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How Google may turn its Kansas City broadband project into a business

As you likely know, Google is in the midst of providing ‘ultra high speed fiber’ access to the residents of Kansas City (MO and KS). (‘Ultra high speed‘ means at least 1gb, which is 50100x faster than your 10mgb connection.) This has been positioned as an experiment, and as a poke in the eye to the incumbents to “show ’em how it’s done.” And it has apparently made the incumbents nervous enough to offer residents a bounty for tips about the deployment.

Now Bill St. Arnaud speculates about how Google is going to turn this into a business. I have zero idea if he’s right, simply because I don’t know enough to have an opinion, but it sure is some interesting speculation.

Bill’s post is very readable, so I suggest you not rely on my summary, but here goes. First, Bill wonders how Google could hope to make back its investment in the physical infrastructure, since providers need about 40% of the market to subscribe to drop the per-user cost sufficiently. But (Bill figures), the incumbents will never let Google take 40% of their market. So, Bill figures:

Google will offer a basic free high speed Internet to each and every home, perhaps bundled with Google TV using their new set top box. A variety of premium services will also be offered for additional fees. I would not be surprised that Google decided to offer a basic 1 Gbps service to every home. This would clearly differentiate Google from the cableco or telco and make it almost impossible for them to compete without undertaking a massive investment themselves.

But, Bill guesses that the premium services will still not make the venture profitable. So, he speculates that Google…

…could offer to peak manage the customer’s power usage, by briefly turning off air conditioners and hot water tanks. They could also install smart thermostats and other devices to further reduce energy consumption. The money in the energy savings would be used to pay for the fiber or premium services, rather than being returned to the customer as piffling amount of energy savings.

So, the deal to users would be: We’ll give you incredibly high speed connectivity (or we’ll give you some great premium services) if you’ll let your energy company install a smart thermostat and manage your peak energy consumption in ways you won’t much notice. The user’s energy bills don’t go down (or don’t go down proportional to their energy consumption decrease), and the energy company shares the money with Google.

I’m not convinced that users would take the deal positioned that way. Maybe I’m positioning it wrong, but it seems like a pretty complex offer. I think I’d rather take a deal with my energy company to lower my usage and my costs, and then decide if I want to pay Google for fiber access or for premium fiber access. I already resent the cablecos for making their “triple play” (telephone, tv, Internet) pragmatically a requirement to get any one of the three. A double play of Internet and energy savings would be even weirder.

But, Bill knows approximately 50x what my own poor brain fiber does. The key is, I believe, in the energy company making the claim that the decrease in energy consumption will be minor, the noticeable impact on the user will be negligible, and the monetary savings would be “piffling.” If he’s right, it’ll be fascinating to watch.


This isn’t right, is it?

Seemingly wrong WolframAlpha result

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9 Responses to “How Google may turn its Kansas City broadband project into a business”

  1. ” (‘Ultra high speed‘ means at least 1gb, which is 50x faster than your 10mg connection.)”

    Huh? “Mg” is a unit of weight, not speed. If the writer meant MB, that would still be incorrect. 1 GB = 1024 MB.

  2. Also, a gigabit would be 100x the speed of a 10 Mbit connection…or 50x that of a 20Mbit connection…fuzzy math is cool and all, but we aren’t geologists here. A factor of two is important!

  3. Google is planning on purchasing Time Warner Cable, it is already in the works…watch and see

  4. Ack. The “mg” was a typo for “mb.” The really scary thing is that I got the calculation from WolframAlpha because Google’s page says: ” Our network will deliver Internet speeds of up to 1 gigiabit (or 1,000 megabits) per second. That’s more than 100 times faster than what most Americans have access to today.”

    To check that number, I had Wolfram divide 1gb by 10mb, and used the result, because while I know that gb is 1024 mb, I can’t hardly do any calculation without making a mistake. So, I either typed it in wrong or typed it out wrong.

    To make matters worse, I just went back to Wolfram and entered “1gb / 10 mb=” (that’s a copy and paste, so it’s accurate), and the result it gives is 800. It interprets the first term as 1 gigaBYTE and the second as 1 megaBIT. but that’s still crazy wrong, isn’t it? (I took a screen capture for doubters.) In fact, if you have WolframAlpha do “1 gigabit / 10 megabit” it gets the right answer (i.e., 100).

    So, I’m not blaming WolframAlpha. I must have mistyped the query. I am blaming my own cascade of errors. I have fixed the post.


  5. Todd Shipman, on July 13th, 2012 at 8:38 pm Said:
    Google is planning on purchasing Time Warner Cable, it is already in the works…watch and see

    If that happens then it would probably take a while for approval. The only thing is a year ago TWC announced a build-out of a Super Headend,, and companies that are looking to sell don’t usually undertake that kind of project. If you’re right about Google acquiring TWC, then that would be great IMO.

  6. Its already clear that Google will NOT be giving ANYTHING away in KC. Unfortunately they’ve hired a ‘cable’ guy who’s going to setup a fairly mundane, traditional triple play offering – Voice, Internet, TV.

    They obviously can play with all sorts of free and coverage techniques – but at the end of the day (unfortunately this whole Google Fiber thing looks like it’s the 37th item on Larry and Sergey’s to do list. Maybe once its up and running – “they’ll play with it” – but that’s just not clear.

    Meanwhile I should point out that managing energy and thermostats has NOTHING to do with gigabit networking.

    If you want to know more about what do to WITH gigabit networking – well then maybe it’s time to read a draft of MY new book “Five days in the life of a Digital City Program”

    Coming soon – to your InBox – but only if you wish it to.

  7. […] David Weinberger reacts to some crazy ideas on what Google will do in Kansas City […]

  8. Well, I do know the business, because I’m in it. And Google is unlikely to make a thin dime on its KC project; in fact, it stands to lose millions.

    Which is fine with Google. All those losses can be written off on Google’s taxes, and the remainder will be paid by its ordinary shareholders — not its billionaire executives.

    The goal is to be able to say, “Look at what we did in KC! All ISPs should embrace our (money losing) business model!” And then use this message as a lobbying tool to promote anti-ISP policies in DC.

  9. […] How Google may turn its Kansas City broadband project into a business DAVID WEINBERGER | FRIDAY, JULY 13, 2012 […]

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