A lot of people tend to turn off the critical thinking the minute Google comes to town with their Magic Fiber Elixir. I’ve already spilled a lot of digital ink on why I think it’s a bum deal, so I don’t need to rehash that here. What does need to be asked is if their slick online marketing campaigns and brand power are being used to avoid any level of accountability from the cities they make deals with. Right now, I think the answer is a resounding yes.
I’ve heard from multiple sources, some of them very close to Google Fiber, that take rates in Provo are not only well below Google’s expectations but below what Veracity had achieved while they still operated the network. The estimates I hear put take rates in the low-20s whereas Veracity had peaked around 30%. That giant plunge would be almost the entirely of the MDUs taking service from the last time those numbers were available. Part of this is to be expected. Google offered up a “free” tier of service for seven years to anyone who paid a pittance of a connection fee. In student-heavy Provo, it shouldn’t be much of a surprise that this ended up being a very, very popular route to getting online.
I know some people are saying “so what? The network is theirs to make flourish or fail.” That’s not quite true, though. If you look very carefully at the contracts, the city has the right of first refusal to get the network back for the $1 that Google paid to use it. The odds of the city not exercising that right are extremely low. Citizens are still paying for the bonds via a utility fee. There is an immense public interest at stake here should Google decide to pull out of the business any time after the end of their seven-year obligation. When the city handed the network over to Google, it was covering operating expenses and the bond. A 25% hit on subscribers means going right back to propping it up from city coffers.
When the city owned and managed the network, there were monthly reports on subscribers and revenues broken down into segments. Once Broadweave came in (and was later acquired by Veracity), most of the numbers were sealed up as company trade secrets and the only public data was if the payments were being made or not. Veracity was more open that Broadweave about take rates and network challenges, but there was still a lot of data left up to speculation.
Once Google came in, the meager data dried up. I have little confidence that either Google or Provo’s elected officials (looking at you, Mayor Curtis) would give anything resembling a direct answer if asked, assuming they gave any response at all. Even worse, it seems that journalists who proudly proclaim to be the public watchdog aren’t going to even ask those kinds of questions, uncritically reprinting each press release as gospel truth.
If you live, work, or have any personal interest in Provo, you should pushing for answers before the city inherits another financial mess.
Hard to believe you could even pretend to be keeping a straight face while suggesting that the city of Provo might want to “buy back” iProvo for $1 under its “right of first refusal”. After the colossal financial and operational mess that was iProvo for many, many years, why would the city harbor any fantasy that they could somehow do a better job that they had for decades? It’s also hard to believe that google is doing worse than the previous ISPs on iProvo. Without real data, I’m inclined to not believe your anecdotal stories on subscribers in Provo. Please feel free to support your opinions with data, otherwise, don’t try to pass them off as facts.
As I pointed out (and you apparently ignored), the network was at a break even point on opex and bond obligations when it was handed to Google. And if Google added value to the network with their $18.7M in upgrades, it would make little sense for the city to walk away from that.
You can choose to not believe my sources as much as you want. Maybe you can ask Google or the city if it is true. If you got anything more substantive than “no comment”, I’ll be surprised.
Jesse, your track record on Google Fiber predictions is what 0 for 2 and heading to 0 for 3. First, you predicted they would never come. They did (I think you still owe me lunch for that one). Then you predicted they would never supply a business solution, they did. Now you are saying they will give it back to Provo at the end of the contract? Care to go double or nothing on the lunch bet?
Christian, you are once again not carefully reading what I actually said. Instead, you are choosing to recast my words to defend Mayor Curtis at all costs.
I said that Google launched without a business product and no viable plan to create one. It took them, what, over three years to cobble something together that is, at best, a slightly improved home service targeted at only the smallest of businesses? It doesn’t even include a proper SLA. There is still no true business-class product on the horizon and they seem to be content to allow Veracity to eat their lunch on this front. It’s still not a serious product for anything beyond a dozen employees and you know it.
As far as if Google will or will not revert the network to city control at the end of seven years, I don’t know if they will and have never said one way or the other. That said, the contract says what it says: they can do so anytime at the end of the seven year period. Since the possibility exists, the city ought to be ensuring that the network stays in the best shape possible. Are you arguing they should not?
PS I should note that you never once contacted me to collect on lunch. I coughed up to other people I placed bets with very readily. It’ll be harder for me to deliver now that I live a few hours south, but I’ll happily give you a call next time I’m up that way, if for nothing else so that you’ll stop dangling it over my head and implying that I’m not a man of my word.
Jesse — I did not mean to say that you are not a man of your word. I know I haven’t tried to collect on that and I don’t intend to. I was just pointing out that your record on Google is pretty poor.
I am not defending Mayor Curtis because he doesn’t need my defense. I am actually defending Google Fiber in Provo — I live here and the complaints I have heard are all related to where they were on the list for installation. Your “take rate” doesn’t include anyone who is getting the free service and I think you are making a bad assumption about what Google’s motives are for this product. They have been pretty explicit about the fact that this is an investment in getting Gigabit service into the community to see what cool things can happen. I realize that they are a corporation and they need to make money, but I think this is more about providing ubiquitous access to the web so that more people are using Google Search than it is about beating Veracity or Comcast.
But while we are talking about the competition, here is another way that Provo residents have benefitted from Google Fiber: If you don’t want Google, you can get a killer deal on a competitive product. In the information meetings with Google, they were also clear about how ridiculous it is that bandwidth speeds and prices have been stagnant for so long and they set out to change that. I would say that’s a success.
Finally — regarding the business service — you are absolutely wrong if you think that the business class service they offer only appeals to a dozen or so people. You are right that they do not provide an enterprise class service, but enterprises that I know aren’t interested in Google Fiber and that has never been what Google agreed to offer. You did say they wouldn’t offer a business solution and they have — it is just targeting small businesses and the small businesses I know that use it (many, many of them) love it and most of them don’t know what an SLA is and certainly wouldn’t pay more to have one.
Let’s grab lunch whenever you want. We can go dutch.
Hey, if we want to keep score on iProvo, you can at least give me credit for calling Broadweave a dumpster fire VERY early on, much to the chagrin of, well, everyone. I’m not some guy in sweats angrily churning out Cheeto-fueled vitriol from his mom’s basement.
I made it pretty clear to point out that the take rate is for paying customers. Customers who don’t pay you money don’t create income and, well, aren’t really customers. Would some of them become paying customers if the free tier went away? Probably, but you’ll still experience a lot of attrition. That should absolutely be a cause for concern since the city is the fallback position.
Also, you’re speed reading again. I said companies of a dozen employees, not a dozen companies. VERY big distinction there. Very small companies are the only ones getting marketed to for Google Fiber. Companies who would need uptime or bandwidth guarantees are being completely ignored. You and Google are playing fast and loose with the definition of business class.
Google has done a good job at scaring incumbents into at least playing the fiber-to-the-press release game, no question. That is not the point I have argued at all. I am arguing that since the city is paying the bond and ultimately is the backstop for the network, it should be taking a more proactive role in ensuring the health of the network. That it is not fits its profile of actions of trying to run away from the network at every single turn (like it did with Broadweave). That is not acting in the best public interest and must be called out.
I am happy to give credit where it is due, and Broadweave was a disaster. That was one thing George Stewart did just before he left his place on the council for his mission (http://www.heraldextra.com/news/local/george-stewart-man-on-a-mission/article_36913666-f18b-552d-b4f4-73a7b53056c4.html) so full points for that one.
But to the point of this article, I am not playing fast and loose with any definitions. A small business solution is just that — a small business solution. It isn’t wrong to not offer a product to a group of customers. There are plenty of options for enterprises with enterprise class needs.
I am all for making sure that Google is being good steward of the resources they have purchased. I think your point is partly that this is more like a lease than a purchase because of the timeframe of the agreement, the option to walk away, and the city’s first right of refusal. I agree with those points. I just don’t think it is very likely that Google will release it to us at the end of the term, and I think that if they did we would look for another buyer pretty quickly. I don’t see Provo getting back into the fiber business, but maybe you’re right this time.
Let’s get to the core of your argument (please correct me where I get this wrong):
1. Google is avoiding accountability for their care of the asset they purchased by hiding behind slick marketing.
2. Because Google can walk away after seven years and because Provo has the first right of refusal, we (Provo) should care about how they treat that asset.
3. Therefore, someone needs to investigate.
Does that sum it up pretty well? If it does, how does that argument support the claim “Google is botching iProvo”?
Those three points are correct.
Multiple sources close to this project have told me that paying subscriber numbers have dropped. This raises alarms that revenues since Google has taken over have likely dropped by at least that much. They have also left the biggest margin customers, businesses, on the sidelines by not offering real business-class products.
If Google doesn’t meet their own performance expectations (which my sources say they are not), it means both that they are more likely to not extend the contract and more likely to leave the network in a worse revenue state than when they received it. If anyone other than Google was in that same situation, they would not be getting as much benefit of the doubt.
I see no reason at all why the city should not minimally be asking for annual high-level performance metrics to see if they need to keep a contingency plan in the wings.
I maintain that your title is overstated and probably click bait. Your real conclusion is that someone should ask Google for subscriber numbers. Fine. I hope the request is sent on a thank you card for the millions they invested in updating the hardware, finishing the build, and installing fiber in a huge percentage of the homes that at least signed up for the free version.
Let’s say you are right and the subscriber numbers dwindle to the point that Google decides to walk away. Whoever comes in will have fiber to the home in thousands of homes that didn’t have fiber to the home before. That’s an asset with a lot of value because it reduces the cost of expansion for whoever steps in.
So a research company did some surveys and concluded that Google Fiber has take rates in Provo around where I said they are: http://www.multichannel.com/news/distribution/study-market-too-dismissive-google-fiber-s-potential/394356
As I noted, Veracity was at least around 30%. So… sounds like the city has some valid questions to ask about the viability of Google as a network operator, no?
I don’t have a problem with asking questions but I don’t think you have a foundation for your claim that iProvo is being botched. It would make you more credible if you acknowledged the investment Google has made into the network that makes it better (much better) than it was when they took it over. Clearly we won’t agree on this.
Their investment did improve the network. I reject the premise that this is the only or best way that it could have happened.
Since Google isn’t a Tier 1 provider, they have to buy their bandwidth which is very expensive. A couple of 10G waves to Palo Alto isn’t enough bandwidth to start selling large customers who will not want to share an over-subscribed network with residential customers watching Netflix and porn!