Delivering some hard subscriber data to indicate why Google Fiber is reportedly considering a pause, MoffettNathanson analyst Craig Moffett said that the service had only 68,715 video subscribers at the end of June.
“For those keeping score at home, that’s a little less than seven one hundredths of 1 percent of the U.S. video market,” Moffett said in an investor note released yesterday.
The numbers come via a filing with the U.S. Copyright Office – necessary for maintenance of a compulsory license for broadcast signals. With Google Fiber eschewing the release of customer metrics, the tiny market share in pay-TV services hints at the diminutive size of the overall business, and explains why the division has laid off half its staff and has stopped deploying its lines in new markets.
Using a conservative estimate that only around 15 percent of Google Fiber subscribers also take video, Moffett estimated that the service would have had 453,000 broadband customers as of the end of June, representing less than one half of 1 percent of total U.S. ISP customers.
For its part, Google Fiber hasn't confirmed it's in retreat. An individual with knowledge of the company's business said it's sub base has grown 110 percent year-over-year in its original market, Kansas City, and it is now in three more markets since the June filing. Besides, the individual added, Google Fiber's primary service is fast broadband, not pay-TV.
Responding to this article, a Google Fiber spokesperson said, "We’re very pleased with Google Fiber TV sign-ups, which have been very strong. In the past two months since this filing we opened new cities including Atlanta, Charlotte and Salt Lake City, so we expect the growth to continue."
Moffett, meanwhile, also suggested Google Fiber’s primary reason for existence has been undermined.
“Google Fiber, which we have always maintained was a largely regulatory gambit anyway, may turn out to be an unexpected regulatory albatross instead,” the analyst said.
Last week, Moffett pointed out, the U.S. Court of Appeals for the Ninth Circuit issued a surprising decision in tossing out a case brought by the FTC against AT&T Mobility for allegedly misrepresenting claims of ‘unlimited data’ and policies with respect to throttling.
In effect, the Ninth Circuit ruling suggests that since the FCC has now reclassified broadband providers as common carriers (both wireless and wireline broadband providers alike), the FTC no longer has jurisdiction,” Moffett explained.
By one “draconian” interpretation, “all of Google could be pulled into a regulatory vortex of the FCC,” Moffett speculated. “Care to try out a net neutrality ban on paid prioritization on Google’s paid search business, anyone?”
Article updated Sept. 9 to reflect added comment from Google Fiber.
- read this MoffettNathanson report (sub. req.)
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