Light Reading

How Long Will Google Keep the Fiber Flowing?

Jeff Baumgartner
LR Cable News Analysis
Jeff Baumgartner

If Google (Nasdaq: GOOG)'s fiber experiment in the Kansas Cities goes badly or it simply wants to hand it over to someone else, it's got an out. Google can terminate its agreements two years after it started building the networks.

That's just one of several favorable clauses that are present in Google's sweetheart deal with the cities, according to franchise agreement documents obtained by Light Reading Cable. (See Google Fiber Bundles TV, Shuns Data Caps.)

Google, of course, has shown no signs that it intends to walk away, but it doesn't need much of a reason to do so.

"Google will have the right to terminate the Agreement for convenience at any time up to two (2) years after actual construction commences on the fiber network," the franchise agreement states.

If the deal is terminated after services are launched, Google and the city can create a new operating agreement "for the continued use of the existing fiber network, which could involve operation of the network by a third party."

Google's savvy deployment model, which requires that a certain number of homes in a given "fiberhood" (areas with 250 to 1,500 households) pre-register for the service for a $10 fee, is also baked into the deal. The city is allowing Google to "build the fiber network on a demand-driven basis, allowing the citizens of the City to determine where and when the Project will be deployed," according to the agreement. (See Google Fiber's Drive for Density and Who's Rallying for Google Fiber?)

While that's a clever way to stir up excitement about the project while adding in deployment efficiencies, it's not a model that franchise deals have historically allowed; they usually require the operator to make service available to all areas within a franchise region, and to get it done within a certain timeframe. The idea is to keep an operator from concentrating on affluent areas first while ignoring poorer neighborhoods -- a cherry-picking no-no called "redlining."

In fact, there is no hard deployment target mentioned in Google's agreement with Kansas City, Mo., the initial term of which is ten years (unless Google uses its two-year out), with the option for successive five-year terms.

But Google says it's committed to bringing services to all fiberhoods that qualify under its build-by-demand model. "We will build Google Fiber in the areas of Kansas City, KS and Kansas City, MO that meet their pre-registration goals," a spokeswoman says via email.

Google's first fiber "rally" is underway. At last check, 14 fiberhoods in Kansas and 49 in Missouri have already met their pre-registration goals, and there are 25 days remaining in the first round.

Google Fiber's also set its sights on Westwood, Westwood Hills and Mission Woods, Kan., as part of a phase II rollout that will apply the same model. It's just waiting for the three city councils to approve it. (See Google Fiber Sizes Up More Territory.)

In it to win it
The early rally results show that there's plenty of interest in Google Fiber, but the franchise agreement's loose deployment targets and conditions likewise show how anxious the city was to win the Google Fiber competition, says Effros Communications President Steve Effros, a veteran cable lobbyist with a deep understanding of franchise rules.

"Google got an absolute sweetheart deal," Effros says. "They [the cities] wrote a franchise that no cable operator could have possibly gotten when franchises were being argued over and fought over in the 1990s and 2000s. The franchises operators have today are far more restrictive than this thing they've given to Google."

Google also represents new competition for the area's incumbent operators, so that's one reason Google was given some advantageous leeway. Still, other overbuilders typically did not receive nearly as much special treatment from franchise authorities.

Also, no part of Google Fiber's contract with the city requires it to operate its new network under an open access system that would let other ISPs jump on and sell services. Google promoted the open access idea in the early days of its fiber project, but "that disappeared before they even dug their first trench," Effros says.

Google, meanwhile, argues that it offers the best option. "We don't think anybody else can deliver a gig the way we can," Google Fiber Project Manager Kevin Lo told The Kansas City Star in July when asked why the open access idea was left behind.

— Jeff Baumgartner, Site Editor, Light Reading Cable

(7)  | 
Comment  | 
Print  | 
Newest First  |  Oldest First  |  Threaded View        ADD A COMMENT
User Rank: Light Beer
12/5/2012 | 5:23:52 PM
re: How Long Will Google Keep the Fiber Flowing?

I'm not one to stand up for big MSO business or service models, but if I were one of the incumbent providers I'd be looking for consessions from KC. There is a huge capital cost to deploy service to all areas of a city regardless of service take rate. This cost must be recovered through fees from those that take the service. Letting Google only deploy in areas with a high enough take rate greatly reduces the costs that must be recoverd and this reduces the price they must charge. If the city wants to go that way they should expect any incumbent that rolls out new services to request the same treatment. Like only rolling out DOCSIS 3 network upgrades in profitable areas. I'm not sure KC is going to like where this goes.

User Rank: Light Beer
12/5/2012 | 5:23:51 PM
re: How Long Will Google Keep the Fiber Flowing?

This no deadline, no committment to plant trees, support schools, or service all neighborhoods is beyond me....i hope TWC goes to the city or the courts, competition is good, but it must pretend at least to be even steven

User Rank: Light Beer
12/5/2012 | 5:23:51 PM
re: How Long Will Google Keep the Fiber Flowing?
But it is different.

The cable & telcoms are being given a de facto monopoly over a large user base, that is what allows costs to be recouped.

In Google's case, similar to a CLEC (but running their own lines) they are the "underdog" and do not have a monopoly status.

I think this will al lbe a very itneresting experiment, and competition is a good thing.

For example - FiOS makes the cableco's "do better", and I am hoping Google does the same to all of the other players.

Eventually, there may be other considerations (for example, if it gets to the point that Google is the encumbant monopoly) ... but that is a ways off yet, and isn't (IMHO) Google's goal.
User Rank: Light Beer
12/5/2012 | 5:23:50 PM
re: How Long Will Google Keep the Fiber Flowing?

Letting Google only deploy in areas with a high enough take rate greatly reduces the costs that must be recoverd and this reduces the price they must charge. If the city wants to go that way they should expect any incumbent that rolls out new services to request the same treatment. Like only rolling out DOCSIS 3 network upgrades in profitable areas.

Seems to me there's an enormous difference between only deploying in areas with a high take rate and only deploying in profitable areas. A high take rate is defined by customers putting up a $10 registration.

And, at least in my neck of the woods, it certainly looks like the ISPs are already following the 'profitable area only' plan.

User Rank: Light Beer
12/5/2012 | 5:23:50 PM
re: How Long Will Google Keep the Fiber Flowing?

Remember a couple of years ago when towns were scrambling to be the lucky ones to get the project (and thus, bragging rights)?

Kansas City did what it had to do to win Google's heart, which likely involved generous concessions.

So irrespective of what the competition is doing, has been doing, the monopolies they hold or have held in the past, Google has - to their misfortune - apparently turned the tables - rather than the operator scrambling with the town to cover that area, the town is instead scrambling with the provider to cover it's residents.

User Rank: Light Beer
12/5/2012 | 5:23:49 PM
re: How Long Will Google Keep the Fiber Flowing?

But it is different. The cable & telcoms are being given a de facto monopoly over a large user base, that is what allows costs to be recouped.

I agree, but with the existance of Google in the market there is no monopoly anymore thats why I said the MSO could roll out future services in only profitable areas. Get rid of my monopoly and free me from universal coverage. It is the city through their cable franchising regulations that control universal service. Once they give that up to one competitor they should give it up to all operators for future services or there isn't a level playing field anymore. They chose to give it up to get Google, if I were the MSO I'd use it.

Christopher Mitchell
Christopher Mitchell,
User Rank: Light Beer
12/5/2012 | 5:23:38 PM
re: How Long Will Google Keep the Fiber Flowing?

Umm, it was AT&T and other telecom interests that changed the law in Kansas, prohibiting local governments from making various requirements of those seeking a franchise.  If Time Warner Cable has a problem with this, they have themselves to blame. These companies have embraced cherry-picking.

From The Founder
Light Reading's conference in November will attempt to answer all of the big questions around white box networks. No pressure...
Flash Poll
Live Streaming Video
CLOUD / MANAGED SERVICES: Prepping Ethernet for the Cloud
Moderator: Ray LeMaistre Panelists: Jeremy Bye, Leonard Sheahan
Telecom Innovators Video Showcase
Close-up on ConfD

10|12|15   |   10.21   |   (0) comments

Tail-f's Renée Robinson-Stromberg tells Steve Saunders about the powerful ConfD management interface.
Women in Comms Introduction Videos
Women in Comms: Highlights From Dallas

10|12|15   |   2:23   |   (1) comment

The best soundbites, quotes and words of wisdom from leading women from Intel, AT&T, Verizon and Genband at our recent WiC breakfast in Dallas.
Telecom Innovators Video Showcase
NetNumber Founder on Managing Signaling Control

10|12|15   |   6:36   |   (0) comments

NetNumber Founder and Chief Strategy Officer Doug Ranalli describes the essential complexity of real-world signaling-control and how NetNumber enables carriers to bring signaling-control "under-control". Learn why virtualization alone isn't the answer.
LRTV Documentaries
Verizon Gets Proactive on App Performance

10|12|15   |   04:50   |   (0) comments

SDN is turning traditional service models around to allow Verizon to measure and deliver performance at the application layer. As Shawn Hakl, VP of enterprise networking and managed solutions for Verizon, explains, the carrier had to develop new skill sets and change some of its internal operations, but the payoff was happier enterprise customers.
Telecom Innovators Video Showcase
Tail-f, Cisco & What the Future Holds

10|9|15   |   8:17   |   (0) comments

Steve Saunders meets with Tail-f's Director of Technology, Carl Moberg, in Stockholm to discuss becoming part of Cisco, ETSI MANO, virtualization and the need to combine science and business in order to create opportunities for service providers.
LRTV Interviews
Broadband Forum Embraces SDN & NFV

10|9|15   |   02:42   |   (1) comment

At Gigabit Europe 2015, Robin Mersh and Kevin Foster from the Broadband Forum explain how the industry body is adapting to meet the SDN, NFV and cloud needs of the access network sector.
LRTV Interviews
Top Tips for FTTH Operators

10|8|15   |   02:26   |   (0) comments

At Gigabit Europe 2015, Ventura Team co-founder Richard Jones talks about some of the key business case considerations for FTTH network operators.
LRTV Interviews
M-net Calls for FTTx Unity

10|8|15   |   03:45   |   (0) comments

At the Gigabit Europe event, Jörn Schoof from M-net, the Munich city network operator, calls for industry collaboration on fiber broadband access rollouts.
LRTV Documentaries
The Business Case Challenge for NFV

10|7|15   |   03:47   |   (0) comments

Virtual CPE is one of the early success stories for network functions virtualization, as service providers are finding flexible, programmable CPE solves a lot of logistics problems and reduces their cost. But even here, Masergy Communications faced a business case challenge, says CTO Tim Naramore.
LRTV Interviews
JT Offers Some Gigabit Lessons

10|7|15   |   4:08   |   (1) comment

Barna Kutvolgyi, managing director, Global Consumer, at JT, the incumbent operator on the island of Jersey, talks about how other service providers can learn from his company's gigabit broadband rollout experiences.
LRTV Interviews
AT&T's Chiosi on the Potential of Open Source

10|6|15   |   06:27   |   (0) comments

AT&T Distinguished Network Architect Margaret T. Chiosi talks to Light Reading's Carol Wilson about the potential for open source technology to liberate communications service providers.
LRTV Interviews
Network Security in a Gigabit World

10|6|15   |   05:52   |   (0) comments

Masergy's James Harrison talks about some of the network security and data center issues network operators need to consider as they expand their broadband services portfolios.
Upcoming Live Events
October 14-15, 2015, New Orleans Ernest N. Morial Convention Center, New Orleans, LA
November 5, 2015, Hilton Santa Clara, Santa Clara, CA
November 17, 2015, Santa Clara, California
December 1, 2015, The Westin Times Square, New York City
December 2, 2015, The Westin Times Square, New York City
All Upcoming Live Events
Network appliances have a strong value proposition in today's networks and will continue to do so in the NFV and SDN-enabled networks of tomorrow.
Hot Topics
Dell Buys EMC for $67B in Biggest Tech Deal Ever
Mari Silbey, Senior Editor, Cable/Video, 10/12/2015
M&A Speculation Swirls Around Juniper
Ray Le Maistre, Editor-in-chief, 10/6/2015
Cord Cutting? 'Fraid so.
Brett Sappington, 10/7/2015
Cisco Makes 'Martian' Connection
Mitch Wagner, West Coast Bureau Chief, Light Reading, 10/9/2015
Like Us on Facebook
Twitter Feed
Webinar Archive
BETWEEN THE CEOs - Executive Interviews
With so many new and exciting communications technologies now under development, it's easy to get caught up in the industry's escalating hype cycle. That's why the ...
Last week saw a big day in the 15-year history of Light Reading when Editor-in-Chief Ray Le Maistre and I were invited to interview the Deputy Chairman and Rotating ...
Cats with Phones
"What?! I'm on with Finisar about their stock price tanking" Click Here
Live Digital Audio

Think NFV is just about virtualization? Think again!

Network architects are learning that there's a lot more to the technology than first thought – more complexity, that is; but also, more potential benefits.

On May 29th 1 PM ET, Steve Saunders, founder and CEO of Light Reading, will be drilling into the "pains and gains" of NFV with Saar Gillai, SVP & GM, HP Communications Solutions Business at Hewlett-Packard Co. (NYSE: HPQ) (HP). He has defined a four-step NFV model describing a sequence of technology innovation. It's a must-read doc for any network architect looking to get to grips with their NFV migration strategy. Join us for the interview, and the chance to ask Saar your NFV questions directly!