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Google's high-speed gamble in KC [The Kansas City Star, Mo.](Kansas City Star (MO) Via Acquire Media NewsEdge) Dec. 11--Let's settle one thing up front: Google Inc.'s plan to build a far faster Internet for our homes could be, as the kids say, an epic fail. It's easy enough to see why the global Internet company would want to juice Kansas City's Web surfing with a little rocket fuel. The faster the Internet -- even measured in fragments of a second -- the more time people spend online. That means Google sells more ads. It's less clear that Google can make a business -- an entirely new business for the search giant -- out of a trucks-and-trenches job that even cable and telephone companies shy from. This is a hardhat project for a software company. Google has never been a utility before. Other than an experiment begun to a few hundred homes in California, it has never done things door to door, never fielded calls from the confused guy with a 10-year-old computer or dealt with squirrels chewing through the lines to a house. Yet now Google says that it will climb power poles and snake cable through the ground, that it will please customers one at a time. It aims to get them hooked up to, and hooked on, the kind of super-speedy Internet service that no one has sold at market prices before. Google might pour $1 billion or more into a network that could deliver the fastest of Internet connections to perhaps 1 million living rooms at a price to compete with what consumers pay for far slower service. Still, no one knows for sure whether it's a good business idea. "They're willing to fail," said Josh Olson, a technology industry analyst for Edward D. Jones & Co. "That's a large part of why they've succeeded." But how could Google's big gamble disappoint? If no gotta-have-it uses sprang from otherworldly Internet. If the service didn't look profitable enough to prompt telecoms to build similarly fast systems elsewhere. Or if Google performed like a junior varsity substitute for the cable company. Google concedes there's no guarantee with the project but insists it fully expects to add to company profits even as it gives first Kansas City, Kan., and then Kansas City, Mo., a tech leg up on the rest of America. "This is not a charity. It's not a nonprofit. It's not a dot.org initiative," said Kevin Lo, the general manager of Google Access, the name the company has given to the light-speed Internet project. "We expect to make money at it. It's a business we expect to be in." Triumph or fiasco, Google plans to string thousands of miles of fiber optic cable across town. That'll mark one of the most ambitious infrastructure overhauls Kansas City's seen in generations. Just having Google compete in the market should keep a lid on your Internet fees. How well Google sells the resulting Internet hookups, and how creatively Kansas City puts the service to use, could change everything from the way Junior plays shoot-'em-up online to how Grandma consults her cardiologist. Whether Google wins or loses on the deal, Kansas City almost certainly comes out ahead. It's tough to say what it will mean for businesses, but the worst case for consumers is that their Internet shifts up to another gear. There have already been fits and starts. Google doesn't concede its schedule has slipped, but it has changed slightly the vague timeline for the project. The real tests that lie just ahead -- it's promising service by summer to at least a few fortunate neighborhoods -- will show how well a company that has thrived like no other online can perform in a world without a delete key. In many ways Google is a wonderful and an awful player to tackle this problem. It's big. It's got money. It's got computer engineering smarts arguably without peer. And yet it has never flipped a switch on a service that resembles this. "The nature of the fiber project itself is a manifestation of our culture," Lo said in an interview on the Google campus in Mountain View, Calif. "We like to take on big problems." The Google culture For the want of Internet speed, Google Inc. almost never was. Never a Web-searching revolution, never a mammoth technology company, never a verb. Larry Page and Sergey Brin were merely smarter-than-most graduate students at Stanford University in 1997. But they'd conjured an elegant new way to find order in a chaotic Internet. Search engines at the time had no clever trick for ranking one Web page above another. Page found a way. He used the power of references between websites to robotically sort for the most valuable search results. It made all the difference. Yet that magic-like algorithm -- called BackRub at the time -- needed faster-than-fast Internet to work its wonders. As luck would have it, the future billionaires happened upon an improperly set switch in a Stanford basement. Fiddle with it just so, they realized, and the school's entire Internet capacity was theirs alone. That ability to beef up their database drew users, which later attracted investors, which ultimately begat the world-changing, fortune-making search savant that today dabbles in everything from Web browsers to driverless cars. From Stanford, Brin and Page moved to a rented room in a friend's house with strict orders to come and go through the garage. Then to a storefront office in Palo Alto. Next to a small office park. Finally onto what is now Google's ever-expanding office park in Mountain View. If Saudi princes were world-class mathletes, they'd probably build something like the Google campus. The Googleplex -- acres of office buildings snuggled in northern California greenery and outfitted to the quirks of a clever teenager -- speaks to the chi of the world's most prosperous, and most imposing, Internet company. Big on color, short on pretension. Plenty of whimsy, not much to see in the way of hierarchy. Clearly flush with cash, and getting flusher. The giant corporation's still-forming culture stands on display amid the volleyball courts, free haute cuisine cafeterias and ironic artwork. (An ocean-themed sculpture garden juxtaposes busts of explorer Jacques Cousteau and Lloyd Bridges, star of the cheesy Eisenhower-era TV show "Sea Hunt.") Drive an electric car? Great. There's special parking next to electrical hookups. Want to dodge the sometimes hour-long commute from San Francisco? Enjoy Wi-Fi on your free Google shuttle. State-of-the-art workout facilities? Check. Laundry rooms? Check. Help-yourself bikes for tooling from one side of the complex to the other? Check. It adds up to what has almost become a cliche for 21st-century technology companies. A load of on-site perks makes the office a fun place and, conveniently, encourages people to work longer hours. Likewise, Googlers all have "20 percent time" to pursue projects not necessarily in their job descriptions. Among the dividends: Gmail, Google News and Google Sky. Googlers -- it's what they call themselves -- like the free meals and the video arcade, the concerts and the lectures by great thinkers. But they speak far more excitedly about the actual work. "We designed Google," Urs Holzle, the company's first vice president of engineering, is quoted in the book "In the Plex," "to be the kind of place where the kind of people we wanted to work here would work for free." The people who work there strive for a sense of "Googleyness." Like obscenity, Googleyness is something they know when they see it. It can alternately mean being intellectually curious, affable or self-sufficient. Perhaps the best is the company's widely touted "airport test" used to hire the earliest Googlers. If you got stuck waiting for a flight with somebody for two hours, could you bank on an engaging conversation? If so, well, that person was Googley. Googleyness started with rich Stanford DNA. It has since been infused with a steady stream of computer engineering talent from Harvard, MIT and other brainy schools that probably didn't have room for you. The corporation has grown to roughly 28,000 employees worldwide. About a third of them work at Mountain View. Applications for wannabe Googlers pile up at a rate of 3,000 a day. Maintaining Googleyness becomes more daunting by the hour. Likewise, the company's famous "don't be evil" motto has become harder to apply as Google gets increasingly enormous. The maxim sprang from a session in 2001 convened to nail down the company's core values. According to "In the Plex," the conversation drifted toward corporate mission statements about devotion to customers and fidelity to the promotion of ethical relationships to ... you get the idea. Paul Buccheit, one of the first 25 Google hires, suggested simply, "Don't be evil." It stuck. Googlers say it's rarely a trump card in internal debates. Data, they say, is the coin of the realm. But the avoidance of evil still courses through day-to-day sensibilities. Don't make a quick buck by channeling ads for porn. Don't suffocate customers in spam. Don't lock up technology with a ridiculous number of patents. Don't be evil. Much like Googleyness, "don't be evil" can be subject to its own situational interpretations. "When the money is easy, it's easy to do good and look good," said Siva Vaidhyanathan, author of "The Googlization of Everything (And Why We Should Worry)." "So far, the money's been easy. We shouldn't confuse past surplus with the size of (Google's) heart." It's not easy being big Relative to its competitors, Google has been reluctant to bottle up its advances in patents. Rather, analysts say, it has erred on the side of making technology more available. This year, though, it moved to buy Motorola in what's been widely seen as a way to snatch up the electronics maker's thousands of patents to protect itself in patent disputes. Or consider how the company struggled to walk a line between commerce and conscience in China. Google.cn launched in 2006. It wasn't until 2010 that Google announced it would no longer censor search results, an uncomfortable concession it had made to the Beijing regime for its license to operate in China. "The benefits of increased access to information for people in China and a more open Internet outweighed our discomfort in agreeing to censor some results," Google explained in a 2010 blog post. It ultimately pulled its search engine from the mainland after human rights activists' Gmail accounts came under mass hacker attacks widely suspected to be spurred by the Chinese government. "Google tried to push back as best it could," said Robert Ross, a China specialist at Boston College. "They were providing a service that was contributing to a more open Internet community in China. ... At some point, that became unworkable." Now complaints are building at home that Google doesn't play fair with its search results. Google Chairman Eric Schmidt, who recently ceded the chief executive job to Page, was summoned to Capitol Hill in September to field suggestions that Google had become a greedy monopolist favoring its corporate ambitions over Web surfers' hunger for the most helpful information. European Union regulators have taken similarly stern views of Google. "Google is no longer in the business of sending users to the best sources of information on the Web," Jeremy Stoppelman, CEO of Internet recommendation company Yelp, told a congressional hearing in September. "It now hopes to become a destination site itself for one vertical market after another ... It would be one thing if these efforts were conducted on a level playing field, but the reality is, they're not." Google handles two out of every three Internet searches in the United States, about 10 times as many as second-place Yahoo, and closer to seven in 10 worldwide. A website's ranking in Google results, consequently, is make or break. Critics say Google's rankings reek of bias steering users to its own services ahead of its rivals. Google has staunchly denied such practices. Its success has been anchored in getting customers something useful, not in corralling them toward Google services. The company now spends more than Microsoft on Washington lobbyists. "If you're a bricks-and-mortar retailer and they're helping direct business to online retailers, you're definition of 'don't be evil' is going to be a little different," said Colin Sebastian, an Internet and digital media analyst at Robert W. Baird & Co. At the heart of Google's growing power sit the unparalleled search algorithms. Engineers tweak the main search formula about 500 times a year. That mathematic treasure is designed to find ever more relevant results. It's not easy. For starters, one in six searches put to Google is something its computers have never seen before. It kicks back most responses in about a third of a second. Google runs searches through its vast array of computers crammed in football field-sized buildings scattered around the world. Those so-called data farms are water-cooled wonders stuffed with pizza box-shaped computer servers that store Google's inventory of the Internet. That means Google is more than just shrewd algorithms and holiday-themed takes on its kindergarten-colored logo. It has grown to include a massive physical network of computers of its own design. So even if you built a better algorithm tomorrow, Google would still have you beat. Speed bumps The so-called Google Fiber project in Kansas City isn't only something the company has never tried before. It's something that probably strays furthest from anything the company has ever succeeded or failed at. What's more, there's a reason you don't have whip-fast downloads now. The industry that serves up your Internet now has deemed it unprofitable and unnecessary. "Three to six megabits" -- speeds more than 100 times slower than what Google wants to provide -- "looks to be the sweet spot in the market for now," said Donna Jaegers, a telecommunications analyst for D.A. Davidson & Co. Talk with technology analysts, and you get a sense of why this might be a bust for Google: --Inertia surely will discourage significant numbers of families from ditching their current phone-cable-Internet bundles in favor of whatever Google offers -- even if its Internet service is far faster and no more expensive. People who study the industry say, sure, consumers increasingly value fast Internet. But they also tend to stay with what they've got. Google might sweeten the package with video. It has declared publicly that it's bringing Hollywood production values and demographically targeted channels to YouTube. The Wall Street Journal has also reported Google is in talks with Walt Disney Co., Time Warner Inc. and Discovery Communications Inc. to cobble together a cable-like TV package. Google is coy about the subject. Even if it offers an entertainment package, there's no guarantee that vast numbers of customers will switch from AT&T or Time Warner Cable in favor of a Google bundle. --Google reasonably argues that the world was once satisfied with dial-up Internet, until YouTube and other applications showed what could be done with broadband. Still, there may be a point when the vast majority of us don't need anything faster. If I can watch high-def movies on Netflix now, why do I need a fatter data pipe? Roughly a third of people who have access to conventional broadband today simply don't bother to sign up. Verizon's FiOS service uses fiber optic lines, albeit not at the 1-gigabit Google speeds coming to Kansas City. It has not been enough of a success to warrant a coast-to-coast build-out. --There will be no algorithmic shortcuts, the scalability that has driven so much of Google's growth, here. This job requires technicians to string hundreds of miles of wire and to install and service hundreds of thousands of homes. Not (yet, anyway) a Google skill set. The same analysts warn against underestimating Google. This is, after all, a company born about the same time as this year's high school sophomores that has transformed a noun (googol, the digit 1 followed by 100 zeros) into a verb into a brand estimated by Interbrand to be worth $55 billion. The entire company's value has topped $200 billion, and Google sits on $43 billion in cash reserves. It has purchased an average of more than one company a week this year. Indeed, the company has said next to nothing about the project since picking Kansas City, Kan., in March and Kansas City, Mo., in May as the kickoff for Google Fiber. Lo said the plan remains on schedule, although he won't say how long it will take to spread the fiber optic network across the two Kansas Citys. Google had originally said it would begin signing up customers this year, a prospect that appears to have disappeared. It had promised to light up the service for those earliest customers in the first quarter of 2012. Now it says those debut customers will get hookups in the first half of 2012. Again, Lo will give no hint how many homes might get access next year. For a company fully and sincerely committed to gathering and making handy the world's information, it shares precious little about its own intentions. As for its reticence about the Kansas City project, Google notes it's about to take on some new competitors. That doesn't give it much incentive to say where the service will go first, or how it will choose those neighborhoods, until it must. "The community is interested," Lo said, "and the community will figure it out with us." Google likes to say it has tried plenty of improbable things before. Its track record is largely one of success. It gave away free email accounts with vast storage when people thought such a thing was nuts. That built a new place for its ads. It created an Internet browser -- Chrome --when the geekocracy saw no point to adding another flavor to the mix, and quickly amassed users by the tens of millions. It brought you Google Maps when you were already delighted with MapQuest. Apple charmed the world with the iPhone. Google gave birth to Android and made it the planet's most widely used smartphone operating system. So they've got the Benjamins and the brainiacs to power through. If Google fails? Now let's assume that, on the high side, Google sinks $1 billion into wiring Kansas City (Google won't say how much it's spending. Analysts say it's a tough cost to guess at, but that the hundreds of millions will pile up quickly.) And let's assume that too few people sign up for the service, spoiling Google's contention that it will make money, and soon. It could still be a great move for Google. Whether most of Kansas City or just a significant minority fires up Google Fiber the company should get a solid look at what happens when large numbers of users move into the fast lane. Ideally, that gigaspeed will summon a certain magic. Google makes the case that we won't know what voodoo will take over on a blindingly fast Web until we get one. Then, though, the digital alchemy could transform our lives the same way Pandora, YouTube and Hulu altered our online universe. Imagine teleconferencing that links together not two locations but 10, and without a single bit of herky-jerky Skype-style delay. Or picture cyber-age house calls that make life easier for both doctor and patient. Consider how kids could attend school from home on days when they're sick, or marooned by a snowstorm. The company is hoping for even more dramatic changes. Should something special happen in Kansas City, pressure could grow for companies such as Comcast and Time Warner Cable to bring equally fast Internet to other markets, or risk Google moving in on them there as well. That's where the big payoff lies for Google. Faster Internet = people using the Internet more = more money for Google. "Part of their strategy in Kansas City is just learning," said Olson, the Edward Jones technology analyst. "They could spend $100 million and walk away with $50 million worth of learning. They can afford that." Cable and telephone companies essentially stumbled into the business of being Internet service providers. They were, after all, the utilities that had communication wires running to your home and figured out how to add Web connections to the mix. Those telecoms have been able to draw ever faster Internet speeds from mostly copper lines that run to homes by finding increasingly inventive new ways to move larger amounts of data faster. Now, most in the industry think, that old wire has been pushed near its limit. And though they've moved their high-capacity data hubs closer to homes, they've not seen a profit in taking fiber optic lines all the way to the home. It's labor-intensive work to hang more cable on utility poles, pull it through underground conduit and build new trenches. It's pricey. So Google's plan to install that ultra-speed fiber challenges the telecommunication industry's conventional wisdom. Why would Google take such a gamble? "People care about high speed," Lo said. "At a very, very high level, we all recognize that broadband connectivity is as important as roads. ... It's infrastructure that's critical for U.S. competitiveness. ... We want the Web to move forward." Throughout its history, Google has been obsessed with speed. A study it conducted in 2007 found that differences in the return of search results of a tenth of a second altered the likelihood a user would try another search. Incongruous as it may seem -- two-tenths of a second is generally thought to be the limit of human perception -- those fractions of an eye blink seem to matter. "A huge amount of energy goes into making the results milliseconds faster," Lo said. This isn't the first time Google risked company loot to influence how other industries were managing Internet gateways. In 2008 the Federal Communications Commission put up the so-called "C Block" of radio frequencies for auction. By bidding up the price, although the company didn't actually want to buy the spectrum, Google triggered regulations that would force the ultimate buyer to allow "open applications" and "open handsets." "They were glad to let somebody else buy (the spectrum) as long as they had a say in things," said Rob Enderle, a technology consultant to hardware and software companies. From Google's perspective, the gamble was worth it. The move aimed to make smartphones less captive to a particular carrier, and make room allow open-source devices like those using Google's Android operating system. That might give a peek at another reason Google wants to use Kansas City to show what happens when hundreds of thousands of homes crank up ultra-fast Internet. Google has been an advocate for "net neutrality," a set of regulations calling for all Internet content to be delivered at equal speeds. Much of the telecommunications industry is less enthusiastic about the idea. Opponents of net neutrality see a value in moving some kinds of traffic faster than others. Doing so could prevent some users from hogging a neighborhood's bandwidth. It could also be a way to generate more revenue by charging content providers a toll for giving their traffic priority. By building an info-freeway with plenty of room for most all traffic, Google could make a strong case for net neutrality. "If you put enough pipe in there, you don't have to worry about who gets top priority," said David St. John, a spokesman for the Fiber-to-the-Home Council North America. "There becomes plenty of room for everybody." Some in the industry are skeptical that wiring Kansas City will be enough to win the day. "One market doesn't change things," said Larry Gerbrandt, an analyst for Media Valuation Partners and a former cable operator. "Even Google doesn't have enough money to wire the country." Google says that it continues to ponder the possibility of hooking up other places. But for now, it still needs to string its lines in Kansas City neighborhoods. It will do almost no local hiring for the project, although it's unclear where it will get the crews for the work. Mostly, though, it wants to see what happens when residential areas get the kind of big-time Internet connections that previously only sizable businesses could afford. One cable industry analyst sees no way Google can make money simply by selling the gigabit service at megabit prices. Steve Effros thinks it might make Google a profit only by creating new ways to sell ads -- meaning that the Internet service would be effectively subsidized by other aspects of the company's business. "It's like you're selling somebody a Ferrari and charging them for the cost of a Ford," he said. "But your Ferrari only gets three miles to the gallon. Maybe that works if you're selling the gas. ... It's still not clear that people need to drive 180 miles an hour." To reach Scott Canon, call 816-234-4754 or send email to [email protected]. On Twitter: @ScottCanon ___ (c)2011 The Kansas City Star (Kansas City, Mo.) Visit The Kansas City Star (Kansas City, Mo.) at www.kansascity.com Distributed by MCT Information Services |