Why Would CT Want Gig Service?
Kansas City, Kansas
In the early 2000s, Kansas City’s local public utilities board wanted to build the infrastructure for Fiber connectivity, but the challenge was to figure out how Kansas City, with a population of about 147,000, could finance such a large project on its own. Former Mayor Joe Reardon thought Kansas City’s current infrastructure was at risk of decay and understood that high-speed broadband would be vital for his city’s future. Reardon stated, “Gigabit Internet is something we’re going to accept in 10 or 20 years as essential and as normal as water or electricity.”
In February 2010, Google announced its first plans for an ultra-high-speed broadband. Google initiated a call for governments to complete a request for information, and more than 1,100 cities from across the country applied. Google’s Fiber City Checklist had cities submit data on their existing infrastructure and speed and predictability of construction. Google’s plan was to offer a city its Google Fiber service, and then implement its marketing technique, crowdsourcing. Crowdsourcing would incentivize neighbors in a specific location to sign up for Google Fiber because it requires a minimum number of installations per location before implementation.
When Google announced its Google Fiber plan, Reardon thought Kansas City still hadn’t found a solution for creating an infrastructure of Fiber’s magnitude. However, Kansas City submitted its application and showcased how it had previously worked with private partners. These public-private partnerships helped create the Kansas City Speedway, Kansas City’s Sporting Park stadium and Legends Outlet Mall. Additionally, Kansas City was able to work with the Board of Public Utilities in order to implement Fiber infrastructure.
On March 30, 2011, Google announced it had chosen Kansas City to be the first city to implement Google Fiber. Reardon said there were two reasons as for why Kansas City rose above the competition: the city provided the resources needed to move through the administrative process quickly, and the unnecessary regulations during the permitting process were eliminated. In addition, Kansas City offered access to public rights-of-way, offered space in city facilities and provided assistance with marketing and public relations. Milo Medin, Google’s vice president of access services stated, “We wanted to find a location where we could build quickly and efficiently. Kansas City had great infrastructure. The utility there had all kinds of conduit in it that avoids us having to tear the streets open.”
The Google Fiber project, however, saw month-long delays from disputes over fiber installation processes, material and installation costs, outdated pole attachments, government rights-of-way and regulations. Google’s Vice President of Access Services Milo Medin stated, “Governments across the country control access to the rights-of-way that private companies need in order to lay fiber. And government regulation of these rights-of-way often results in unreasonable fees, anti-investment terms and conditions, and long and unpredictable build-out timeframes.” Even though Kansas City had the adequate infrastructure and offered access to public rights-of-way, there were still many issues with its installation process.
Google Fiber has Internet speeds up to 1,000 Mbps, which is 150 times faster than today’s basic broadband speed of 6.7 Mbps. Its rates start at $70 a month for Internet service or $120 a month for Internet and television service. Additionally, free Internet service is available at 5 Mbps for a $300 construction fee. Google Fiber’s gigabit service is priced much lower than Chattanooga’s rate of $350 a month. The price discrepancy is primarily caused by Google having built its own network; Google uses a fiber-optic cable that is reliable and has a high capacity; local traffic on a network is essentially free; and scaling due to consumer attraction to large, interconnected networks.
Critics of Google Fiber believe it has caused a digital divide between high and low-income families, and it has only served to highlight the current internet distribution problem. A recent Kansas City School District study found only 40 percent of its students had an at-home Internet connection to use with school-issued computers. Students are now being issued laptops or iPads for learning purposes, but they are not beneficial if Internet access is not available at home. Google Fiber’s free Internet service plan costs only $300 for construction fees. However, low-income families tend to rent; it does not make fiscal sense to wire their homes. Landlords of low-income apartments typically will not pay for the construction fee; owners feel as if they cannot raise their tenant’s monthly rental fee much higher, thus, Google Fiber does not provide these landlords with much value.
Recent research by Bernstein Research indicates tremendous progression for Google Fiber. According to a recent door-to-door survey of about 350 homes, Google Fiber now offers service to about 75% of Kansas City homes. While the critics of Google Fiber believe that low-income consumers are at a severe disadvantage, the study also specifies that Google’s penetration captured three-fourths of homes passed in medium-to-high income neighborhoods and nearly 30% of lower income neighborhoods.
The potential benefits of Google Fiber include: higher tax valuations from rising home values; more tax revenue for the city; more jobs stimulated by entrepreneurs and technology start-ups relocating or starting a company in the city; and the new perception of Kansas City entrepreneurialism. Google already cited studies with anecdotal evidence indicating a direct correlation between Fiber connectivity and increased home values by $2,000 to $5,000. The increase in home values will lead to higher tax valuations and more tax revenue for the city. In addition, thousands of contract jobs are now available for Fiber installation. While many contractors do not work for local companies, contractors are spending money in Kansas City while they work there. When it comes down to it, it is still too early in Google’s grand experiment to point to tangible, quantifiable benefits from the gig, although there seem to be some promising results.
What is yet to be determined is if a gigabit of Internet is even necessary. Offering a gigabit of Internet is a great marketing tactic that can potentially have a profound effect on entrepreneurship and innovation. A pessimistic individual would agree that a city would need costly technologies to make the most of a gigabit, and that there is no benefit of watching five high definition movies simultaneously at light-speeds. Conversely, one might need a gigabit connection to inspire the creation of those same technologies. Therein lies the gigabit paradox. At the moment, a truth running through the Google Fiber project is that there is a limit to what a gigabit of Internet connectivity is good for.
There are both benefits and challenges to Google Fiber, and it will take additional years and more equitable implementation before it can be deemed a complete success. The lesson may be there are select few who can duplicate the gigabit connectivity, and that building one’s own network or investing in improving infrastructure should never be ruled out. A typical citizen would agree that Internet availability and speed is important for economic prosperity. Google Fiber provides superior Internet speeds and its availability is improving, but it is still too early for any sweeping conclusions.