I think this is great, but it's really critical to understand the regulatory concessions Google won in this process (FTA):
> The agreement exempts Google from a 3 percent "PEG fee" that the city charges Comcast.
> Unlike Comcast, Google Fiber is not required to serve all parts of the city. Google says it will operate in "fiberhoods" where subscribers reach a critical mass.
So far Google has gotten these sorts of concessions in most if not all of the Google Fiber Cities, over public opposition: http://seattletimes.com/html/businesstechnology/2023420101_b.... Provisions like these are key barriers to establishing competition in other markets, especially for companies that don't have the negotiating clout of Google.
The media has tended to focus on the Google versus cable/telco fight, but at least as important if not more so is the precedent that Google's hardball tactics are setting for municipalities: if you want fiber, you have to give up these terms in franchise agreements. Google's efforts here will be a huge boon to companies like RCN that are attempting to build fiber in cities with established cable or telecom competitors.
There's also a third interesting point:
> Portland and Google will participate in a "joint defense" of the franchise if it faces a legal challenge over allegations it gave Google Fiber preferential treatment, exceeded the city's authority, or violates the law in some way.
> Unlike Comcast, Google Fiber is not required to serve all parts of the city.
The sentence immediately following that makes the nature of that "concession" clear: 'Google says it will operate in "fiberhoods" where subscribers reach a critical mass.'
In other words, the same process Google has already followed in other cities: get people to express interest in fiber, then go to where those potential customers are first. This isn't about skipping low-income neighborhoods; this is about prioritizing customers over non-customers, which seems completely reasonable. There's little point in forcing universal availability in areas where nobody intends to actually use the service.
Given that it isn't possible to instantly roll out the service to every area at once, it makes sense to prioritize expansions by the number of customers, and cover the areas with fewer customers later.
Interestingly, that might also tend to prioritize areas not currently covered by the existing Frontier fiber network (areas only served by Comcast or DSL), since those areas would have more people eager for fiber.
I've edited my OP to reflect that sentence, and I agree that it's a reasonable criterion. However, it's a much less stringent requirement than what's usually present in a cable company franchise agreement. Cable companies generally must serve every neighborhood above a certain density, whether or not there are enough interested subscribers. And by law they are usually required to provide a minimum tier of service, usually at around $15-20 per month.
Google's policy will absolutely have the effect of skipping low-income neighborhoods. It's cheapest (gigabit) rate plan in Kansas is $70 per month. The whole point of the policy is to not bother to build fiber out to a neighborhood until there are enough $70 per month subscribers to justify the expense. This is precisely what traditional franchise agreements prevent, and precisely why they have the effect of keeping out competition. Only the incumbent can commit to that sort of requirement profitably.
Actually, there's a much cheaper option if you pay the installation fee of $300.[0] This works out to $25/month over one year. While $300 is a significant amount (especially for people with lower incomes), it is an option and is a fraction of the cost when you look at the long term.
$300 up front is a huge barrier for low income people, who don't tend to have cash reserves. Just for 5 mbps. Also: the wording of the agreement gives Google the flexibility to use the number of $70/month customers as the benchmark.
You can also pay the $300 over a year ($25 / month for the first year), and then get it for free after that. $25 / month is cheaper than the what I pay for my relatively slow internet.
A few years ago I was supervising a guy who was hired to clean up a contractor's mess in a penthouse loft in the building I lived in. Making small talk, he asked me what I though the difference was between rich people and poor people. His view was that it was bad judgement. He told me that most of his (poor) friends had nicer TVs than the rich people whose houses he cleaned.
Given that, I suspect that some of those 'poor neighborhoods' might have a significant number of people willing to commit to spending that kind of money (whether they have it or not) to feed movies to their big new 4k TVs.
> I've edited my OP to reflect that sentence, and I agree that it's a reasonable criterion. However, it's a much less stringent requirement than what's usually present in a cable company franchise agreement.
Certainly true, but that then raises the reasonable question of whether that requirement should exist. (Also, the more relevant agreements here seem like those applying to ISPs, not cable companies. Cable is not an essential service, and even if it were, universal coverage is better handled by an antenna.)
> Cable companies generally must serve every neighborhood above a certain density, whether or not there are enough interested subscribers.
Such a requirement would make more sense 1) if an area has no existing service provider, and people would otherwise have no option for service at all, which obviously doesn't apply here; and more importantly 2) if applied to an essential service like phone rather than an utterly optional one like television.
> And by law they are usually required to provide a minimum tier of service, usually at around $15-20 per month.
As others have pointed out, the cheapest plan is $25/month. Even if it weren't, the two requirements only make sense if coupled together: there's no sense in forcing deployment to neighborhoods where nobody can pay $70/month, so unless you're also restricting prices, a coverage requirement makes no sense.
On top of that, if trying to solve the problem of universal Internet connectivity, I half wonder if cell service might be the more viable alternative: rather than building an entire fiber network in a neighborhood so that a small fraction of households can get Internet access who otherwise wouldn't have, cell service (even subsidized) would cost far less, and would handle telephone as well.
Alternatively, open wifi networks (such as those discussed in the article) would serve much the same purpose.
> This is precisely what traditional franchise agreements prevent, and precisely why they have the effect of keeping out competition. Only the incumbent can commit to that sort of requirement profitably.
Exactly. If you're going from zero providers to one, your biggest problem might be how to get coverage to everyone. Right now, however, we have a huge problem with lack of competition, which gives the one viable provider in an area an effective monopoly, and all the problems that go along with it. Thus, we need to stop imposing restrictions that preserve that monopoly.
I think you're misunderstanding the posture of my post. I don't think we should hold fiber deployment hostage in the name of universal service. All of the points that you're making, that "there's no sense in forcing deployment to neighborhoods where nobody can pay $70/month" are absolutely correct. To the extent that universal service is important, I agree with you that cellular is the answer.
BUT: the fact remains, that these requirements are almost universally a part of cable franchise agreements. Municipal governance in American cities is a state of constant class warfare, and the idea that a high-end internet provider should only expand to neighborhoods where people can afford the service is politically toxic: http://www.speedmatters.org/blog/archive/philadelphia-and-nj... ("As Philadelphia councilman Jim Kenney told local TV, 'We were happy to have competition with our current major cable provider, Comcast. But we want to make sure that every neighborhood in the city is getting built out with the FiOS, and not just neighborhoods that can afford to pay the fees.'")
Google, by setting a precedent of refusing to agree to such requirements, is doing everyone a huge favor.
"...then go to where those potential customers are first." From a business perspective, that's great. And really it's no different from what other ISPs have done for years; Google's just turning customer discovery into a PR fiesta. But it ignores what tech geeks everywhere[1] have always said about network access: that the mere presence of access spurs innovation, provides opportunity. Many, many people without broadband internet access still see it as a superfluous luxury service used to access Facebook and YouTube from their homes where their smartphone has less reliable service.
Access to the network should be considered as crucial to modern human existence as electricity. Access eliminates barriers to education, therapy (just having asynchronous communication with other sufferers of your condition is itself therapeutic), not to mention gaining inspiration for creativity or even innovating some unforeseen improvement in peoples' lives.
I think the concerns are reasonable, but Google did give some different promises in exchange, including free internet for non-profits, free wifi networks in some areas, and their usual "free 5 megabits after install costs" access. The TV service will carry the local PEG channels.
I think trading short term franchise concessions for a few years makes sense. Later on I would require them to cover all households in general areas they operate in, for example.
Yes, Google is offering free internet after a $300 up-front payment, in neighborhoods that otherwise justify fiber deployment. In contrast, for example, cable companies are generally required to offer basic service everywhere in the franchise area for $15-20 per month. Given that most of the cost of deployment is building to the neighborhood, and that neighborhoods are economically segregated in most cities, the former concession is much less onerous than the latter.
Again, I don't think fiber should be beholden to universal access. I'm just pointing out Google has won a major political battle here that has major precedential value.
> After the rally, we’ll let you know if your fiberhood has reached its goal. If so, you can sign up for your service package. The first homes will get service shortly after the rally ends, and all qualifying neighborhoods will receive service before the end of 2013.
Now Google did a lot after the fact to generate interest in those neighborhoods that had been left-out, and sign up more of them. But let's not forget they have substantial PR reasons for doing so.
My intention isn't to question Google's motives, but to point out that even Google has refused to accept build-out requirements, of the sort that are almost universally included in franchise agreements. What does that tell you about how these requirements impact competition in other markets? What impact do they have on potential fiber ISP's who don't have Google's PR motivations?
> The agreement exempts Google from a 3 percent "PEG fee" that the city charges Comcast.
NO NO NO NO NO NO NO
This is very very very bad and sets a horrible precedent. Portland has one of the best cable-access facilities and set of stations in the country. They serve a vital public interest, allow absolute free expression, and "professionalize" niche programs that otherwise would just be someone talking into a webcam.
Some fiber is better than no fiber. Verizon has used these whole city requirements as an excuse to avoid wiring any part of major cities. As a result, the densest neighborhoods of most US cities have worse internet than the affluent suburbs around them.
Still no fiber in the ground. This sort of negotiation is such a huge barrier to entry that only very big (or incumbent) companies have a fighting chance.
Obviously, Google entering the market is a big deal and good news – two competitors is better than one. But only a company of the size and regulatory savvy of Google would even try.
> The agreement exempts Google from a 3 percent "PEG fee" that the city charges Comcast.
> Unlike Comcast, Google Fiber is not required to serve all parts of the city. Google says it will operate in "fiberhoods" where subscribers reach a critical mass.
So far Google has gotten these sorts of concessions in most if not all of the Google Fiber Cities, over public opposition: http://seattletimes.com/html/businesstechnology/2023420101_b.... Provisions like these are key barriers to establishing competition in other markets, especially for companies that don't have the negotiating clout of Google.
The media has tended to focus on the Google versus cable/telco fight, but at least as important if not more so is the precedent that Google's hardball tactics are setting for municipalities: if you want fiber, you have to give up these terms in franchise agreements. Google's efforts here will be a huge boon to companies like RCN that are attempting to build fiber in cities with established cable or telecom competitors.
There's also a third interesting point:
> Portland and Google will participate in a "joint defense" of the franchise if it faces a legal challenge over allegations it gave Google Fiber preferential treatment, exceeded the city's authority, or violates the law in some way.