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.
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.
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.
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.
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.
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.
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?
honestly, you are most likely for this subsidy because you are getting benefit from it, plus knowledge that other large companies get similar subsidies.
I'm all for this kind of subsidy too, as I'd say there's a significant public good for low-cost fiber. But most likely you wouldn't be so enthusiastic if you didn't value the service being rendered.
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.
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
> and frame the public good not as rich internet, but as rich internet access
Which is exactly why the $300 one timer almost seems to good to be true. I would almost be willing to actually participate in my local city council if it meant we could leverage the "free" package to enough neighborhoods for free wifi coverage. I really really want everyone to have uninhibited internet access, and I feel that free access to information should be amended into the bill of rights. Google seems to be the first company to actually be able to provide a solution for this, big brother worries aside.
IMHO, you and the parent are probably both missing the point of the submitted article. The points being that (1) contrary to what people are saying, this is not a triumph of the "free markets", and (2) more importantly, fiber in general may be unviable without govt. subsidies.
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.
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?
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.
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.
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.)
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.
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.
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.
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.
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.
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.
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.
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?
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.
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.