Stars and Astral Cars

I was recently in Kansas City, MO, and I got to give Google Fiber a test drive. I guess I should’ve expected it, but Google’s presence in the city is hard to miss. I happened upon a colorful Google building within a half hour, and many local businesses have “Try Google Fiber” stations where folks can try out the speedy service.

As an aside, I’m not really jazzed about this “Try Google Fiber” station as a selling tool. It was just a laptop (Chromebook, obviously) with “See How Fast!” signs posted. I expect 90% of the people that give it a shot visit ESPN, CNN, or even Google.com and barely notice a difference. They should be instructed to download an album, movie, or TV show to really see the benefit. Anyway.

Speedy is a bit of an understatement. Google Fiber is very, very fast.

To get that in writing, that’s 91.58 Mbps down and 35.01 Mbps up. For basically the same price, I’m lucky if I can get 9 Mbps down from Comcast here in Seattle. And that’s probably the fastest residential I’ve had in my life.

For comparison, where with Comcast I can download a 1080p Breaking Bad episode (1.86 GB) in about a half hour, Google Fiber would get it done in under 3 minutes.

Needless to say, if I lived in Kansas City, I’d be all over that.

Something has never sat right with me about Google Fiber, though. It just has a ‘way too good to be true’ vibe to it. Google’s never revealed what the cost of deployment is to them, but Neil Lachman estimates.

Lachman explained a complex financial model he developed that assumes Google Fiber eventually gets 15 million subscribers. Using varying assumptions about average revenue per user per month (from $70 to $100) and how much it costs to connect the average user to fiber (between $850 and $1,250), Lachman concludes that Google’s investment would total between $19.8 billion and $28 billion.

Basically, everyone outside of Google that has run the numbers can not conceive of a way that Google even breaks even on this, let alone operate profitably.

Why is Google doing this? What’s their angle? It seems downright philanthropic, if nothing else. I left Kansas City still wondering.

But Timothy B. Lee at ArsTechnica wrote this morning about the less-free-market-than-you’d-think aspect of Google Fiber. It’s a good read, and it includes a quote from Fred Campbell, a former FCC official, that clears the cloudy picture just a bit.

Google received stunning regulatory concessions and incentives from local governments, including free access to virtually everything the city owns or controls: rights of way, central office space, power, interconnections with anchor institutions, marketing and direct mail, and office space for Google employees. City officials also expedited the permitting process and assigned staff specifically to help Google. One county even offered to allow Google to hang its wires on parts of utility poles—for free—that are usually off-limits to communications companies.

Well, then. It seems many Kansas City taxpayers will be paying for Google Fiber whether they sign up or not. It also seems that Google has a LOT of free and unregulated access in the city. Kansas City could become a testbed for many a Google project. Self-driving cars on the streets in KC? Real-world enhanced Google Glasses interactivity, like with say, display ads? Hell, energy?

I don’t know. But it’s foolish to think Google’s doing this just to disrupt the status quo.