In mid-April, amid the celebratory back-slapping that was going on in Austin after Google (Nasdaq: GOOG) announced it as the next city to receive its fiber blessing, the Internet search giant made another surprising announcement: it was purchasing iProvo, a municipal broadband network in Utah, for $1.
Broadband backers hailed it as a smart, fast way to get more Google Fiber into new parts of the United States. But two providers directly impacted by the Provo incursion--CenturyLink (NYSE: CTL), the incumbent wireline provider in the area, and XMission, an independent ISP--didn't see it the same way.
CenturyLink complained that the city council hadn't deliberated enough before agreeing to the sale of the network.
XMission, which had been trying to gain access to iProvo's existing network in order to build its Internet customer base, complained that Google had just closed the door on that opportunity.
While admitting that Google has a great business model, Pete Ashdown of XMission noted in a blog post that "The network will solely belong to Google and will not be open to other providers. If for some reason a Provo customer decides they don't appreciate Google's take on privacy or their endorsing warrantless monitoring of the Internet, they will have no other choice for service that can give them speed and reliability of fiber."
XMission's complaint reopened a sore spot that Google has so far covered over in the glowing coverage of its Kansas City build: it backed off of its promise to allow other providers to use the 1 Gbps network to offer services to customers. And because Google appears to be on a successful track, that stance could spell the end for the open access concept in most cities.
The case against open access
About a year ago, GigaOM reported that despite promises to the contrary, Google was not going to make the newly announced Kansas City buildout an open access network, on which ISPs and other services could build and develop.
"In many truly open networks, the mandate is that two or three fibers run to each premise--then access providers put equipment in at the patching point and tie in to their customers on dark fiber," Stacey Higginbotham of GigaOM explained. "This lets consumers buy Internet from one provider, TV from another and so on."
A 1 Gbps backbone from which providers can launch a variety of services in a competitive environment sounds ideal, but Google isn't going this way. Why?
Part of the reason may be that it is difficult to offer both a retail and a wholesale option on what is supposed to be an essentially municipal broadband network built on a public-private partnership. Not impossible, but difficult.
OneCommunity, an open access, middle-mile fiber network provider in Ohio, walks this tightrope.
"We only directly serve the public interest sites; we do not serve consumers directly for a fee, nor do we serve businesses," said Scot Rourke, a founder and former CEO of the nonprofit provider, in a FierceTelecom feature we ran last year. OneCommunity not only stays away from direct retail sales, but also works to ensure it doesn't step on toes or overbuild into areas served by large incumbents or large providers. "On the flip side, we also leverage their assets a lot. ... We're Time Warner's (NYSE: TWC) biggest customer in northern Ohio. We work very hard not to duplicate their assets; most of our new construction is in rural areas where there is no fiber."
For a publicly traded company like Google that needs to keep shareholders happy and turn a profit on at least one of its concepts, trying to achieve the same balance as OneCommunity while building out a network is likely quite difficult.
Google Fiber is working hard to shake up the broadband market, and it is having some success in doing so. But it is also setting a precedent in abandoning the open access idea, and engendering resentment from service providers both small and large. (Though to be fair, many large operators kind of brought it on themselves by refusing to partner with municipalities on fiber.)
On the plus side, Google is so large that it's not completely unrealistic to wonder if, once it has established a profitable model through its direct FTTH service, it will tack in another direction and sell its unused bandwidth to other providers in Kansas City, Provo and Austin. Of course, that kind of wishful thinking is based on the hope that Google will become the "benevolent monopoly" of ISPs that John Fox of IGN envisions.
Private competition steps up
One thing Google Fiber has done is force incumbents and MSOs to step up their game. CenturyLink was the most recent provider to announce it would offer 1 Gbps, in Omaha; AT&T (NYSE: T) tried to steal some of the Google thunder in Austin the day of that announcement, saying it would make 1 Gbps available at some point in the city. (Although the carrier said at a Jeffries conference this week that it had plans on the drawing board for fiber deployment in Austin before the announcement.)
And while Time Warner Cable's CEO Glenn Britt held firm to his statement in late January that consumers just don't need gigabit speeds, even that provider has pushed up its residential and business broadband offerings and submitted a bid to build a 1 Gbps service in North Carolina.
The 1 Gbps playing fields are still closed to most of the smaller teams, but at least there's some competition to watch.--Sam