Great post online at RWW called “The Genius of Google Fiber” and I agree on many fronts but wanted to elaborate on the advertising angel.
It is clear by now that with everyone who uses the internet, with every minute you use it more, Google wins, and they have the data to prove it. When a big telco asks if you want to have Gbit Internet for $2000 a month, most will say no, but for $50… sure. That is not something that the big telcos want though.
But let’s do a calculation. You are online 24 hours a week, 100 hours a month on average. 21% of that time is spent searching, of which most if not all is Google anyway. This means that you are searching for 20 hours a month. In 2011, Google had a billion unique users a month, so let’s presume they have 2 billion now. They also have 5.6 billion adimpressions per day on search, on average i’d guess 2 ad impressions per search, so 90 billion searches a month. Each user does 45 searches per month. On average 65% of the clicks are paid and I presume that there are three clicks per search on average. Means 135 clicks per month with 90 of those being paid, at $0.35 on average. That’s something around $30 per month. That’s actually close to the $43 per user cited on Motley Fool.
With Google Fiber they have people watch movies online, be faster, be able to do more in the same time, and so on. Can you get that time from an average of 100 hours per month, to 150 hours per month, which is just 5 hours and includes TV. That would mean an extra $20 that Google will make. Remember this is an average, you just get a lot of people from a few minutes a day. And it is a lot more complicated than that.
But, what becomes visible is that Google will possibly make something like $20 per user in Ads without getting anything for the pipe.
This makes it very very interesting for Google and is a revenue stream that the telcos cannot match. And it does not factor in the lockin value, and other things.
The telcos better beware.
(P.S.: and this is just a thought experiment and probably wrong in different points but also probably not too far off )