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February 12, 2010

Estimating the Cost of the Google Super-Fiber Network

Business Week reports that analysts like Broadpoint AmTech believe that Google's 1 Gigabit per second network will cost about $3000-$8000 per home to implement

Google wants to offer 1 gigabit-per-second speeds to some 50,000 to 500,000 people. At 2.6 people per household, that roughly translates to 20,000 to 200,000 homes. Our friend Ben Schachter, Internet analyst with Broadpoint AmTech, estimates that it will cost Google between $3,000 and $8,000 per home, or roughly $60 million to $1.6 billion, depending on the final size and footprint of the network. If Google reaches, say, 100,000 homes, it would cost the company about half a billion dollars.

Calix Networks has developed an equation that allows them to calculate the cost per household depending on population density (the single most important factor for per house cost of FTTH.)

This is why densely populated places like Hong Kong and some Japanese cities already have gigabit per second internet.



A typical PON is made of two pieces: an optical line terminal (OLT) at the service provider's central office, and an optical network terminal (ONT), which is used to terminate the fiber-optic line and is typically outside the customer's premises. A single ONT costs about $330, according to Fox. Since PON is a shared fiber technology, OLT costs are calculated in terms of ports and are about $80 per port. So the total per household is about $410. The fewer the number of ports, the higher the per-home costs.

It costs more than $600 in electronics for an Active Ethernet-based network. This is closer to what Google has in mind, according to some experts I spoke with.

Mike Day, chief technology officer at ADC Telecommunications, told me this network is going to be a lot more expensive than somewhat similar ones. It would need a really fast switching fabric that in turn would be connected to the Internet backbone at astonishingly fast speeds. This seamlessness is what will bring true speed to the homes on the test network. Think of this as building a smooth Autobahn from the home to the backbone. Day said the network would need to overcome some major design challenges, such as different data center architecture and a different style of servers that don't become a bottleneck and are able to leverage the 1 Gbps speeds.

Google Motivations

* Google needs to explore the outer limits of broadband.
* push the FCC to accelerate its examination of using TV white spaces for wireless broadband
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