Google’s Little Fiber Experiment Could Cost Over $1 Billion
The surprise announcement that Google (GOOG) is going to experiment with installing ultra fast optical fiber-based broadband Internet access to up to 500,000 people has some very real potential economic consequences.
Broadpoint.Amtech analyst Benjamin Schachter does the following back-of-the-envelope math. There are on average 2.6 people per household; so reaching 50,000 to 500,000 people means roughly 20,000 to 200,000 homes. The cost of the rollout–which will involve physically laying cable to individual homes–he thinks will be somewhere between $3,000 and $8,000 per household. That comes to anywhere from $60 million to $1.6 billion. At the midpoint–100,000 homes, $5,000 each–you’d be talking $500 million.
