This doesn’t come free, however. The city is making Google a very sweet deal: get the existing network for free, and they’ll finish the remaining $39.6M in bond payments over the next twelve years. Google only has to spend an estimated $18M to build a network that, based on costs from UTOPIA and other fiber networks, could easily cost $90-100M to do from scratch. They also reserve the right to pack it up and halt the service after a seven year commitment. The city still has a repurchase right, but it could be left scrambling for a solution in that event.
What makes the arrangement in Provo so unique is the existing network. The terms in Kansas City and Austin are more-or-less the same: no franchise fees, unlimited right-of-way, and they can quit after the commitment period. In both of those cases, they’re not really giving up much to get the network. Provo is putting a lot more on the line. They are, however, getting a few more concessions. City facilities will get free gigabit service. The one-time fee for the low-end service is 1/10th that of other cities.
For most users, the choice is clear. The only other viable gigabit option in the state, UTOPIA, charges $300 per month and a one-time install fee of $2,750, albeit you get a choice of several providers and can pick up phone service. You don’t even want to know what CenturyLink or Comcast would ask for. (Hint: it’s about ten times as much.) It’s hard to argue with the basics of the deal.
Some users may not like the privacy implications of letting Google be in a position to be aware of their Internet habits and TV watching. As the only choice on the network, it doesn’t offer the kind of service provider flexibility that UTOPIA users have come to enjoy. Google is also not exactly renowned for their customer service ability.
For the city, it may be less clear. Giving up tens of millions of dollars in potential network value may or may not pay off in the long term. Google may decide that this is something they want to stick with, or, like they’ve done with so many services (looking at you, Reader), they may decide that it was fun while it lasted and pull the plug at the end. If you built your entire business around their service, you could be left in a very serious and expensive lurch.
Another downside is that many broadband users, instead of trying to solve the problems of broadband access for themselves, may opt to hold off to see if Google will come to their neighborhood for free. I’d like to think that all technologists can agree that broadband is an essential commodity service, and the current state of it is lackluster at best. Giving users a sense of false hope for a white knight savior may stifle my own efforts to build a gigabit cooperative here in my neighborhood.
It’s easy to get excited by being in the national press for a system that most users can’t even dream of. But let’s not be blind to the potential downsides as a result.
Alex has been a successful entrepreneur for 20+ years. His current ventureLendio ranks #34 on the Inc. 500 list. Alex earned a BS degree at the University of Utah and his MBA at Weber State University, where he is Vice Provost and Director of the Entrepreneurship Program.
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