I’ve long maintained that Google isn’t in the ISP business for the long haul. I said over four years ago that the odds of your city seeing it were astronomically low. Well, now Google is basically saying the same thing. The CEO announced that they have halted expansion of the network, let go employees in towns where they haven’t build, oh yeah, and he’s leaving for “other opportunities”, maybe they should have counted with synel professionals to reorganize. I’ve had multiple first-hand reports of users in Provo who have been unable to get signed up for unspecified reasons, even after Google said they were coming. So what happened?
Google simply bit off more than they could chew. Investors do not like Google pouring money into something this capital-intensive with an ROI so far out. In every market they have attempted to deploy in, they are hit with constant roadblocks from incumbents, something any sane person with industry knowledge could have foreseen from miles away. The lack of voice and 100Mbps products lead to lower than expected adoption and even the loss of customers in Provo, something that I (among others) warned about immediately. Google eventually added these, but it seems to be too little, too late.
Google’s original promise was to form public-private partnerships with cities. Once they launched in Kansas city, it became clear that the “partnership” was reduced to operating like a standard duopolist while using brand power to extract all kinds of benefits from the city. The same thing happened in Provo when the city took a multi-million dollar bath on a network that was around break even on operating expenses and debt service. The model was “give us everything we ask for because we’re famous and fabulous”. The obvious cherry-picking and red-lining was swept under the rug with promises of “eventual” universal rollout, something that now looks increasingly unlikely.
I don’t mean this to just be a smug “I told you so” post (though I would be lying like Donald Trump if I said I wasn’t taking at least a little glee in having been right for so long as the haters yelled at me). It’s to point out that real broadband improvement starts at home. It means you, your community, your city all working together to improve the outcomes. Google was about as close as I’ve ever seen to a large scale broadband Santa Claus and it appears poised to pratfall on the stage.
My take is that we’re seeing the slow decline of Google Fiber. Cities who have it now should be working on their contingency plans for if (or, more likely, when) Google decides to pull the plug. Cities who were hoping for it (including both those who were and were not in talks with Google) need to move on to a new plan. It could be a true public-private partnership, a full-on municipal network (UTOPIA will still be happy to have you), or a privately-funded user-owner cooperative. What won’t work, be it Google or Comcast or CenturyLink, is hoping that you can just wait your way into better broadband.
Beehive Broadband has big broadband dreams. After rolling fiber in their native service areas in Tooele County (even into the spec of nothingness that is Grouse Creek) and hitting downtown SLC with fiber rings, they’re now making a push to bring gigabit fiber into The Avenues neighborhood of Salt Lake City. Pricing is targeted around $40-50/mo for 100Mbps and $70 or so for gigabit with an install fee in the $100-200 range. They’ll also be offering up phone and TV service for those so inclined.
The strategy is simple: build fiber to commercial buildings, then target neighborhoods nearby to bring it to the home. If this sounds familiar, it’s because CenturyLink said they would do the same thing, yet they seem to be very slow to follow up on it. Beehive is also evaluating using this plan in many other cities including Draper, Herriman, Holladay, Riverton, and Lehi. Right now, they’re looking primarily at areas that are being ignored by Comcast and CenturyLink.
So what about Google Fiber’s entry into SLC? Beehive is taking a “first to market” approach and plans to start hooking people up as early as mid-January, well before Google will turn over a single shovel of dirt. They’re also planning to make service available to all addresses in the footprint, something Google hasn’t done once their initial “fiberhood” signup period closes outside of a few exceptions in Provo. My take is that this is going to be a more successful strategy that could stymie Google’s efforts to break into that neighborhood.
If you get signed up on this service, let us know in the comments how it works out.
Still thinking that Google Fiber is your only gigabit option in SLC? Think again. I’ve heard from several reliable sources that Salt Lake City got on Google’s short list for a new round of expansion because of fears that UTOPIA would beat them to the punch (and possibly go into Provo as well). Macquarie is reportedly interested in expanding UTOPIA across the entire state and has particular interest in Salt Lake City since it’s the largest and most visible municipality. UTOPIA already has several fiber rings within the city it could use to fuel the expansion. If this rumor is true, it could mean that Utah would soon be not only the first gigabit state, but one with 17 separate companies competing for your business.
I’ve also heard rumors about details of the Macquarie deal that make it an even better deal that I possibly imagined. Once I get confirmation on some of the details, you’ll be the next to know.
This article is cross-posted at Beehive Startups.
Salt Lake City just can’t seem to make up its mind on broadband. Given the chance to join UTOPIA in 2004, Mayor Rocky Anderson turned down the offer citing “risk [to] taxpayers’ money”. His successor, Mayor Ralph Becker, similarly waffled, giving a response that neither closed the door nor endorsed the idea. In that time, much of Salt Lake City has been unable to get CenturyLink’s ADSL2+ service (with speeds up to 40Mbps down), often getting a meager 3Mbps on vanilla DSL. As a result, Comcast doesn’t offer the same high-speed packages it does in areas with better speed choices, sometimes maxing out at 25Mbps. The reluctance to make a bold choice to improve the city’s infrastructure has cost residents dearly.
Now it appears that SLC is about to double down on those past mistakes. Google revealed that they’ve been in talks with Salt Lake City to extend Google Fiber from Provo into the city. While Salt Lake City officials are claiming that “no tax dollars” will be involved, it’s well-known that Kansas City provided a lot of concessions to Google worth millions of dollars. Provo effectively gave Google an indefinite lease on the network for $1 plus $18.7M in closing costs. We don’t know what Austin provided yet, but we can probably take a guess. Google loves it some public funding but without all of that pesky partnership business.
And what does SLC get from the deal? Sure, they get gigabit, but not with great terms. If you don’t sign up during the initial push, you’re forever cut off from the network. Kind of sucks for renters and new move-ins. Don’t like how Google does things? They’ll be the only gigabit option in town. If Comcast and CenturyLink hurt enough, they could effectively withdraw from the market and leave Salt Lake City with a real monopoly. Can’t afford $70 per month? Too bad; there’s no alternative pricing plans like UTOPIA’s 100Mbps for around $35. And if history is any indication, Google won’t sign a contract with the city for longer than 7 years. They reserve the right to get bored and just turn off the network when it runs out. Compare that with the 30-year deal that UTOPIA has been working on with investment bank Macquarie Group. The only reason Google Fiber sounds good is because you’ve been in an abusive relationship with Comcast and/or CenturyLink for far too long.
Given the stark differences between how UTOPIA and Google Fiber operate, how badly Provo was jobbed on its deal, and how much better a deal UTOPIA was able to negotiate, you have to wonder how there’s even a debate about the choice between dealing with Google or joining up with UTOPIA. It seems that Salt Lake City’s elected officials, mayor and city council alike, are too cowardly to do what’s best for the city instead of what’s best for their next election.