Google Hurts Cable Companies by Going Hyper-Speed
Chris is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
The look on his face says it all. I’m sitting in a coffee shop looking at a man working from his laptop. You can see the frustration littered all over his face like a capsized garbage truck. Slow internet.
The problem is that slow internet plagues more than just coffee shops – the dreaded ill is making its way into homes across America. Your speed may not be bad with a smartphone and two laptops, but a family with three laptops, four smart phones, two iPads, and three TVs will see major internet lag.
With an ever-increasing number of internet-connected devices fighting for the same limited internet bandwidth, connections are growing slower and slower. However, a few players are making updates that could attract customers - and more importantly - create shareholder value.
AT&T (NYSE: T) and Comcast (NASDAQ: CMCSA) both agree that the speeds they advertise are for devices that are directly plugged into routers. AT&T and Comcast are both finding new ways to improve their routers and bandwidths so that home users can achieve faster connections speeds. But while their top speeds can likely touch 300 mbps, the providers concede that numerous other factors can put a drag on performance.
Verizon (NYSE: VZ), for example, claims a top speed of 305 mbps. However, the company says that its latest router gives “real world” speeds of only 85 mbps. Real world speeds are the speeds achievable when users take into account competing devices and other hindrances to bandwidth. So, until Verizon’s FiOS can achieve top speeds in users’ homes, the service remains far slower than it is made out to be.
The difference between the advertised speed and the actual speed can leave some users scratching their heads - and it could have them looking for alternative providers. Of course, this leaves the large broadband companies open to a competitive strike.
Google Could Steal Market Share
To no surprise, one company trying to reinvent the industry is Google (NASDAQ: GOOG). Google is currently testing a network in Kansas City rumored to have max speeds of 1,000 mbps, or 1 gigabit per second. But until the network is ready to go live throughout the whole country, Google has a compromise – it has built a router capable of reaching “real world” speeds of 300 mbps.
If Google is able to build such a fast, "hyper-speed" network, it could out-innovate the industry incumbents and force them to pour additional investment dollars into faster networking speeds - multiplying their investment costs. Also, the companies could lose customers as they wait for the faster networks to be built. Both scenarios are bad for traditional cable companies.
Aside from Google, whose favorite business model seems to be reinventing industries, the major carriers have an incentive to collude to keep speeds at constant levels.
However, until Google goes mainstream with its product - and until competitors up their speeds - internet users do have options to obtain a faster, more reliable connection.
Until Network Speeds Improve, Try This
Boost the router’s power – Many routers can only handle speeds of 54 to 100 mbps. Perhaps your dated router can handle only 54. Maybe it’s time to check.
Find a better place – The further away the signal from the device, the worse the connection. Place the router in a central place that is not distanced from the devices you will use most often.
Minimize Interference – Neighbors’ routers, microwaves, and even baby monitors can limit a Wi-Fi signal. Position your router away from these items.
Cut dead weight – If your network is shared between 10 devices, do all of them really have to connected to the internet at once? Switch your smart phone off of your home network, turn off the Xbox signal, and power down that iPad you aren’t using right now.
Buy accessories – Certain types of power adapters can extend the range of your Wi-Fi signal by accessing the electrical power lines inside your home. You can also plug your TV or Xbox into a cord connecting to the adapter, giving you a connection similar to one you would receive from connecting directly to your router.
Go direct – If you must have the optimum connection – maybe you are day trading oil futures – don’t risk it. Go direct. Plug right into the router. No exceptions. In fact, if you make your livelihood from trading, it would be a good idea to even have a back-up internet service provider. Could a missed stop loss order cost you $5,000? All of a sudden that $300 or $400 annual back-up connection doesn’t seem that high.
Back to the Coffee Shop
However, until speeds improve, users are stuck with trying to find ways to speed up their internet.
Flash back to the gentleman in the coffee shop. There are probably 10 laptops in here, plus 40 mobile devices, and that doesn’t include all the interference from passersby or the store next door. That totals 50 devices that he is competing with, just in this restaurant. The thick walls and interference from all of the cooking equipment are probably getting to his connection, as well.
Either AT&T, Comcast, or Verizon likely supplies the internet connection here - and it is frustratingly slow.
Maybe he should just head home – he could likely get a much faster connection by making just a few small tweaks.
ChrisMarasco has no positions in the stocks mentioned above. The Motley Fool owns shares of Google. Motley Fool newsletter services recommend Google and AT&T.; Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.If you have questions about this post or the Fool’s blog network, click here for information.