Google Begins Risky Experiment

by Matt Davis

On February 10, Google posted on its official blog, its intention to "build and test ultra high-speed broadband networks in a small number of trial locations across the United States. We'll deliver Internet speeds more than 100 times faster than what most Americans have access to today with 1 gigabit per second, fiber-to-the-home connections. We plan to offer service at a competitive price to at least 50,000 and potentially up to 500,000 people."

Google references its attempts to influence the FCC's National Broadband Policy toward the adoption of an Open Access network concept, whereby the network operator supplies broadband access as a wholesale player and invites participation from service providers wishing to utilize that access. Google goes on to lay out plans to achieve three major goals: 1. To discover the impact that gigabit access speeds would have on the development of new bandwidth-intensive Internet applications. 2.Whether more cost effective or efficient fiber infrastructure deployment practices can be discovered; and 3. Probing the benefits of "openness and choice" enabled by an open access network.

Given Google's success in most technological and business endeavors and the vast resources it has at its disposal, this initiative cannot be taken lightly. However, it has several challenges to overcome in order to make this a successful trial. It has set a date of March 26, 2010, for state and local governments to apply to become part of this trial. Even if these entities could move that quickly and secure a place as one of the trial participants, building a fiber access infrastructure and evaluating open access participants in time to influence the FCC's National Broadband Policy planning would be challenging. In addition, building, maintaining, and operating a broadband access network is a tough, dirty business. If Google thinks it can leave the dirty work of fiber deployment to unprepared government entities, it might want to take a hard look at FTTH projects such as Provo and Utopia as well as dozens of others that ran into major difficulties in the past.

Open access networks seem like a great idea, until you have 20 tiny ISPs showing up at your door and you have to give them all a fair shot at network access, try getting your town selectman to manage that. Then there's a couple of regional CLECs that want the business voice access but don't have a lot of interest in the margins associated with consumer voice service. Then you have to attract a company willing to do the cable television piece — good luck with that. And you'll likely need all three to make it a go — if the operator lacks the building blocks of the triple play, it makes it very tough to make a business model work (Why do you think the telcos got into IPTV in the first place?) If a provider wants to take another tack and offer only Internet service and have Skype (or Google voice) or another IP-based service for voice and go with over-the-top video delivered over a variety of technologies, what would the ISP have to charge for monthly Internet fees to sustain the business model? This model might be OK for consumers, but SMBs want some guarantee of QoS, so they might sign up for fast cheap broadband, but nothing else. Also, if history is any indicator, the local incumbents would all slash prices and upgrade facilities in your footprint to undercut your efforts, and suddenly you're a little town with a couple of hundred subscribers in charge of operating, maintaining, and upgrading a fiber network in order to offer one service. To be fair to Google, the trial seems to be designed to answer these questions.

However, one question Google might want to ask itself is, What if this trial fails? Does it then concede to network-based providers that Open Access is unfeasible? That building and operating a fiber network is every bit as hard and expensive as the facilities-based broadband providers claim? That new applications can be developed, but there is not enough revenue to justify their support?

If I was a network provider, I'd call off my lobbyists (the same ones that try to kill any municipal or government-funded broadband initiative) and let Google experiment away. However, I'd also demand a magnifying glass be placed on the results. Then after the bloodbath that is likely to ensue takes hold, I'd get my PR machine moving and argue that the current broadband market dynamics are the best thing for America — and while you're at it, let's forget that Net Neutrality stuff.

That is, of course, if Google doesn't actually succeed.