
Google buying $39M fiber service in Utah for $1 - rkudeshi
http://hosted.ap.org/dynamic/stories/U/US_GOOGLE_FIBER_UTAH?SITE=AP&SECTION=HOME&TEMPLATE=DEFAULT&CTIME=2013-04-18-17-08-16
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jpatokal
Since nobody has pointed out the obvious: buying things for $1 in the business
world means that the thing has negative book value (= its liabilities exclude
its assets), but not so much that you'd want to structure the sale the other
way around (= Provo paying Google to get rid of the thing). So Google's not
getting $39m worth of stuff for $1, they're getting $39m worth of assets plus
$Nm worth of liabilities (where n > 39) for $1. See also:
<http://en.wikipedia.org/wiki/Peppercorn_(legal)>

Also, paying $39m to build something doesn't mean the resulting asset is
actually worth $39m any more, but that's another story.

(And obligatory disclaimer: I have no personal knowledge of how the valuation
was actually made.)

~~~
fjarlq
> _So Google's not getting $39m worth of stuff for $1, they're getting $39m
> worth of assets plus $Nm worth of liabilities (where n > 39) for $1._

Pete Ashdown of Xmission says "Google will not assume any of the debt, the
Provo city taxpayer will continue paying that."

[http://transmission.xmission.com/2013/04/18/the-1-fiber-
opti...](http://transmission.xmission.com/2013/04/18/the-1-fiber-optic-
network)

Who is right? I haven't looked into it.

~~~
YeahKIA
You can't blame google if the government officials were stupid enough to not
extract the right value out if their assets

~~~
lmm
Watch me. I suspect there are many people here who had the opportunity to rip
a client off but chose to instead do the right thing.

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SoftwareMaven
A $39M fiber service that has been a constant drain on the city's coffers and
is in serious need of upgrading. I read that the fiber pull is about half the
cost of this; the other half is the routers, switches and other equipment it
takes to make it work. I'm sure Provo City is breathing a sigh of relief at
getting that weight off their back.

And I'm hoping that Googke will decide to extend its market to outlying
communities. Much of American Fork was wired by the same original company, and
my town is next to American Fork.

Come on, Google, it's only 12 miles! (My wife already prohibited a move for
better Internet connectivity. :)

~~~
vyrotek
Dang, your wife won't move to Provo either? Ok, I don't really want to move
there either. But sometimes sacrifices have to be made in the name of fast
internet!

On a more serious note. I had heard that Lehi did make a pitch to get Google
Fiber when this first started. I wonder if there's still enough interest. This
area is growing like crazy and it's rural enough to make installation easy.

~~~
SoftwareMaven
I can't imagine Provo by itself is a big enough market to be interesting to
Google. The entire county isn't much more than half the size of Austin. I have
to believe that they see Provo as the starting point for entry into the
Wasatch Front.

~~~
JRobertson
I definitely see that happening. The big question in my mind is how they're
going to interact with Utopia. Both Orem and Lindon have Utopia already. So
will they go head to head with them? Or are they just going to skip those
cities and hit all the other ones?

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jjcm
For $1 and a guarantee that they'll upgrade the network to gigabit speeds.
Most of the fiber has been laid, but they still need to do a lot of
infrastructure changes.

~~~
winter_blue
Do you realize much of the cost is in the routers switches & other hardware
that brings to the life the gigabit network?

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zapdrive
I am sure many more companies would have been interested in this deal. When it
comes to selling the infrastructure built with tax-payer money, the government
should be more transparent in its dealings. The city of Provo should have
advertised the sale or lease of its fiber infrastructure and let companies bid
on it. And the fiber should have gone to the highest bidder. Or at least,
accept offers from multiple companies and let the residents decide (through
voting) which company they want to give the infrastructure to.

~~~
SoftwareMaven
Provo has been trying to unload their fiber network for a long time. I don't
see this as a backroom deal that only benefits Google, but rather somebody
finally putting the "under contract" sign above the "for sale" sign.

That nobody else came calling (or offered deals as good as Google's) is not
Google nor Provo's fault.

From a taxpayer perspective, they get to stop paying for the upkeep on what is
currently an unprofitable system. And those who keep paying for it get a
significant upgrade.

~~~
JRobertson
Don't forget that this is a big marketing opportunity for Provo as well. As
someone that is house hunting in Utah county the announcement of Google Fiber
is the only thing making me consider Provo itself as a viable option.

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jakerocheleau
I'm hoping to see Google move out to the east & west coasts with their fiber
speeds as well.

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escaped_hn
Please send ripples through to market Google.

~~~
ihsw
All the news about where Google is rolling out GFiber seems to indicate
they're getting their feet wet with smaller communities first, which makes
logical sense in many ways.

On one hand the logistics of managing smaller municipal networks is easier,
the politics is a lot less murky, and they establish a history of cooperation
and reliability.

Where they start to ramp up in cities with >1M people is a mystery though,
only time will tell. It may be Philadelphia, Cleveland, Atlanta, St Louis,
Minneapolis, or even Dallas.

~~~
27182818284
The first two places ( I know it isn't much data points) were Silicon Prairie-
ish places. Provo I was a bit surprised by, but I think the main draw there
was the in-place fiber that just needs bought for the $1 and then upgraded.

~~~
JRobertson
All of the major companies have a decent presence in Utah. Adobe just opened
up a 1,000 shop in Lehi (15 minutes north of Provo). Utah is one of the larger
growing secondary tech hubs in the nation. No where close to Silicon Valley or
NYC, but still growing and doing quite well.

[http://www.siliconslopes.com/sites/default/files/silicon_slo...](http://www.siliconslopes.com/sites/default/files/silicon_slopes_calendar_2012.pdf)

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blocktuw
I think Google got a deal because Provo's 1 Gbps is only equivalent to 1000
mbps according to the article.

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_account
This is something I've seen before, and expect more of.

Municipalities[taxpayers] paying to build out infrastructure, "mismanaging
it"[then usually underfunding the administration because everyone wants 'small
government', and then having the infrastructure scooped up for peanuts by a
private company who makes a killing.

It's actually happening right now in slow motion in my hometown.

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jessriedel
Given your derision for the term "small government", I'd guess you think this
is a corrupt practice and that such infrastructure shouldn't be sold. But--at
least to a small-government-er like myself--this seems like even _better_
evidence that the municipality shouldn't be trusted with building these things
in the first place.

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SippinLean
>underfunding

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jessriedel
Yea, I read that part. Unfortunately, great governments supported by a steady
stream of good decisions is not an option on the table. We need to decide
whether to begin government projects _given_ that crappy and corrupt decisions
will be made in the future.

