Hints of respectability for Google Fiber’s sub count

by Steve Blum • ,

Some tantalising numbers have been published that could be interpreted as bad news for Google Fiber’s subscriber count. Or it might foretell market success. It depends on how you look at it.

MoffetNathanson Research took a bearish look at the latest filings with the U.S. copyright office, which collects pay TV data, and found that Google has 53,000 video subscribers in the three markets where it’s doing business – Kansas City, Provo and Austin – which indicates it grew by only 23,000 subs in 2015.

That’s video subs. Not broadband customers. Nor does it say much about how extensively Google has built out its fiber network in those markets. According to a story in re/code, Google Fiber has a reasonably good sized share of homes in the two Kansas Cities…

Moffett reports that Google has more than 7,000 video subscribers via its Google Fiber service in Kansas City, Kansas — about 13 percent of the market there — and more than 20,000 subscribers in Kansas City, Missouri — about 10 percent of that market.

Combine those numbers and you get about 11% video penetration of the two KCs (that’s within city limits – suburbs aren’t included). To me, that points towards a very healthy penetration of Google’s addressable universe, the homes it actually reaches with fiber.

Let’s play with the numbers a bit. If you make the wild ass guess that Google has built out half of the two cities and that half of its broadband customers opt for the video package too, then that 11% becomes a 44% share of its addressable broadband universe, which is a dominant share. If you assume an 80% broadband adoption rate – still a guess, but not so wild – that leaves the incumbent telephone and cable companies with 36% of the market, or 18% each assuming an even split. Ouch.

If you’re less wild and assume that Google has built out to three-quarters of the homes in the two cities and sells video to three-quarters of its broadband subs, you get a 19% take rate which is respectable for the third major ISP to enter the market. My guess is that the correct figure is somewhere between those two scenarios. Not dominating, but punching equally with cable and telcos: a success for Google Fiber.