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Can Cities Wait Until 2084 for Google Fiber? [Government Technology :: ](Government Technology Via Acquire Media NewsEdge) June 18--More than 400 municipalities around the nation have built their own high-speed networks, most of which are plotted on this map, along with the type of network and its reach. Red = Citywide cable network. Blue = Dark fiber. Yellow = Fiber available to portions of the city. Green = Citywide fiber. Purple = Gigabit speeds citywide or to portions of the city. Technology is becoming the new religion, and the dogma is just as impenetrable. Issues of personal privacy, social equality, and economic policy are each day bound tighter to outcomes in the digital world. As technology becomes a progressively more integral part of daily life, the stakes are raised in equal measure. The broadband market is changing quickly, and America's emotional investment in tomorrow's winners and losers grows ever more entrenched. Since the Federal Communications Commission ruled in 2005 that telecommunications carriers aren't required to unbundle and share their networks, the market has become increasingly monopolized, leaving Americans with fewer and fewer options. Soon, a market dominated by a handful of companies could become even smaller, as the nation's largest cable company, Comcast, attempts to merge with the nation's second largest cable company, Time Warner Cable. The merger would give them more than 40 percent of the broadband market. But two new challengers have emerged, offering hope to those who want a choice. Google is disrupting the market with Fiber, a brand of gigabit networks being built in Kansas City; Austin, Texas; and Provo, Utah. Being an innovative tech giant, flush with cash, and also a newcomer to the broadband market is allowing Google to play by a different set of rules, and the existing providers are paying close attention. Fiber offers customers connection speeds sometimes 150 times faster than what they were getting, and at just $70 a month. The idea of being freed from the incumbent providers has captured the attention of the public at large, as thousands beg for Google to build in their cities. In February, Google announced 34 cities where Fiber may build next, but experts are unsure of Google's commitment to becoming a force that does more than just agitate the market. Many rural and otherwise underserved regions have realized that no telecommunications provider, new or old, will soon ride in to save them and it's up to their communities to find a way online. More than 400 municipalities around the nation have built their own high-speed networks. Sometimes the networks are profitable, and sometimes they're not, but they are always a point of fierce ideological contention, because networks are expensive. Even large metropolitan regions are examining the municipal broadband option and discovering that building a successful network like the one in Chattanooga, Tennessee, is much harder than it looks. The Google Treatment If Google plans to be America's next big broadband provider, a legitimate competitor to the likes of AT&T and Comcast, they're not saying so. A Google spokesperson was able to offer only tangential generalities about the company's future in the broadband provider market. "Google has a long history in investing in things that help make the web move forward," spokesperson Jenna Wandres said. Leaders at Google may themselves be undecided about the future of Fiber at this early stage in the company's network rollouts, but the public remains adamant -- they want alternatives to today's limited market offerings. The most popular technology news article ever submitted to social news website Reddit is entitled "Dear Google Fiber: Please, please, please rescue me from Comcast." The sentiment mirrors the results of an April poll, in which the readers of consumer advocacy news site The Consumerist voted Comcast "the worst company in America," narrowly edging out agricultural firm Monsanto, with Verizon and Time Warner Cable also making the final eight. The telecommunications industry in general has an exceptionally poor reputation with consumers. The American Customer Satisfaction Index (ACSI) released a report in May showing that not only are consumers becoming less satisfied with the telecommunications sector overall, but Internet service providers now rank last in a list of 43 industries. Comcast and Time Warner Cable are literally "the worst of the worst," an ACSI spokesperson said. He added that a straight market comparison isn't fair because there is such little competition in the telecom industry. Those unsatisfied with a product like toothpaste are free simply to buy a different product, so satisfaction rates will naturally be higher in those markets. The ACSI report offers little hope for the future, and notes that "Comcast and Time Warner Cable both score lower for Internet service compared to their pay TV ratings, which suggests that a merger of the two providers will likely create even worse levels of customer satisfaction, at least in the short term." Gartner Research Vice President Ian Keene said he did the math, and those hoping for Google Fiber to come rescue them shouldn't hold their breath. "It was something like about 70 years to be a significant player at their current rate of progress," Keene said. Google launched Fiber as an experiment, he explained, to see how many people would adopt gigabit broadband if it was made available and also to see if gigabit availability might also give birth to some new applications and technologies that weren't possible before. No new applications have really come out of Kansas City as a result of Fiber, Keene said, but Fiber did accomplish Google's other goal, which was to "scare the pants off AT&T and Time Warner Cable." Google has an unparalleled advantage in the broadband market, Keene said, which is that they don't require themselves to turn a profit. "They can write off the costs," he said. "It is a cost sector for them, it isn't a profit sector for them and it never, ever will be on its own. But it doesn't matter because it's part of an investment to forward the aims of the Google organization. It's not about making money off of broadband access." That's not at all true for the incumbent telecom providers, which have been doing business the same way for 50 years, Keene said, and it would be very difficult for them to replicate Google's approach. Google is breaking other rules, too. The standard process of building a network requires a telecom provider to wait in line to acquire licenses, permits, various forms of right-of-way access, and that can take years. Google builds in cities that allow them to skip all that stuff, said Teresa Mastrangelo, principal analyst for Broadbandtrends. "In Kansas City they were basically given everything that they could ever want," she said. "They had to pay no right-of-way fees, they had access to all the poles, they had access to all the dark fiber, and that's not always going to be the case." Mastrangelo agreed that it would take decades for Google to become a threat to incumbent broadband providers. Survey results released in May by research firm Sanford Bernstein showed that Google Fiber customers generally love the service they're getting in Kansas City and wouldn't leave for a competitor that offered similar connection speeds. The report concluded that based on the numbers in Kansas City, Google could expand its services to an additional 30 million homes in the next several years. But those conclusions may be too optimistic, Mastrangelo said. "You're talking about a market like Kansas City where they're only building out to 40,000 households in total right now, and that's pretty insignificant when there's 120 million in the country," she said. "They've been a great catalyst for the market, but is Google going to take over somebody? Not unless they buy them, they're not going to." In the few areas Google does operate, though, they are forcing competition where previously there was none, and that was probably Google's intention from the start, Mastrangelo said. "That's why Google excites people -- it gives them a choice and a really fantastic service," she said. "It's something that isn't available from the competition, so they have a tremendous competitive advantage in the markets that they've entered." Since Google set its sights on Austin, Texas, AT&T and Time Warner Cable both began upgrading their networks there. It's great for consumers that Google has created competition in the market, Mastrangelo said, but the fact that companies are building parallel fiber networks is an incredible waste of money, and a direct result of the FCC's 2005 decision to limit network unbundling and sharing requirements. Google has forged a path for a new way of doing business, and AT&T will benefit, said Tracy King, AT&T vice president of public affairs. "Austin is a great example," she said. "Austin is a community that has a very big high-tech component. It's got a large university, it's the state capital." There's demand for high-speed Internet and that's why they built there first, she said. In April, AT&T announced 100 cities where they are considering gigabit expansion. AT&T had been trying for two years to get the permits to attach their equipment to utility poles in Austin, King explained. "Google walks in and guess what? They get to attach to the poles," she said. "That allows us an opportunity to accelerate [our] discussions [with the city]." King said she isn't sure why Google sometimes gets special treatment from cities, but guessed that it has something to do with the fact that they're new in the market and that people just like the idea of what Google is. Google's announcement of Fiber expansion to 34 potential new cities was considered big news, while the announcement by AT&T, a market force since 1882, received far less fanfare. "The cities play a very key role in broadband deployment," King said. "What Google did is it basically challenged the cities to think differently about what their role could be -- rather than being obstacles in creating ordinances that add cost to deployment or make deployment something that's not economical, what can you do to incentivize it? What can you do to eliminate barriers? What can you do to create better opportunities for companies to come in and service your clients and your customers? We at AT&T are taking full advantage of that door that Google opened up." Chief information officers in two potential Google Fiber cities, Palo Alto, Calif., and San Antonio, Texas, shared similar views on Google Fiber. Both reported that they're excited about possibly entering a partnership with Google as they wait to hear back about their applications, but both also noted that their cities are vendor-agnostic and that anyone who's able to offer similar opportunities for their residents would be taken just as seriously. Google just happened to be the one who came in with the resources, said Jonathan Reichental, chief information officer for the City of Palo Alto, Calif. "Clearly, if we're going to compete on a global scale and continue being a leading economy, we need good communication systems, so the perspective of Palo Alto is in sync with that," Reichental said. "Google is unusual because this is not a core competency. They've done it in Kansas, they're doing it in Austin and in Provo, Utah. But three cities doesn't make you a telecommunications leader. You look at the incumbents like AT&T, this is what they've been doing for over 100 years and they compete in all sorts of markets and they are good at it, putting in cables and setting up communication networks." Google Fiber's positive image often piggybacks on a perception by the public that the incumbent providers are not meeting market demand, but Reichental said the demand for gigabit Internet doesn't yet exist in large numbers. Google Fiber has been successful because it's a great product offered at a price comparable to what people were paying anyway, he said. "Even if you don't know why you need it, nobody says 'no' to more bandwidth," Reichental said. "I would argue that if communities across America were screaming out for gigabit and they were prepared to pay for it, all incumbents would provide it." San Antonio, Texas opened the doors for Fiber in March when its city council approved a 20-year master-lease agreement that would give Google the option to build and manage approximately 40 communications shelters on city property. In April, AT&T was approved for a similar master-lease agreement. In fact, that type of agreement is open to anyone who wants it, said San Antonio Chief Information Officer Hugh Miller. "Texas doesn't have franchise agreements anymore, so from the city government perspective, they're coming in like any other video or telephony or Internet provider to the citizens," he explained. "The value for us is in enhancing what the city is to its citizens." Google has yet to respond to any of the applications by the 34 cities, but San Antonio will cooperate with any provider that wants to build a network that adds value to their city, Miller said. A fiber network adds immense value to a city. In fact, there's no faster way to become irrelevant in 2014 than to be without an Internet connection. Residents of major cities want Google Fiber because they want more choices, but if most major cities are to be left waiting 70 years for the likes of a Google, it's no wonder that small, rural communities aren't content to wait at all. DIY Internet The topic of municipally-run broadband doesn't relate to technology so much as it reflects a philosophy. Supporters argue that if the market does not provide the things a community needs to thrive, then it is that community's right to take their future into their own hands and build it themselves. In recent years, hundreds of cities, counties and utility districts, mostly rural communities with populations of 10,000 or 20,000, have built and are now managing broadband networks to bring people online. A map managed by the Institute for Local Self-Reliance shows there are more than 40 municipally-run gigabit networks, 180 networks with partial community coverage, and 163 cable and fiber networks reaching most or all of the community. A broad, comprehensive study that seeks to determine whether municipal networks are generally a good idea or not does not exist, said Christopher Mitchell, director of the Telecommunications as Commons Initiative at The Institute for Local Self-Reliance. Views on municipal broadband typically come down to a political viewpoint supported by anecdotes. Mitchell himself has been a municipal broadband advocate and researcher for the past seven years, searching for data that can establish a meaningful framework for what it means for a community broadband network to be "successful." "If you look at those who try to discredit the networks, a lot of times the only thing that they'll collect is financial information from each network," Mitchell said, but this is the wrong way to judge success, especially with a new network, since all networks lose money at first. "The benefits should outweigh the costs. The only way these local projects can be evaluated is by people who are within the community. It's hard for me to come in and say, 'this is successful, that's a failure,' because it's a value judgment by someone who doesn't have to live with the consequences." And there are big consequences. A broadband network that can cost hundreds of thousands or even millions of dollars means a community is sacrificing other things that might have been built instead, like parks, schools or fire departments. The Utah Telecommunication Open Infrastructure Agency (UTOPIA) has spent the last 10 years trying to build a fiber network spanning 11 cities. Now finding their net worth sinking beneath negative $100 million, and with the network not even half completed, many are left wondering if broadband is not a task best left to "the worst of the worst." But when done correctly, the benefits are impossible to deny, Mitchell said. Municipal networks create competition that drives down cost in the market, there's value for governments in increased reliability, and there's black and white financial savings gained simply by not giving money to an external provider. Santa Monica, Calif., saves about a half a million dollars annually by running its own network, Mitchell said. The chief information officer of Davenport, Iowa, reported that the city's fiber network, not yet shared with the public, saves the city about $400,000 annually. But like Mitchell said, it's not all about money. There's qualitative value just in being online. "If you don't have a local government that makes smart decisions, then you have bigger problems than just the network and you probably want to figure out how to reform government before you start encouraging it to build a network," Mitchell said. "I don't think that every local government should go out and start doing this, but I do think that they should evaluate it." Lafayette, La., home to 120,000, is one of the larger municipally-run networks and frequently cited as a success story. "It's cash positive, it's paying for all its expenses, it's making its debt payments, but not putting much away for the future," Mitchell explained. Looking at those details alone might not make it a success, he said, but the bigger picture is that the network generates peripheral benefits like new jobs, institutions like schools save money, and the city is now flourishing as one of the fastest growing economies in the nation. Even places that don't like the idea of government getting involved in the broadband market recognize a need for some kind of action. The state of Kansas is this year wrapping up a four-year, $4 million research program to evaluate the broadband market as a means to encourage investment in unserved or underserved areas. The predominant ideology in Kansas generally precludes local communities from attempting their own networks, and there are very few there. But programs like the Kansas Statewide Broadband Initiative typically don't have much impact, because they have limited authority and encouraging investment means stepping on the toes of powerful incumbent providers, Mitchell said. When the market doesn't deliver broadband service to a community, it's for good reason, said Royce Van Tassell, vice president of the Utah Taxpayers Association. "The market has proven remarkably adept at providing the Internet access that people demand," Van Tassell said. "If people are willing to pay for it, there is someone who is willing to bill it to them, and that is as true of bread as it is of telecommunications services." Whenever a community begins a municipal network project, Van Tassell explained, they say they're going to build so everyone can have access. "When that fails, they say, 'maybe we should invest where there is an ROI and only go to those areas where we think there's a high likelihood that people will buy.' That's adopting the strategy, albeit imperfectly, that they were criticizing in the first place," Van Tassell said. "And even having adopted that strategy, their ability to succeed in the market has proven almost non-existent." The network in Groton, Connecticut, which was sold earlier this year after just under 10 years of development, is a typical municipal network, Van Tassell said. The project put the city tens of millions of dollars in debt and they were forced to sell the network at a loss, he said -- that's what communities should expect for their efforts. In Utah, Van Tassell has spent years trying to convince others that a government-operated broadband network is a terrible idea. "In the case of UTOPIA, their financial failures are so well documented, it hardly merits beating that dead horse," he said. "All good people, but in every case they seem to believe they know better what the market demands than people who have spent their careers and invested their own dollars to evaluate the risk and say 'this will work or this won't work.'" Nearly all municipal broadband networks are failures, Van Tassell said, and the fact that successful networks like the one in Chattanooga get so much attention is proof of that fact. "Those successes are notable precisely because they prove the rule," he said. "I think it's a little disingenuous to say that you can't rely on a financial measure to gauge their success, because the purpose of a municipal telecom network is to get someone else to pay for my service. The idea behind a municipal telecom network is always financial. That is the entire purpose -- to get someone else to buy down that cost." Mitchell and Van Tassell represent the diametrically opposite outlooks that surface in communities when a municipal broadband network is proposed. Like all ideological debates, this one seems unending. It's not just that the two sides are proposing different solutions to a shared problem -- it's that their expectations of what society ought to provide is rooted in two irreconcilable philosophies. It would be nice if people who lived in rural areas could access all the conveniences of urban life without any of the costs, but life doesn't work that way, Van Tassell said. "If I've decided I want to live out there where there's a lot of people, I get some wonderful benefits," Van Tassell explained, "and I have some other costs, and that's the choice that I, as a consumer, make. Who wouldn't love to have all of the benefits and none of the costs? But that's not the world that anyone lives in." ___ (c)2014 Government Technology Visit Government Technology at www.govtech.com Distributed by MCT Information Services |