Google Fiber gets going in Kansas

Thursday 31 March 2011 | 13:36 CET | Market Commentary

Google is going to roll out a FTTH network in Kansas City, in the state of Kansas (not to be confused with the nearby Kansas City in the state of Missouri). As announced earlier at the start of the Google Fiber project in February 2010, it will be an open network with end-user capacity of 1Gbps. The target is to have the first users on the network in 2012. In addition, schools in the city will receive free access to the network, and the company is cooperating with local institutions, such as the university medical centre. The aim of Google, which at the end of 2010 had USD 35 billion in cash, is to accumulate some experience in the area of network deployment. In December already, with a lightly ironic touch, a ‘microtrenching’ competition was held, to see who could dig a small, shallow trench the quickest. Google also wants to stimulate usage, give a boost to the economy and see what users would actually do with such as broadband connection.

If we look at the project’s development, the demand from local authorities to participate was strong from the start. Around 1,100 American cities applied to participate, despite Google saying it was prepared to connect just 50,000 to 500,000 people. Google looked closely at all the applications, and as a result missed its initial deadline of end-2010 to select a partner. The company did announce in December an agreement with Stanford University to roll out fibre to 850 households on its campus, but this is outside the Google Fiber for Communities project. At the moment, it’s not clear why Kansas City was chosen in the end. It could be for a number of reasons:

o Demographics: much is likely expected from the city in the way of innovation. Almost 150,000 people live there, and it’s home to a large GM factory. There is also room for more cities, as this doesn’t reach the limit of 500,000 participants.
o Geography: the city likely lends itself to a quick network roll-out. The national Internet2 backbone is also nearby.

A number of issues should become clear soon as well:
o Which technology? Given the emphasis on gigabit applications, a point-to-point network is a more obvious choice than PON. If demand grows quicky, Google can’t find itself approaching the limits of network overbooking.
o What business model? One can expect low prices. Not only does Google have the money and a sufficiently long horizon, it’s primarily interested in encouraging innovation and sufficient bandwidth should not be a question. HKBN (City Telecom in Hong Kong), the controversial operator that has consciously chosen for the 'commoditisation' of bandwidth, will likely serve as an example (see our commentary 'City Telecom (Hong Kong) sets the good example for FTTH operators'). Even with this a fair amount of money can be earned over the longer term.
o Which partners are interested in participating? The incumbents were invited by Google, but are unlikely to come knocking. They are also not interested in the Utopia network in Utah, for example. This could be for strategic reasons (they don’t want to help a competitor, and Google in general is not really a friend of telecom companies), but it also runs up against the vertically integrated thinking of the average telco or cable company. Google has said previously it does not want to be an ISP, and as a result will do business with small parties, such as Sonic.net, which manages the network in Stanford.
o How quickly can Google roll out the network and what will they elarn from the process?
o And last but not least: what will the network mean for the city in the coming years? Will it really lead to increased economic activity and innovation? What will people do with a gigabit network? Sceptics say the average family has enough with a few dozen Mbps for all its connected devices. Google and its supporters point to the continued growth, incredibly fast innovation (such as the sudden emergence of the tablet) and the fact that abundance can lead to totally new user experiences.

The eyes of every fibre aficionado are now aimed on Google and Kansas. The only downside is that Google, with its current budget, unavoidably will have to disappoint most of the 1,100 cites that applied.

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