4th 2013 1:20PM
Before Google rolled out its new, lightning-fast Internet service in Shawnee, Kan.; Provo, Utah; and Austin, Texas, Fiber seemed little more than one of the search giant's playthings -- like self-driving cars or home delivery services.
Last month's article, written shortly after Google announced it was heading to Austin -- before Provo and Shawnee were thrown into the mix -- discussed the "what ifs" of Fiber and its impact on the future of cable. Today, there are no more "what ifs." Fiber's real, it's going to generate revenue for Google, and it will change the way cable operates, in spite of what Time Warner Cable's CEO Glenn Britt says.
Did he really say that?
It was only a week ago Britt was quoted as saying of Fiber: "they have a glow about them ... [but are] no different than other overbuilders that have failed to overtake cable operators." Really? Then why did Britt's Time Warner Cable, shortly after Fiber landed in the Kansas City area, increase its Internet connectivity speeds for customers and drop the monthly fee from $45 to just $30 a month?
Also curious, particularly for a cable provider that called Google Fiber nothing more than "imagery painting" after it was announced Fiber was coming to Austin, was Time Warner Cable's decision to offer its Austin area customers free Wi-Fi access. The free Wi-Fi will require installation of hundreds of hotspots in Austin, but Britt and Time Warner Cable have apparently become all about customer service.
A dose of reality
Along with airlines, the cable industry consistently ranks among the worst for customer service, year in, year out. The animosity consumers feel toward the cable industry is across the board -- Time Warner Cable finds itself on most of these lists, along with competitors including Comcast and Charter Communications . Both Comcast and Charter have the distinction of owning even lower customer service ratings than Time Warner Cable, and that's saying something.
As Time Warner Cable made evident in Austin recently, upping Internet connectivity speeds is a viable alternative, as are lower prices, so what's preventing Charter, Comcast, and Time Warner Cable from enhancing their respective services? No need, at least for now. All three of the cable big boys enjoyed year-over-year growth in their Internet businesses in 2012. Charter saw an 8% jump in Internet customers in 2012, and both Time Warner Cable and Comcast increased Internet revenues in 2012 compared with the prior year, by 13.7% and 9.2%, respectively.
With those kind of results, along with margins as high as 97% according to a Bernstein analyst, getting the cable industry to change Internet strategies wasn't likely -- until Google Fiber entered the picture, that is. Now, in spite of what cable executives like Britt are saying, their actions tell another story.
For consumers, Google Fiber is a no-lose proposition. Either customers will see continual improvements from cable providers -- as Austin and Kansas City have -- or will wait for Fiber or Fiber-like alternatives to become available and jump ship. Based on annual customer service rankings, Britt and his cable industry cohorts should stop pooh-poohing Fiber and start implementing a comprehensive strategy to retain their customers. But don't count on it.
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The article Google Fiber Has Time Warner Cable Tripping All Over Itself originally appeared on Fool.com.Fool contributor Tim Brugger has no position in any stocks mentioned. The Motley Fool recommends and owns shares of Google. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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