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Cable service will reportedly role out in the Kansas City area, will not deploy nationally

Google Inc. (GOOG) is already on top of the lucrative smartphone, advertising, and internet search markets.  It has diversified into other ventures including electric powermusic, and personal computer operating systems, as well.  But there are only two directions to go in the world of business -- up or down -- so the pressure is on Google to continue to diversify into new markets.

I.  Google Takes to the Television -- Again

The company's latest plot, according to a report in The Wall Street Journal, is to sell a subscription cable offering.  To develop these plans Google has snared Jeremy Stern, a respected cable executive, whose experience included a stint at U.S. West, Inc. (USW) subsidiary Continental Cablevision.

Led by Mr. Stern, Google is reportedly in talks with major cable channel providers like The Walt Disney Comp. (DIS), Time Warner Inc. (TWX), and Discovery Communications Inc. (DISCA).  All of these companies and Google declined to comment on the rumored talks.

To those unfamiliar with Google's latest efforts, television may seem a bit of a puzzling market for Google to be diving into.  But given Google's project to test a trial deployment of high speed internet and digital phone service to Kansas City, Kansas television seems a natural fit, as most veteran firms bundle the three services -- television, cable, and phone -- together.  Plus there's the small temptation of cracking what amounts to what is expected in 2011 to be a $150B USD market.

Kansas City Wide
Kansas City is getting Google phone and internet service, so why not cable? [Source: Ron Saari]

Standing in Google's way are the veteran cable and satellite firms, who are actively working to get exclusivity contracts, which would lock would-be entrants like Google out of the mix.  Keval Desai, a venture capital analyst with InterWest Partners LLC, "TV is built on a closed system, which is why traditional cable and satellite operators are the only place where consumers can get ESPN and other channels."
Google Cable graphic

But Google is one of the few who might have the financial power and reputation to potentially break into the closed market.  It's not entirely unfeasible that Google could gain access.  Historically, according to the WSJ, cable companies are willing to license channels to other companies like satellite firms and phone companies, assuming they're willing to pay much more than the standard rate.  And the fact that Google thus far claims no intentions of rolling out national service could assuage the concerns of wary companies like Time Warner, whose sister companies sell cable themselves in some markets.

III. Could Google Cable go Nationwide?

For those lucky individuals in the Montana or Missouri in the regions covered by Google, the promise of cable should excite.  Some believe Google could offer cable at better rates than local competitors, even paying a higher price per channel.  Ostensibly it would be cable of carrying out such a feat through its industry-leading advertising prowess.  States Mr. Desai, "Internet companies like Google will be able to give you that same high-quality content [possibly at lower prices]."

As for the rest of the country, one possibility is that Google could eventually try to offer a "virtual" paid cable service inside of its ultra-popular video sharing site YouTube.  However, the WSJ's source on the possible K.C. deployment says that is "not on the table right now" in terms of the current talks.  Still the source says they believe preliminary discussion on that possibility are in the works.

YouTube Movies
Cable subscriptions could be the next addition to YouTube.

Of course, that kind of approach would only work if internet companies don't block YouTube to promote their own cable TV offerings, as some have done with internet channels on Google TV.

Source: WSJ

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RE: Yes please!
By Flunk on 11/4/2011 3:56:02 PM , Rating: 2
Don't you know that America is the "Best Country that God Ever Gave Man in the History of the World"? Of course everything there should be better than South Korea! Reality can't possibly stand in the way of that!

RE: Yes please!
By Shig on 11/4/2011 4:50:26 PM , Rating: 2
XZerg, I used to believe that exact same sentiment. I agree that it is easier to basically just wire up a very high density population. Yet when you look for fiber optic maps of the US, you just cannot find them. This is not an accident, the telecoms don't want you knowing where the fiber is or who uses or why.

There is more fiber optics laid in New York than in South Korea as a whole. There are more fiber optics in Silicon Valley than South Korea, there are more fiber optics in most US states that go unused than most countries even have. You may say this is conspiracy and pessimism, but I dare you to find an up to date map showing where fiber is, how it's being used, for what purpose, who laid, at what cost was it laid, how much of it was laid, etc etc etc, the list just goes on. AT&T, Comcast, Verizon, have paid to keep it this way in the name of 'competition'.

RE: Yes please!
By Spuke on 11/4/2011 5:42:56 PM , Rating: 2
Wow! What a stretch. Just because the telcoms won't tell you where their fiber is (none of your business really) doesn't mean they're up to no good.

RE: Yes please!
By borismkv on 11/4/2011 6:01:24 PM , Rating: 3
It is my business if they were given government subsidies to lay the fiber, which they were. Then there's the fact that having an actual map of fiber lines would keep Billy Bob from driving through them with his plow (happens a lot in Southern Arizona).

RE: Yes please!
By Spuke on 11/4/2011 6:16:29 PM , Rating: 2
It is my business if they were given government subsidies to lay the fiber, which they were.
"I can dig where you're coming from."

RE: Yes please!
By ount252 on 11/4/2011 9:54:46 PM , Rating: 2
FYI-A lot of the Telecom companies lease each other's backhauls. Plus, there are major Backhaul providers out there that only sell fiber trunk bandwidth. One of the largest trunk providers out there is Level 3. Here is their trunk map

Another would be Great Western Communications, but they are mostly Wireless.

Just because you aren't informed doesn't mean something simply doesn't exist. Why should an end user need to know about uplinks that are astronomically out of their price range? You advertise to a potential customer base, not to everyone willy-nilly. Advertising and marketing is expensive, and you will find that there are amazing products and huge companies out there that you know nothing about because you aren't in their target demographic.

RE: Yes please!
By Cheesew1z69 on 11/5/2011 1:37:25 PM , Rating: 3
"Spreading the rumors, it's very easy because the people who write about Apple want that story, and you can claim its credible because you spoke to someone at Apple." -- Investment guru Jim Cramer

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