Is Google Fiber Forcing ISPs to Offer Faster Service?

If you live in a market that has Google Fiber, it's very likely the incumbent provider or providers will increase the speed of their service.

This happened recently in Charlotte, N.C., where Time Warner Cable announced it would begin offering TWC Maxx, an ultra-high-speed Internet service. In addition to telling customers they'll be "experiencing increases up to six times faster, depending on their current level of Internet service," Maxx also comes paired with an enhanced television offering.

Time Warner Cable isn't alone in improving its product when the search giant comes to town. AT&T had the same reaction in Kansas City, Mo., and Comcast is rolling out a service that "absolutely crushes Google's offering, with speeds twice as fast," in Atlanta, according to my Fool colleague Sam Mattera.

Source: Comcast.

If Google comes to town, the incumbent has to get better. In reality, if the search leader even hints at entering a market, that's probably enough to get the established players to miraculously decide out of pure benevolence to offer their customers faster speeds.

That behavior is probably exactly what Google wants.

Google's plansJust because Google enters a market or new business segment doesn't mean it wants to dominate it or even build it out to a large scale. Instead, the company wants to spur existing players to work harder to meet a need the search giant perceives.

In a speech at Mobile World Conference in Barcelona, Google Senior Vice President Sundar Pichai laid out this philosophy when talking about the company's efforts in consumer electronics and in offering wireless phone service.

"It's a bit misunderstood outside [the company] as to why we do Nexus devices," he said. "All innovations in computing happen at the intersection of hardware and software. For you to drive the next generation, you need to do both closely together."

He explained that "compared to the rest of the industry it's a very small scale," acknowledging that the goal of the device was to push other companies to follow.

He implied that a wireless service would follow the same model -- big enough to test concepts, but not a major player.

"We don't intend to be a network operator at scale. Our network partners will be the ones who provide service," he said.

Google Fiber -- though the company has not said anything to this effect -- is probably for the same purpose. It's a cutting-edge service meant to force ISPs to innovate and offer customers more.

Competition is badly needed"FCC data from 2013 shows 55% of American households have no choice in their broadband provider, and the agency has said Comcast will be the only broadband provider for nearly two-thirds of consumers if the company is allowed to merge with Time Warner Cable,"Time.comreported.

"The real problem is lack of competition, and that's where the solution should be,"Columbia University Associate Professor Vishal Misra told the website.

Since the ISPs have little incentive to compete with each other, Google throws a much-needed wrench into the works.

Google knows what it's doingGoogle has bigger plans than being in the fairly pedestrian ISP game. The company has made it clear that it only wants to bring Fiber to communities that roll out the red carpet, but that doesn't stop it from batting its eyes at any municipality where the existing provider needs a kick in the pants.

This approach is already paying off, as Comcast's new service will begin in Atlanta, but it will eventually be rolled out to almost all of its customers. If that holds true if the company is allowed to complete its merger with Timer Warner Cable, then Google will have accomplished its goal.

Google Fiber may not come to your community, but it might bring you faster speeds anyway.

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Daniel Kline has no position in any stocks mentioned. He has regular not-super-fast Internet service. The Motley Fool recommends Google (A shares) and Google (C shares). The Motley Fool owns shares of Google (A shares) and Google (C shares). Try any of our Foolish newsletter services free for 30 days. We Fools may not 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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