

Kansas City subsidises Google Fiber - novaleaf
http://arstechnica.com/tech-policy/2012/09/how-kansas-city-taxpayers-support-google-fiber/

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Spooky23
I'm not seeing this as a subsidy issue. Some of the quotes in the article
sounded like PR from cable or some other companies.

The biggest thing from a cost POV is the access to city building and utility
pole rights of way. In most places, utility poles are owned by a combination
telephone, power and cable utilities (or third parties), and these parties
make it very difficult to run "last mile" cable by refusing lease space to
third parties, or making it extremely expensive to do so. Many municipal
broadband initiatives have died as a result of this.

So Kansas City allowed Google to use it's rights of way, buildings, or leased
pole space to run cabling. And it allowed a few employees to use excess city
office space, and provide some marketing support.

Big whoop. Kansas City made some modest concessions available to make a
important service available to its citizens.

The usual subsidy story is different. My city, like many others, indirectly
subsidizes the cable company by giving them a monopoly on wired television
service. In exchange for a goofy public access cable studio in our high school
and free cable internet for a few public organizations, all ratepayers get to
pay more money for lousy service.

~~~
dmayle
I think you're absolutely right.

I work for Google, and I know no details of this other than publicly
available, but this is my personal opinion:

My understanding is that Google is wiring up city buildings with high speed
internet for free in the areas where they install.

I don't know about the rest of you, but if Google offered to give me free
gigabit internet, and in exchange all I had to do was give them space for the
equipment, and provide the electricity costs, I would be jumping on the
opportunity.

~~~
Splognosticus
Yeah. From the agreement:

6\. Obligations of Google (g) Provide the services in Section 4(a) to City for
up to a total of three hundred (300) locations and other governmental
buildings throughout the City, to be identified by City. When such locations
are passed by the Project construction, the City or other designated
governmental entity may connect the locations to the Project at its expense,
and then receive the Section 4(a) services free of charge.

The services in Section 4(a) are of course gigabit fiber internet. This is
probably the most disingenuous thing I've ever seen on Ars Technica.

~~~
mbreese
The context of the article is that a former FCC official was claiming that
Google Fiber is an example of what can happen when the government gets out of
the way of private enterprise; that Google Fiber shows that deregulation is
the way to go.

In that context, the Ars article is meant as a counterweight to that pure
free-market argument.

It seems to me that the reality is that Google Fiber represents great
cooperation between the Kansas Cities and Google. Yes, Google gets subsidized
access to buildings, right of ways, etc... Yes, the Cities get free service.
And the rest of the country gets jealous.

Overall though, I think that is also part of the grand experiment. Google
wants to know _if_ it is possible to build a profitable gigabit network, but
also how do to do it. Part of that is navigating the governmental bureaucracy
and lowering the barriers to entry. I think that if the Google Fiber
experiment works, we'll see the corporate/government cooperation model used as
a template for other roll outs in the future, not just from Google.

~~~
Splognosticus
It's the part where he writes, "...Kansas City's support for Google's network
went well beyond deregulation to outright corporate welfare," that I found
striking. Maybe it's just a poor choice of words but it seemed to me like it
set the tone of the article as a condemnation of Google building out their
network at the expense of the taxpayers, and completely ignoring that they
were providing what would from any of the established telcoms be a very
expensive service to the city in exchange.

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pash
Yes, Google Fiber is subsidized. And that's a feature, not a bug.

Cable television and Internet service in the United States is lackluster and
expensive partly because the market engenders little competition. (It's a
classic example of a natural monopoly [0].) The high cost of building out a
network is a formidable barrier to entry, one that incumbent providers have
happily lain down behind and gone to sleep.

The way to fix this broken market is to facilitate competition, and one way to
do that is to lower the start-up costs of companies that want to offer new and
better services. That's precisely what Kansas City, Mo. and Kansas City, Kan.
have done in their partnership with Google.

It's reasonable to question these cities' prudence in absorbing part of the
very real, very substantial cost of building a fiber network from scratch.
Whether it proves a wise investment will depend in large part on what they get
out of the deal. But that includes free gigabit Internet for dozens of
schools, libraries, community centers, and public buildings, plus the
centerpiece of an effort to put Kansas City on the map as an attractive place
to start and run a tech company. (That effort formally gets underway on Monday
[1].)

I live in Kansas City, and I've signed up for Google Fiber. I'm here partly
because I'm excited about what I'll be able to do with it, and what others
will do with. So I'm biased, but it looks like a good investment to me.

0\. <http://en.wikipedia.org/wiki/Natural_monopoly>

1\. [http://www.siliconprairienews.com/2012/09/officials-set-
to-u...](http://www.siliconprairienews.com/2012/09/officials-set-to-unveil-
strategic-tech-effort-launch-kc-at-monday-event)

~~~
alwaysdoit
If the government can give a subsidy that causes a business to do something
that has positive externalities greatly exceeding the cost of the subsidy,
isn't that a wise use of government resources?

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fein
We already subsidize Big Cable, and they have a wonderful history of taking
the money and running (with damn near zero repercussions).

Kansas City seems to have tried something different, and Google is actually
holding up their end of the bargain. If this is the alternative to Time Warner
flushing money down the toilet, then I really don't see how this can possibly
be an issue. I would happily contribute state/ city taxes to a subsidy for
solid 1GBit u/d connection.

~~~
simonsarris
Well not only Big Cable, but roads and cheap clean water and electricity
lines, after all, are already subsidized and are not controversial. At least,
not controversial today :)

I don't see anything wrong with subsidizing what could become a de facto
public good[1]. And I imagine citizens in Kansas City will get a more positive
return for the fiber they subsidize than many of the (sometimes massively
inefficient/dead-end) country or sparse suburban roads they are subsidizing.

I wonder what the attitudes were like 100 years ago. Would something like this
be considered bold and praiseworthy? Or would most people complain about the
cost? From my quick glance at the Hoover damn Wikipedia page for instance the
only controversial part was the naming, though I'm sure there are more nuanced
histories of that project.

[1] I suppose we shouldn't kid ourselves too much though, and frame the public
good not as rich internet, but as rich internet _access_

~~~
goatforce5
The Australian government is currently spending $27.5bn to put fibre to the
premises of 93% of Australian homes:

<http://en.wikipedia.org/wiki/National_Broadband_Network>

...and the other more remote premises will be covered by wireless and
satellite services.

~~~
fpgeek
The same kind of thing is happening right now in Singapore:
<http://www.ida.gov.sg/infrastructure/20060919190208.aspx>

It really is the tried-and-true model.

------
ChuckMcM
When Google first announced this project, I thought "Heh, good luck with
that." I know they are quite creative and immune to traditional negativity,
but having worked to get fiber between buildings and data centers you begin to
realize just how deep that rabbit hole goes.

First and foremost we've got Cities, totally strapped for cash and unable to
get new taxes through, seeing everything from recyclables you throw out to the
tree in your front yard (that they planted) as a potential source of revenue.
That does not lead to a lot of concessions, rather that leads to forcing you
to re-stripe your handicap spots with the latest shade of blue and paying for
an inspection.

Then we've got incumbents, these are the people who by virtue of being first,
or formerly part of the bit telephone monopoly, or part of a cable monopoly,
have existing infrastructure in the ground and pre-agreed rights of refusal or
say over what goes in near, next to, or through their stuff.

Then we've got the 'drillers' the folks with the equipment to lay cable which
require various specialize bits, who are the only ones who can get the
necessary permits through because they've been doing it for years and they
know how to 'work the system'.

One of the only other benefits of Fracking aside from lower natural gas
prices, is that a cable installer can now drill a mile horizontally, 500 to
1000' below ground while filling in the drill hole with a concrete and steel
'conduit' path. Still hard to drill straight down from a building's MPOE room
to meet that pipe but you can do it from the sidewalk. That is some cool stuff
right there.

Amazingly hard to do 'simple' things.

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brlewis
I would be fine with my municipality providing this kind of subsidy to a
broadband provider that offered something like Google's free plan.

<http://fiber.google.com/plans/residential/>

Up to 5Mbps download, 1Mbps upload speed • No data caps • Free service
guaranteed for at least 7 years • Includes Network Box $300 construction fee
(one time or 12 monthly payments of $25) + taxes and fees

(Disclaimer: I will soon work for Google, but I don't and won't speak for
them.)

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sophacles
Here is something I don't understand. There may be some subsidizing, but if
the city had previously granted monopolies, isn't a bit of help to newcomers
required to undo the effect of the monopolization?

I mean, if there is a huge infrastructure built via a monopoly subsidy,
including existing leases on the right of ways etc, which the former monopoly
will fight to keep exclusive, doesn't this provide unfair advantage resulting
from the city's previous subsidy? If on the other hand they provide a bit of a
leg up, to jumpstart competition, and help reduce the overwhelming advantage
they previously caused, isn't that just undoing/fixing the mistake?

~~~
sausman
And it's not as if the government has any resources it doesn't take from its
citizens. When we let the government make buying decisions for us through
subsidies, consumers inevitably lose.

This is a perfect example. Instead of consumers voting with their dollars, a
portion of their vote is confiscated by politicians. The money is then put
towards the interests of politicians, not those of consumers.

Best-case scenario: politicians choose exactly what serves consumers best.

Worst-case scenario: politicians serve special interests and don't choose
what's best for consumers.

Not only is the best-case scenario extremely unlikely, it is exactly what
would have happened absent any government subsidies.

~~~
Evbn
You are not showing an understanding of right of way and how infrastructure
projects require large-scale coordinated action. It is not possible to build
anything with only 75% right of way purchased from inviduals.

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eckyptang
I wish Google would do this in the UK and the government would subsidise them
rather than pissing around with ministerial positions and quangos and wasting
our money on nothing of value.

I'm fed up of the monopoly that is OpenReach here (ex BT's infrastructure
division). All you can expect in the UK is 14-20 days a year of downtime,
pitiful bandwidth and quite possibly the worst customer service in the history
of time.

Other providers' service is patchy and they aren't much better as they don't
have much competition and therefore motivation to do better.

Another competitor would go down well for the consumers, especially one
operating at such a price point and with a name like Google.

~~~
ropiku
Add that OpenReach can take 3 weeks to install a landline, they give you a 6h
time slot and the engineer is usually late or missing and there's nothing you
can do. Where I live OpenReach (ADSL2) is the only option.

~~~
eckyptang
I experienced that too!

The worst OpenReach experience I've had was when the line was working in a
degraded fashion, the OpenReach engineer turned up and actually broke it
entirely. The guy literally got up and made a break for it out of the door.

I chased the bastard up the road to his van. It was like a cheesy Benny Hill
sketch.

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Eduardo3rd
I wonder if the stimulus package would have been better received if it had
included more easy to point to wins like this in it. Rebuilding aging physical
infrastructure is incredibly important, but I think there might be more bang
for the political/physical dollar if you are focusing on creating new digital
infrastructure. Pointing to a road that no longer has potholes isn't as
attention grabbing as giving people a 100x boost in internet speed.

~~~
w1ntermute
The problem with that would've been losing all the lobbying dollars and
campaign donations from the telecom industry.

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jobu
The end result of gigabit internet access for everyone is a real "public good"
that likely couldn't have been created otherwise and it should certainly be
subsidized. If other cable or telecom services were willing and capable of
putting out a comparable service I would be in favor of subsidizing them in
this manner as well.

Honestly I think some of the stimulus money we spent on roads and bridges
would have been better spent on high-speed internet access to underserved
areas.

~~~
seagreen
"Public good" has a fairly technical meaning that doesn't fit here.
Wikipedia's article on it is pretty good:
<http://en.wikipedia.org/wiki/Public_good>

Basically public goods have to be non-excludable and non-rivalrous. Internet
access is neither (you can both kick people off and there's a marginal cost to
hooking new people up).

The article on rivalry[1] mentions that it's possible internet infrastructure
is non-rivalrous if there's unused capacity, so once someone's hooked up
actual internet use might be a club good.

If you don't want to imply the other stuff about rivalry and exclusivity you
could say that gigabit internet access for everyone would have positive
externalities (which it certainly would) and leave it at that.

[1] <http://en.wikipedia.org/wiki/Rivalry_(economics)>

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jerel
As someone that lives in an area with no wired broadband i would have to say
that the free internet package that Google is offering is a pretty swell
taxpayer compensation.

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tudorw
Is this a good time to mention
<http://en.wikipedia.org/wiki/Kansas_City_standard> ?

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talmand
History shows this will probably lead to a lawsuit by the local cable
providers to stop it.

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Evbn
Just noticed the Google pitch/ad calls the intallation/access fee a
"construction fee". Is there a per-user constuction task to be fiber to a
residence?

~~~
mbreese
It's probably like per-home connection fees for connecting to water/sewer
lines. Google has run the fiber through the city, but you still need to splice
the houses to the lines. You only want to connect the houses that are going to
be using the service. And that will necessarily mean construction fees.

From the look of the construction fees, they are still pretty cheap and below
actual costs.

