Before you get too excited about Google Fiber, consider this: It likely will take many months before the service actually gets here, you’re unlikely — at least initially — to make full use of the download speeds — and gigabit speed internet connections are already available to tens of thousands of Louisvillians.
Local government and business leaders are touting the eventual arrival of Google Fiber as a boon for Louisville, but a public policy expert who recently analyzed Google’s expansion into Kansas City, Kan., said results there had been mixed. Google’s investments prompted competitors to improve their infrastructure, and hype lured entrepreneurs — but the gigabit expansion has had a minimal impact on pricing and broadband availability for underserved populations.
Google confirmed recently that it is, indeed, going to build its gigabit infrastructure in Louisville, but few details have been made public. The company told Insider, for example, that it “is not able to provide information on how quickly people will be able to access the service.”
On a basic level, Google Fiber will be an internet service provider, or ISP, much like AT&T or Spectrum, and will provide download speeds of 1 gigabit per second. That’s 1,000 megabits per second, or about 10 times more bandwidth than a typical high-speed connection today.
Louisville government and business leaders
Some city and business officials told Insider that being chosen by Google comes with some significant advantages, including economic development and better data infrastructure for government agencies, businesses, nonprofits and residents.
Google is providing the service in only 10 cities, with only two more that have been announced. So Louisville is joining an exclusive club and can better market itself as a hub for innovation, which could foster economic activity, especially from high-tech startups.
Grace Simrall, the city’s chief of civic innovation and technology, said the service would mean that “Louisville’s corporations, small firms, nonprofits, schools, startups and more will have a new world of options to create innovative products and services and to expand. It means home consumers have the option of enjoying the latest and greatest technology.”
Simrall and Kent Oyler, chief executive of Greater Louisville Inc., also told Insider that Google Fiber would increase competition among ISPs, which should benefit businesses and residential customers with better services, lower prices or both.
Aside from a local ordinance that the city passed last year to allow Google and other ISPs to rearrange the equipment of other companies on utility poles, the city told Insider that it had offered Google no incentives to bring its infrastructure here. The city deflected a question about what incentives Google requested.
The city also told Insider that it knows of pockets in Louisville where options for quality internet service were limited and hurt economic prospects of residents in those areas. However, the city could not identify any areas, nor point to any business leaders who have complained about the lack of local broadband infrastructure. GLI, the local chamber of commerce, said it has “not had any direct requests regarding fiber” from its members. Metro Councilman David James said that most broadband-related complaints he fields deal with pricing, rather than availability.
According to the Federal Communications Commission, Louisville’s network is much better than the national average. Essentially all households in the area had access to download speeds of at least 50 Mbps by summer 2014.
Meanwhile, AT&T told Insider that it invested $250 million between 2014 and 2016 to deploy its fiber network, which is accessible by more than 50,000 households and businesses in parts of neighborhoods from Algonquin and Chickasaw to the Highlands. The service, which provides download speeds of 1,000 Mbps, costs $80, but bundling can lower the price.
The Kansas City entrepreneur
Google said that its most advanced fiber network is in Kansas City, and an entrepreneur there told Insider that the announcement and launch of Google Fiber helped create a vibrant downtown startup village — though few businesses, as of yet, really need as much bandwidth as the service provides.
Matthew Marcus, director of operations for the Kansas City Startup Foundation, said Google Fiber turned a quaint neighborhood in the heart of the city into a community of entrepreneurs. While the city had some entrepreneurial activity previously, the arrival of fiber energized the sector and created some interest in the city far beyond the state’s borders.
“It really did amp that energy up,” he said.
In his home, Marcus replaced his 20 Mbps connection with Google’s gigabit service and got 980 Mbps.
“It was night and day for us,” he said.
Early on, he said people had a lot of fun with it because they tried to test the service’s limits — only to end up with overheated computers.
“It’s more bandwidth than you can really figure out what to do with,” he said.
And while few businesses are making use of the full connection speed, Marcus said that it gives dreamers and innovators an edge as they try to come up with services and products that can take full advantage of that kind of bandwidth.
The startup village swelled from six businesses initially to 53, but many of them have folded or outgrown the village, as it generally provides space only for companies with fewer than a handful of employees, Marcus said. The village counts 22 startups now.
About two-thirds of the entrepreneurs came from the city or region, Marcus said. Some of the others came because of the hype surrounding Google Fiber, and others because they needed a reliable high-speed connection.
In the end, Marcus said, gigabit speeds are great, but the community and its people play a bigger role in a startup’s success.
Tony H. Grubesic, professor and director of the Center for Spatial Reasoning & Policy Analytics at Arizona State University, told Insider that results of Google’s fiber rollout in Kansas City had been mixed.
Grubesic and two other researchers recently released a paper analyzing the impact of Google’s expansion into Kansas City.
Grubesic said the company’s effort made high-speed internet available to some underserved populations and prompted competitors to improve their infrastructure — but city government had to make significant concessions, and prices have changed little.
“Kansas City’s support for Google’s network went well beyond stunning regulatory concessions and incentives,” the researchers wrote. “In fact, it was widely criticized as a form of corporate welfare, drawing from taxpayers’ pockets. Similar criticisms were expressed in relation to Provo, Utah, and Huntsville, Alabama, as Google Fiber received heavy concessions from taxpayers’ pockets to access publicly owned city infrastructure.”
Louisville’s ordinance to allow Google and other ISPs to rearrange the equipment of other companies on utility poles is the subject of a lawsuit.
The researchers said that Google Fiber fueled technological developments, including a connected communities venture by Cisco and a plan by Kansas City Power and Light to build 1,000 electric vehicle charging stations in the city. It also forced “existing providers like AT&T to match speed and price.”
However, the analysis found that the “promise of Fiber did not erase the digital divides in Kansas City, but instead made them more visible. … large digital infrastructure projects like Fiber simply enhance the connections of residents that already have good access to digital infrastructure, rather than providing new infrastructure to residents who are lacking.”
Before the fiber rollout, Google asked interested customers to pre-register. Once at least 5 percent of residents in designated neighborhoods (“fiberhoods”) signed up for service, the company displayed on online maps which fiberhoods had met the threshold.
The system came under criticism in part because it “manifested an immediate visualization (of disparity) in Kansas City. For example, affluent white neighborhoods met preregistration targets almost immediately, but lower-income, predominantly black neighborhoods did not.”
Grubesic said that Google responded to that divide by sending people into the underserved areas, working with community groups, even hiring Spanish translators and helping people who lacked credit cards to preregister through a crowd-funding platform.
“That was a positive,” he said.
Ultimately, 90 percent of fiberhoods crossed the 5 percent threshold.
Google also offered people in some underserved areas a 5MB connection for free for seven years — excluding a $300 installation fee, paid in monthly in $25 increments. The company no longer accepts additional clients, though, Grubesic said, which means the free service eventually will disappear. Now a low-speed connection costs $15 a month.
AT&T told Insider that households in which at least one resident participates in the Supplemental Nutrition Assistance Program, can get access to low-income services with connection speeds of up to 10 Mbps for as little as $10 per month. Installation and equipment fees are waived.
Grubesic said Google Fiber’s eventual arrival in Louisville likely would produce little effect on pricing. Most markets are dominated either by one or two ISPs, he said, and they tend to price their packages at the same level.
Late last year, Google’s parent company, Alphabet, also announced that it was cutting staff in the unit that includes the fiber division. The unit’s financial performance has not improved: Alphabet said in April that its Other Bets division, which includes the fiber unit, lost $855 million, compared to a loss of $774 million a year earlier. The loss widened even though revenue increased by 48 percent.
Grubesic said, “I’ll be surprised if Google rolls anything out in Louisville in the next two years.”
He and the other researchers wrote that cities who want to partake in the fast-growing digital economy might do well to understand what happened in other cities after Google arrived.
“(A)lthough the transformative promises of Fiber are alluring,” the researchers found, “the path to realizing the benefits of this digital infrastructure has had many hidden costs.”