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Looking deeper into Google's plans for KCK
[April 27, 2011]

Looking deeper into Google's plans for KCK

Apr 26, 2011 (The Kansas City Star - McClatchy-Tribune Information Services via COMTEX) -- I can't explain it, said one New Yorker barfly to another in a 2002 cartoon. It's a funny feeling that I'm being Googled.

An uncertain sense of what it means to be Googled is now drifting through Kansas City, Kan. But the Googling is less curiosity about the city and more about the curiously uncertain plans that the Internet search giant has for the city.

More than 1,000 cities courted Google. Yet even after the company said it was headed to Wyandotte County, it's not clear what Google will bring.

Although it promises to crank up super-fast Internet service in early 2012, it's not sure of a schedule. It will make the price "competitive" and "affordable," but still insists it doesn't know how much it will charge. It might let other companies sell services over its fiber-optic network, but no news yet on who might sell what.

Still, Google is emphatic about one thing: Kansas City, Kan., won't be just a digital petri dish testing the powers of gigabit connectivity. Rather, without tax breaks or subsidies, Google maintains there's a buck to be made pumping data at light speed, one connection at a time.

"We intend to build and operate a successful business in Kansas City, Kan. It's not a proof of concept. We're a business," said Kevin Lo, the Google executive overseeing the network installation. "We expect to make money selling Internet access in Kansas City, Kan." It means Google aims to do what the cable industry has been unable or unwilling to do: Internet download speeds from 10 to 100 times above what most Americans consider broadband. Uploads at the same speed -- or 200 to 300 times quicker than the broadband norm.

At current broadband rates of 6 megabits a second, a high-definition movie downloads in 90 minutes. At 1 gigabit per second -- what Google will bring to Kansas City, Kan. -- it's closer to 90 seconds. A 10-song album moves in less than two seconds.

Rather than conjuring up algorithms to steer you through the Internet -- the craft that defines Google -- the California company has come to Kansas to tackle the rough-hewed world of utility poles and trenches.

Wyandotte County government leaders say they negotiated the deal with Google in hopes of drawing high-tech business and jobs. Google, meantime, has been explicit in saying it does not plan to hire locally and will run the service remotely.

Although Google demurs on many of the details for now, interviews with the company and analysts are beginning to color in the fiber-optic picture.

Faster Internet. So what? Even Google says it's not sure what will come from a data super expressway.

But here's an example. It could tempt more companies to farm out their information technology to other businesses.

If data can travel to some remote computers over the Internet in virtually the same time it zips from your desktop to a server in your basement, then that server doesn't need to be in your basement.

That means the computer server can be anywhere. So it can be shared with other companies. That means you don't have to pay for capacity you don't use. You save money.

Companies such as NetStandard in Kansas City, Kan.

"Now our customers will be able to connect with us faster and far less expensively," said NetStandard CEO Jeff Melcher.

There are also hopes for telemedicine, where clearer videoconferencing will make examinations and diagnoses more practical to do from afar. Ditto for passing around large hunks of data captured in things like MRI scans. And since super-fast Internet allows a physician to be virtually in places it's not always practical to be physically, there's talk of remote procedures, teaming the fat-pipe data connections with robotics.

What does this mean for the cable TV companies? It can't be good news.

Google is essentially saying it's stringing fiber-optic wire to the home because the old guard hasn't. And Google is hinting that it could offer its 1,000 megabits per second speed for roughly the price people pay for 7 megabits a second.

"Our intention is to deliver an affordable broadband service," Google's Lo said. "We're conscious of the prices people pay today." Implied in the move is an oft-repeated criticism: The cable industry could do this, but it doesn't -- because there's not enough competition to force the upgrades.

The industry, naturally, begs to differ. It points out that cable companies collectively have spent $170 billion since 1996 to upgrade the infrastructure. Much of that has gone into laying fiber-optic cables, just rarely to the home. It's the industry's so-called last mile -- stretching those high-capacity lines from its network to the home -- that's so expensive. It also points out that Internet speeds have increased over the last decade while data prices have dropped.

Besides, the industry says, it's given consumers fast-enough connections. Today, people in Kansas City, Kan., and elsewhere are streaming high-definition movies. They're playing online video games over the Internet against people in China.

"The vast majority of consumers can do what they want today," said Brian Dietz, a spokesman for the National Cable & Telecommunications Association.

Time Warner, which now dominates Kansas City, Kan., says Google won't change its outlook. It just announced new, faster Internet service: 50 megabits per second for $100 a month. So far, Time Warner said, demand hasn't justified the expense to take fiber that last mile, or those last 100 yards, to the home.

"We know what we're going to provide," said Matt Derrick, Time Warner's Kansas City spokesman. "We're going to offer as fast a speed as we can at the lowest price we can." Can Google really make money on this? Lo thinks the high profitability of cable companies shows that it's possible.

For starters, Kansas City, Kan., has a large amount of "dark fiber," unused fiber-optic lines strung on poles or underground. Google will buy access to those lines, but likely at a cost much lower than if it had to install the wires itself.

But the cable industry has also vast fiber-optic networks spiderwebbing throughout cities. Again, it's that last stretch from the network to the home that's so pricey.

That's why people such as Craig Moffett, who analyzes the telecommunications industry for Bernstein Research, hold doubts.

For starters, a less-than-affluent market like Kansas City, Kan., is a hard place to sell broadband. Today, the proportion of the city buying broadband falls about 5 percent below the national average.

Companies have built fiber-to-the-home networks before. Moffett said there's just never been much money in it. Even telecom giant Verizon, which has been ambitious with its FiOS fiber network, has had a hard time turning a profit on the service.

Moffett said the costs of building a network simply can't be offset by monthly fees that many customers can afford.

"History is littered with companies that have tried and failed," he said. "It's exceptionally ambitious of Google to suggest it will make money doing this." What will it cost to build? That's anybody's guess. Google isn't making any public predictions.

Rates for installing a network vary widely, depending on where the construction takes place. The cost of installing fiber-optic line through a community can run from as low as $3 a foot on a utility pole without complications from criss-crossing power lines or other obstructions. It can cost more than $100 a foot to burrow under a city block crammed with sewers and old trolley tracks.

Per-home costs vary for the same reasons, with the added variable of density. Depending on how many customers in a neighborhood sign up for service and share the costs of building, industry costs range between $400 and $2,000.

"One crew of three to five guys can usually string somewhere between a half-mile and a mile a day," said Rex Schick of K & W Underground Inc. in Olathe. "But there are a lot of variables." Kansas City, Kan., has 65,000 electricity customers. Even at the industry's minimum cost, that means a $26 million cost for Google, and probably far more. That wouldn't include the expense of so-called head-in electronics that would connect the city to the Internet or the boxes in homes or businesses needed to generate gigabit speeds from the fiber-optic wires.

Google wouldn't say if it has some cost-cutting technological edge. Pressed, Lo would only say that "there's a lot of technology being brought to bear." Has this been tried before? Sort of.

Several cities have installed fiber-to-the-home networks, often out of frustration that private companies were not delivering fast-enough Internet. But they've all been smaller communities, with typically fewer than 20,000 customers.

Wilson, N.C., began stringing fiber-optic wire to increase the reliability of its Internet and other communications to city offices and recreation centers. Some businesses in town asked the city if they could hook up to the lines, too.

So by 2008 the city's Greenlight electric utility was signing up customers for phone, video and Internet service, with download speeds of 10 megabits per second, for about $100 a month. So far only a handful of the city's 5,700 subscribers have opted to pay $150 a month for 100-megabit speeds.

"We're already cash-flow positive, which was our only goal," said Brian Bowman, a spokesman for the city.

Chattanooga, Tenn., did much the same thing and now has fiber stretching to nearly all its 170,000 home and business customers. For $120 a month, someone there can get almost 200 television channels, phone services and Internet speeds of 30 megabits per second.

But if they want the 1-gigabit speeds Google promises for Kansas City, Kan., they must pay $350 a month. There haven't been many takers for the gigabit service.

"It's mostly a few businesses," said Lacie Newton, a spokeswoman for the city's EPB utility. "We put it out there and didn't expect that it would be for everybody." In both Wilson and Chattanooga, the private cable companies lowered their prices and increased download speeds after the cities offered service.

The municipal systems have also prompted complaints from the industry about the unfairness of having to compete with government. A city can wait dozens of years for an infrastructure investment to pay off. Businesses, said broadband market analyst and consultant Craig Settles, need to see a return on their money in three to five years.

"If you can spread this sucker out over 12 or 25 years it becomes profitable," he said. "Not every entity can do that." If you build it, will they log on? Maybe.

But Google will have to convince people that the faster Internet is worth the bother.

Certainly, as more people get television shows and movies through downloads or streaming services such as Hulu, Netflix and Vudu, the need for speed accelerates. Even if you're able to do those things now through your minimal broadband, that capability could fade. If your neighbors turn on the data tap at the same time, the capability on your block to watch high-definition could confront gridlock.

Most Internet providers offer speeds "up to" 7 megabits or 30 megabits per second. But those speeds drop when other people working off the same nodes want service at the same time.

The Google fiber project hopes to guarantee everybody a full gigabit virtually all the time. Any problems with jerky video or a slow-moving gaming experience would vanish.

Still, analysts say Google will need to move large numbers of customers to its system, and bringing them over won't be simple when so many in Kansas City, Kan., already have their phone, video and Internet bundled with Time Warner or AT&T.

"People are pretty averse to switching once they get all these services from one place," said cable industry analyst Mark Kersey. "Are you really going to switch just the Internet?" Tech-crazy users will be drooling for their gigabit, he said, but the majority of the market might not be so excited.

Will someone else use Google's fiber to sell HBO? Google says that "we plan to give third parties flexibility to offer their own services on top of our open network, but we don't have any partners to announce." Lo would not elaborate.

Time Warner had nothing to add.

Still, there are hints that some companies might want to tap into the Google network to bring you your MTV, and that Google might use their services to draw customers to its Internet expressway.

SureWest, a so-called cable overbuilder that provides phone, video and Internet where larger cable companies dominate, does not have customers in Kansas City, Kan., even though it sells service in other parts of the market.

A company spokesman said the Google entry into Wyandotte County validates "our strategy of operating as a fiber-to-the-home." "With our expertise and experience in building fiber-to-the-home networks over the last 10 years," Ron Rogers said in a statement, "we are also open to partnering with Google if opportunities present themselves." Some policy wonks think Google should be eager to wholesale service to other companies if, as Mark Cooper of the Consumer Federation of America said, "they want to loosen the strangleholds" of the phone and cable companies that dominate Internet service. Otherwise, he said, consumers will simply see one behemoth snuff out another and eliminate competition.

Increasingly, there are ways to get TV over the Internet. But the convenience and buffet selection of cable television has become a standard in home entertainment.

For now, Google's Lo said, the company plans only on "delivering a really, really, high quality Internet service at affordable rates." Will this work with my old computer? Short answer: yes.

Fiber optic is just what it sounds like, a wire that carries light. That light gets transformed to electronic pulses. Computers use those pulses to talk to one another, share information and show YouTube videos.

The flexible glass wires can move data much faster than the copper in your phone line or television cable. In laboratory settings, fiber optics move more than 100 gigabits per second. In the real world, with the right electronics, 10-gigabit speeds are practical.

Even at the 1 gigabit per second speeds Google aims to deliver, high-tech boxes will be needed at the end user's home to manipulate the light. The more those electronics can play over different wavelengths, the faster the speed.

It will work with your computer. But your computer likely won't be able to take advantage of the top speeds, or likely need to. At least to start.

Google hopes the wide availability of such speeds will spawn new uses, applications that haven't been thought up yet.

"When we were all excited years ago about a 56K (dial-up) modem, I wouldn't have even thought of streaming a Netflix movie," Lo said. "That's the type of leap forward we're talking about." Will this cross the state line? Probably.

Google said it plans to expand in "the region." Much will depend on whether the Kansas City, Kan., project works.

Pressed on whether Google is going to become a national Internet service provider, the company gets cagey.

"Our model is not just applicable to Kansas City, Kan.," Lo said.

To reach Scott Canon, call 816-234-4754 or email [email protected]

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