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I've Altered the Deal. Pray I don't Alter it Again

Yesterday, Google announced additional details for the implementation of a fiber network to Kansas City. I'm not going to repeat that stuff-- it's all over the internet. Just look around. What I'm going to do is air a bit of a grievance about it, because the more I find out about this deal, the worse the deal gets.

When Google announced last year that they would be building an unprecedented fiber network in Kansas City, all involved and affected were buzzing with energy and excitement, myself included. A gigabit of internet access to everyone in town! 650,000 residents thrust all of a sudden into the future. The potential was staggering.

The unimaginative could only see the face value. Higher-speed access to the internet. Youtube and facebook will load faster. Netflix loads faster, and possibly at a higher quality. But I saw that this was huge. It was much a greater catalyst than that, because my thought was that the potential for innovation, capitalism, and commercial opportunity would be so great that this would be the biggest economic watershed for Kansas City since the railroad bridge was built in 1869, and possibly bigger.

This was what I thought Google's idea was too. Then, over the intervening months I started to read about Google's fiber initiative including residential television service, and I became confused. What reason do they have to break into television? How will that foster the commercial renaissance I had envisioned? If anything, it'll just make it difficult for existing carriers to do business in Kansas City. That isn't innovation. With both KCMO and KCK bending over backwards to make this happen, that's government-sponsored competition killing. My opinion of Google declined.

Then, the announcement was finally made as to how things were going to go down. A marketing-laden presentation was given yesterday, to highlight the major points of Google Fiber, talking entirely about how it can be used and enjoyed by people at home. No mention whatsoever was made of the business application of it. No mention whatsoever was made of how it would improve public services, or level the playing field for Kansas City's ailing schools and underfunded hospitals. It was basically an expensive advertisement for a home ISP. Again, my opinion of Google declined.

It was announced that KC had been divided up into geographical areas referred to as "fiberhoods," which surreptitiously excluded large parts of the city. Each fiberhood coincided loosely with existing neighborhoods, or did as much as possible, and residents of each could now preregister for Google Fiber service. But a couple hooks were added without specific announcement. If a fiberhood didn't reach a number of preregistrations by Septemer 9th equal to an arbitrary percentage of all the housing units within it, the Google Fiber would not become available there.

Further, and cruelly so, in my opinion, Google has seen fit to deny access to its network to schools and public buildings in fiberhoods where the arbitrary goal isn't met. The goal for most of the city is five or ten percent, which on its own is very significant. However, in downtown it's twenty five percent, with the highly noticeable exception of the River Market, which is five percent. Google claims on the registration page and interactive maps that fiberhoods that don't reach their goal by September 9th will not get service, and the ones with the highest percentage of registrants, as compared to their goal, will get service rolled out first.

This is not a good time to live downtown. Amazingly-- flabbergastingly, downtown might actually not get Google Fiber service.

This is not a good time to innovate. This is not a good time to move your company to Kansas City. This is not a good time to invest in Kansas City. Because unless we hear something different, all we're looking at with Google Fiber is faster Facebook and Youtube.

1:29 PM, Jul 27, 2012

5 comments

Boss Tom's Ghost interrupted with:

It is refreshing to see a healthy dose of skepticism to contrast the Google cheerleading, but not sure it is entirely warranted. Google is realistically investing (tens? hundreds?) of millions of dollars in local communications infrastructure and it isn't because they are charitable. They are $200 billion publicly traded corporation that needs to make money on this or it just becomes another failed tech business plan. They have little choice but to initially seek out the low hanging fruit to start the service. Using the techy appeal of social media and human competitiveness, their fiberhoods will tell them where the early adopters and willing investors are located. Once those areas served, if economically feasible, the remaining areas will get wired. That surely includes downtown, east of Troost, probably even north of the river and maybe even the swines in JoCo may eventually get their hands on fiber.

You should also not forget the biggest blow to incumbent ISPs, the "free" broadband option. A $300 fee to provide 7 years of what would still be considered a standard broadband connection, or roughly $3.57 per month. No ISP is currently offering that kind of deal. That is what changes the playing field. And once that 7 years is up, you already have fiber installed to the premises. Imagine if buildings downtown just told Google to wire the whole building and make broadband free to all residents unless they wanted the full 1000 mb/s and video service. $300 a unit is a meager investment to offer that kind of amenity.

I agree the video service isn't anything to wow you. If they offered a la carte channel lineups, that would revolutionize the video industry. As it is now, it is simply an alternative to existing providers, which is still a welcome site given that TWC can be just simply awful. Incumbent providers have had decades to build, establish, and adjust their services, add customers, and get feedback. The fact that people are racing to get away from them should say more about the status of our existing communication and media options than what Google is actually providing. Even an unimpressive offering may still be better than what we currently have.

2:13 PM, Jul 27, 2012

ihtarlik blurted:

Part of the deal with the city is to install fiber to roughly 200 public buildings such as libraries and schools. That's just not part of the media hype. The city management

knows about this, and they don't need a social media marketing campaign to get those institutions to "sign up." If you talk to any of the Google team members, they'll tell you

the goal is downtown South to I-435 first, then they plan on expanding more North and South. They eventually want to provide access to many more cities besides Kansas City,

but that will entirely depend on how well things go here.

I know a lot of people that are very excited about it, and a great many more that are anxious to find anything even marginally better than what Time Warner, AT&T, and Comcast

have been spoon-feeding us for the last few decades. SureWest recently put fiber in Olathe and began offering 18Mpbs symmetrical service for about $50/mo and people jumped

ship from Comcast like rats fleeing a fire. I don't think Google will have any problems convincing people to switch.

But even more intriguing is the way their reps talk about "taking down" the other service providers. This is entirely speculation, but I think Google plans to disruptively

innovate the broadband industry and out-compete anyone in their way. And once they have enough people signed up for TV, I expect they'll do something highly disruptive in the

TV industry as well. Imagine if they competed their way to being the number one cable TV provider and then decided to use that base to negotiate for a la carte programming?

Wal-mart does something similar with its manufacturers. And if companies like NBC tried to back out, less people would be willing to go back to pre-gigabit Internet than jump

ship again to get that programming back (especially when they learn how to torrent on gigabit).

5:06 PM, Jul 27, 2012

ihtarlik had this to say:

Part of the deal with the city is to install fiber to roughly 200 public buildings such as libraries and schools. That's just not part of the media hype. The city management

knows about this, and they don't need a social media marketing campaign to get those institutions to "sign up." If you talk to any of the Google team members, they'll tell you

the goal is downtown South to I-435 first, then they plan on expanding more North and South. They eventually want to provide access to many more cities besides Kansas City,

but that will entirely depend on how well things go here.

I know a lot of people that are very excited about it, and a great many more that are anxious to find anything even marginally better than what Time Warner, AT&T, and Comcast

have been spoon-feeding us for the last few decades. SureWest recently put fiber in Olathe and began offering 18Mpbs symmetrical service for about $50/mo and people jumped

ship from Comcast like rats fleeing a fire. I don't think Google will have any problems convincing people to switch.

But even more intriguing is the way their reps talk about "taking down" the other service providers. This is entirely speculation, but I think Google plans to disruptively

innovate the broadband industry and out-compete anyone in their way. And once they have enough people signed up for TV, I expect they'll do something highly disruptive in the

TV industry as well. Imagine if they competed their way to being the number one cable TV provider and then decided to use that base to negotiate for a la carte programming?

Wal-mart does something similar with its manufacturers. And if companies like NBC tried to back out, less people would be willing to go back to pre-gigabit Internet than jump

ship again to get that programming back (especially when they learn how to torrent on gigabit).

5:06 PM, Jul 27, 2012

staubio offered:

This strikes me as a pretty short-sighted view. Is innovation and entrepreneurship the stuff of office

buildings or of driven, creative people being empowered? That's what fiber is.

Besides, simply providing this one of a kind amenity is a game changer. This was always a consumer

focused product. We are a test bed for how new products and services can be delivered with this kind

of connectivity? If they want to sell us TV with some of that fat pipe, who cares?

If all we do is Facebook with Fiber, that's our fault, not Google's.

10:23 PM, Jul 29, 2012

Jeff interjected:

the fiberhood goals aren't arbitrary. it makes sense that it would be more difficult to run fiber lines where you have to

dig things up as

opposed to climbing a pole. i'm sad it means some folks like you may end up getting it later, but they're going for the "low

hanging fruit"

first and i can't blame them for that.

=================

http://fiber.google.com/help/

How did you decide the fiberhood pre-registration goals?

Like many of our projects at Google, we relied on data.

All fiberhoods are different. They range in size and density as well as speed and ease of Fiber construction. For example,

houses that are spread

out (like in the suburbs) require more time, fiber and labor, and therefore are more difficult to connect than homes in a

dense urban

environment. So, in those fiberhoods that are more complicated to build, we want to make sure that enough residents will want

Fiber service.

Taking that into account, we determined fiberhood pre-registration goals by grouping fiberhoods into three tiers:

• Fiberhoods that have a 5% goal. Typically, these areas will be easy to build and install.

• Fiberhoods that have a 10% goal. Typically, these areas will be more complicated to build and install.

• Fiberhoods that have a 25% goal. Typically, these areas will be the most complicated to build and install.

8:46 AM, Jul 30, 2012

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